- (september 2014)
The democracy virus.
Hong Kong used to be a British colony. In 1997 Britain ceded Hong Kong back
to mainland China, and China promised to let
Hong Kong run itself (to some extent.
At the time China made a big (nationalistic) deal of having retrieved the city
from the evil European colonists, but,
when China absorbed Hong Kong, it didn't realize that it was absorbing
a dangerous virus, the virus of democracy.
As democracy sweeps the world, from the Arab world to Ukraine, it is not
surprising that the people of Hong Kong are reluctant to be the only ones
on the planet who move one step back.
When China's president Xi announced that mainland China would select the
candidates for the "democratic" elections of the next chief executive of
Hong Kong, and his spokeswoman used the expression
"a leap forward for democracy in Hong Kong", he was clearly insulting the
intelligence of the average citizen of Hong Kong.
Before he became president, Xi had notoriously argued that the Soviet Union
made a mistake in not cracking down earlier on anti-communist sentiment.
Indirectly, he was also justifying the June 1989 Chinese crackdown on
the student protests in Beijing's Tiananmen Square (five months later
the Berlin Wall fell because the Soviet Union did not crack down the same way
on pro-Western sentiment in Eastern Germany).
Now Xi has to decide whether the pro-democracy protests in Hong Kong threaten
China the same way that the Tiananmen Square protests did 25 years ago.
Mainland China has never had democracy, so its citizens, even the young ones,
might be largely indifferent to the fact that they cannot choose their
political candidates, but what is happening in Hong Kong might turn out to
be a virus that infects the nearby areas and then spreads quickly to
the big Chinese cities. These days (thanks to the digital devices invented
in the West and mass-manufactured in Asia) democratic ideals have a way of
getting out of control before the tyrants even realize what exactly is going on
(see the Arab spring and the various color revolutions in the former
communist countries).
Xi's position is further complicated by ethnic unrest all over his empire.
As much as China tries to hide it, it has been under attack from Uighur
separatists more than the USA has been under attack from Al Qaeda:
hundreds of people have died in the last few years in ethnic riots in
East Turkestan (Xinjiang) and increasingly the "terrorists" have been striking
in the rest of China
(and, coincidentally, a secret trial has just sentenced Ilham Tohti to
life in jail for supporting the Uighur separatists).
While the last major pro-independence riot in Tibet took place six years
ago, we know that in 2012 dozens of Tibetans set themselves on fire in Gansu,
Sichuan and Qinghai provinces to protest Chinese occupation before a complete
shutdown on information took place.
If the USA says that it is under attack by Islamic terrorists (only a handful
of US citizens have been killed and all of them outside the USA),
one wonders what mainland China should say.
How confident the mighty Xi is of his power and of his regime's legitimacy
is evident from his first gut reaction: he immediately shut down any reference
to the Hong Kong demonstrations
in all news media and social media of the country. The average Chinese person
knows absolutely nothing of what is going on in Hong Kong.
(But Xi must be kept sleepless by the notion that thousands of mainland
Chinese tourists, armed with digital cameras, were visiting Hong Kong
before being rushed back home, not to mention the thousands of Chinese students
abroad, who are seeing the images on tv).
Also telling is that my humble website at one point was banned in China, whereas
Xi's words are not banned on my website: logic tells you who is afraid of whom.
Its own actions (not my words) demonstrate how weak the current regime
of mainland China is and how close it is to collapsing.
The longer he waits to abdicate and liberate his people, the more damage he
will do. Chinese empires have a long and painful history of disintegrating
just when they seemed invincible.
See also: The great illusion?
TM, ®, Copyright © 2014 Piero Scaruffi All rights reserved.
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- (september 2014)
Domestic and foreign challenges for China
For all the talks of China becoming the largest economy in the world
(see my article
The great illusion?),
China still relies on the same business model of 30 years ago:
exports raw materials and low-end products; keep labor cheap so that
labor-intensive industries can prosper. Cheap labor also makes it easier to
employ everybody: the continuing boom in public transportation and real estate
largely depends on the fact that labor is cheap in China.
