China: Quo Vadis?

Our relations with China have become increasingly complicated since Xi has acquired more power. He has instituted more of a regulatory state, BUT there has also been a significant growth in entrepreneurship. Their small businesses on the whole are doing better than what ours have experienced in the Covid-19 crisis. It is a countervailing power to Xi’s power acquisition. There is an inbuilt tension between the two.

Trump’s main interest has been in trade but that distracts from much larger trends at work. His efforts to blame China for the covid-19 breakout are unlikely to bear fruit. And, even if those efforts proved China was somehow responsible for causing the breakout were successful, the U.S. option are limited.

Xi and his ruling party are highly influenced by their perceptions of the Qing’s dynasties serious problems that led to humiliation from the U.K. Americans tend to see free trade as a positive good. China’s leadership sees free trade as hypocritically advantageous for the U.S. We think of religious freedom as a main source for stability, but the PRC sees Christianity and Islam as destabilizing. Thus, their regime suppresses both. Hong Kong appears to Americans as an economic success story, but China is reminded of British imperialism. China sees Trump’s America First as but a new version of that.

Here are several areas where China is unlikely to relent: (1) China has made an irrevocable commitment to state controlled capitalism while allowing for individual entrepreneurship. (2) China is not wedded to a coherent, universal ideology. The Communist Party of China is no longer Communist, but the Party is committed to one party rule albeit with allowance for elections at the local levels. (3) China does not have nor is it likely to have an independent judiciary let alone a free press. (4) China is not going to quit exporting technology. (5) China is not likely to give up on requiring those who build plants in China to share their technology secrets with China. (6) China’s BRI (Belt and Road Initiative) is inextricably linked to their future though their ruling party sees that their implementation has evoked resistance and must be modified. China seeks to restore its greatness at the center of the world.

Perhaps most important of all, China’s long history and deeply imbedded extended village relationships have favored the collective over the individual. China has no experience with western style democracy in its own governance nor is it likely to. The issue really has been more how authoritarian will its government be. It has learned from the horrid excesses imposed by Mao that Xi is just not going to be a mass murderer. Strong centralized control, yes, but murderous on a large scale, no. Concentration camps for the Muslims in its West, yes, but mass murder no.

China has been remarkably stable since Deng’s reforms of 40 years ago, the longest period of stability in China’s modern life. The model he put in place has stood the test of time, but it will not lead to democracy any time soon. Those who want to see China today as simply a warmed-over version of Mao’s totalitarian, murderous regime are mistaken.

But, China has inbuilt issues that will be hard for it to resolve and continue to grow economically. It is aging especially thanks to the long-term deleterious effects of its previous one child policy. Its exam system to enter the best colleges is so strict and jobs so insufficient for those who pass them that it has yet to resolve this disconnect. Its BRI has engendered legitimate complaints of being too overbearing in imposing debts upon its recipients. For this initiative to achieve a genuine win/win status, China must adapt. The U.S. by itself is unable to take much advantage of these issues.