Sometimes you find ten or twenty workers manning something that does not require
any particular attention because of automation.
Chinese premier Li delivered a programmatic speech at a conference titled
"Creating Value through Innovation" in which he (not me) warned that
"we cannot advance without changing the growth model".
China's rankings in the recent statistics released by the World Economic Forum
say it all. China ranks 28th for competitiveness,
32nd for innovation, 65th for education and
66th for fighting corruption.
A literal way to look at these numbers is to say that China's economic boom
does not depend on competitiveness, innovation, education or rule of law.
It simply depends on cheap labor.
Li seems to be fully aware of this, but his speech did not explain how the
government is planning to change course. For all the talk about shifting
China's economy towards consumption, you can't ask people who make $500 a
month to become big consumers, and that's what the average Chinese citizen
makes.
Internationally,
China should never forget which is the hand that feeds it.
The Chinese economic boom (based on importing natural resources and exporting
manufactured goods) has been made possible by the globalization fostered
(some say "forced") on the world by the USA.
The trade routes are physically protected by the
navy and tha army of the USA. The capitalist world is physically managed
by institutions created by the USA.
China benefits from the world order that the
USA has created and maintains.
What is happening instead is that China tends to side with Russia on world
events. Now that Russia has annexed Crimea and threatened the sovereignity
of Ukraine, China is unable to break its ties with the anti-Western coalition
(basically Russia and the two or three allies that it still has).
If Europe slides again into a Cold War between West and East ("East" being
really just Russia and Belarus), China could make the mistake of lining up
with Russia and de facto returning to Mao's foreign politics. For those who
don't remember, that's when millions of Chinese were starving to death.
The close links that China has with Russia might be the single weakest
part of its development strategy.
China's president is attending the Shanghai Cooperation Organization (SCO) with
Putin and the other dictators and presidents of Central Asia.
This eight-member group includes
Tajikstan, with a GDP per capita of less than $1,000 (yes, less than $100 a
month). The richest member is Russia thanks to a GDP per capita of $14,500
(a little over $1,000 per month).
If China, with a GDP per capita of $6,000 (or $500 per month), keeps this
kind of company, it is unlikely to learn much about becoming a rich country:
they have problems, not solutions.
The latest country to apply for membership in the SCO is Pakistan, another
very poor country (GDP per capita $1,300), while, for example, Vietnam
(with a more vibrant economy
and no separatist and terrorist movements to deal with)
is increasingly shifting into the orbit of the USA.
The other company that China keeps is the BRIC bloc (Brazil Russia India
China). That too is unlikely to be a source of pride: Brazil is in a recession,
Russia might enter one soon, and India is a colossal mess.
Hardly success stories.
On the other hand, China has to fear from a "withdrawal", not an expansion,
of US military power, precisely because it is the USA that maintains the order
which creates China's wealth. China's president Xi has made terrorism a key
topic of the SCO. He is painfully aware that the USA will withdraw from
Afghanistan at the end of 2014 and thousands of Islamic terrorists will be
looking for a new target. Afghanistan borders with China, and it borders with
the very Muslim region of China (East Turkestan, the land of the Uighurs)
in which more than 300 people
have died since april 2013 in ethnic riots. This year scores of Chinese have
been killed by Uighur attacks in Kunming and elsewhere.
Xi is also painfully aware of the danger of drups, since one of the great
catastrophes in Chinese history was the "opium war" of the 19th century.
Afghanistan is now producing an estimated 5,000 tons of opium, enough to
flood China with heroin's raw material. This opium de facto constitutes a
huge amount of capital to purchase weapons on the international market.
Those weapons are now used inside Afghanistan and perhaps in Pakistan, but
they could some day arm China's own terrorists.
It would be hard to believe that the new president, Xi, is not aware of this.
China's neighbors have been alarmed by Xi's tough aggressive posture on a
number of issues since he came to power in november 2012.
China is claiming land or sea from the Philippines, Japan
and Vietnam, and it still claims the whole of Taiwan. Xi's foreign arrogance,
however, might reflect more the need to increase his credentials at home than
a real desire to start conflicts in Asia. Hu Jingtao did something unprecedented
in Chinese history: he surrendered all power when he stepped down. All previous
leaders of China who were succeeded peacefully retained influence and sometimes
direct power over the next government. Not Hu: he renounced all titles and
simply vanished from the scene. Indirectly, he set the example for other senior
members of the Communist Party. The result is that Xi came to power with
unprecedented freedom to create his own China, which is what he gladly
proceeded to do. Those who didn't get the message are facing rather rude
treatment. Some have been jailed. One can see this as the first purge in
decades. Others think that
under Xi's leadership the Communist Party is conducting a
"self-targeted revolution" aimed at fighting widespread corruption.
It could be that Xi needs to coalesce support from the military while launching
his reforms; in which case Xi might be getting ready for a major overhaul of
Chinese society, possibly for multiparty democracy itself.
The Communist Party is supposed to celebrate its centenary in 2021.
Don't count on it.
TM, ®, Copyright © 2014 Piero Scaruffi All rights reserved.
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- (april 2014)
So you want to be a superpower?
China's growing economy is inevitably being reflected in China's growing
visibility on the world's stage, despite the fact that China has been careful
to do as little as possible at the United Nations. Where China is very visible
is in its own neighborhood. Within a few months China managed to have major
quarrels (and dangerous ones) with Japan, the Philippines and Vietnam, not
counting the long-lasting dispute with Taiwan (which China considers a
runaway province despite the fact that very few people in Taiwan see it that
way). If China wants to be a superpower, or at least "the" Asian superpower,
it will have to get used to it. The title of superpower doesn't come for free.
China also has precious few military agreements, and is not part of any military
or economic alliance.
Unlike the United States, whose wars of conquests date from almost two centuries
ago and were mostly
(with the exception of the Mexican war)
at the expense of two European colonial powers, Britain and Spain
(the rest was peacefully acquired from France and Russia), China has
both an ancient and recent history of invading and annexing territories
that are inhabited by ethnically and linguistically non-Chinese people.
Vietnam was a favorite target. Tibet and Eastern Turkestan were annexed
against the will of those people during the 20th century (and renamed Xizang
and Xinjang). China has a public, official, outspoken policy of wanting to
annex Taiwan. Hence it has a long record of expansionism.
As it becomes a regional and possibly global superpower, China is likely to
reawaken old tensions. The USA eventually managed to create cordial relations
with its neighbors, who don't fear any invasion by their more powerful neighbor.
It will take a long time for China to achieve the same kind of friendly
relations with its neighbors. In fact, in the short term it is causing an
arms race (more similar to what Germany caused in Europe during the 1910s
and then again in the 1930s than to what the USA caused in the Americas
during the last century) with the risk that Japan will change its constitution
and even become a nuclear power and with the almost certainty that Japan,
South Korea and Taiwan (and in a not so distant future even Vietnam) will
sign stronger military pacts with the USA. Paradoxically, as China grows
to become more of a regional superpower, it will increase the presence of the
USA in its neighborhood.
These international tensions come at the same time that China is still facing
resistance in the occupied regions of Tibet and Eastern Turkestan. The Tibetans
and the Uighus are far from accepting Chinese rule. In fact, resentment against
Chinese rule is increasing as China keeps relocating thousands of ethnic
Chinese to Tibet and Eastern Turkestan in a sort of forced immigration.
If people in the USA resent the "invasion" of illegal Mexican immigrants
and people in Europe resent the "invasion" of illegal African immigrants,
imagine how Tibetans and Uighurs must feel about the "invasion" of legal
Chinese immigrants.
The status of superpower has another cost: there are people (usually called
"terrorists") who would do anything to get maximum publicity for their
military achievements, and nothing compares with fighting a superpower.
China has always been ambivalent about the various Islamic wars, whether the
one fought by the USA in Afghanistan or the one fought by Russia in
Chechnya, but, now that the USA is pulling out of Afghanistan and Iraq,
China might be dragged into the Islamic wars whether China likes it or not.
Syria has proven that Islamic fighters go where they can fight for the Islamic
cause. Assad's government, a largely secular regime drawn mainly from a
non-Sunni sect (which Sunnis consider apostate), was a perfect target.
So will be China, because China is certainly guilty of annexing Muslim territory
and of trying to obliterate their Islamic culture.
It is just that for the time being they are busy in Syria/Iraq or in
Afghanistan. Once the USA pulls out of Afghanistan, there is a chance that
Afghanistan reaches some kind of settlement with the Taliban, and that
Pakistan reaches a similar settlement with its own Taliban. Given that India
has already largely succeeded in dealing with the Kashmiri insurgency,
and Russia has Chechnya under control,
there will suddenly be thousands of well-trained and well-armed Islamic
fighters looking for a new mission to liberate Islamic lands from infidels.
Muslims don't normally think of the Chinese as infidels, but they are.
Recent attacks on ordinary ethnic Chinese by Uighur "terrorists" proves that
this could easily escalate into a new jihad, this time against Chinese people.
China is, in fact, in a much worse situation than the USA. The USA does not
really have internal domestic terrorism of the kind that China has in Tibet
and Eastern Turkestan. Terrorism is the USA comes from either local psychos
(the Oklahoma City bombing) or international fighters who manage to sneak in
(the September 2001 attacks). The USA has no disputes with Mexico and Canada
that even remotely resemble the military stand-off between China and Japan,
between China and Vietnam, etc. The USA does not have a neighbor like North
Korea that is armed with nuclear weapons and could collapse at any time.
On the contrary, the USA enjoys the world's strongest military alliance of
all times, NATO.
And, more importantly, Afghanistan is thousands of kms away from the USA.
China even shares a border with Afghanistan.
TM, ®, Copyright © 2014 Piero Scaruffi All rights reserved.
Back to the world news | Top of this page
- (april 2014)
China's paradox.
The Chinese regime has learned from the mistakes made by other countries.
First of all, it has learned from the Soviet Union. Gorbacev dismantled the
Soviet Union and the result was a meltdown of Russian society and politics.
Russia lost its superpower status, its economy was plunged into a deep
recession, and at the end the country didn't even become democratic (it fell
into the hands of another authoritarian regime, Putin's).
China has also learned from what happened to Japan when it followed the "advice"
of Western countries to let its currency rise. Japan, that had enjoyed
breathtaking growth similar to today's Chinese growth and also based on
cheap exports, entered a stagnation that lasted more than 20 years.
China is learning every day from India. Where China has a fast slim decisional
process, India, which is the largest democracy in the world, has an incredibly
messy and slow decisional process. At the end of the day India is also rife
with corruption, just like China, just a lot more inefficient.
These three lessons are then wed to lessons from China's own past that have
become part of the collective subconscious: the humiliation of a century ago
at the hands of the Western powers and the genocide caused by Japan during
and before World War II, i.e. foreigners, whether they come as friends or
liberators, are only motivated by pillage.
China has major internal problems. The first one is that, despite Xi's official
policy of shifting the economy from exports towards internal consumption, the
average Chinese household does not trust that the government will take care
of them when they get sick or in their old age and therefore households tend
to save as much as they can. The second one is the cost of cleaning up the
air and water pollution that is affecting the way of life of millions of
citizens (and killing scores of them). One fifth of China's soil is now
officially contaminated, according to a 2014 report by the Environmental Protection Ministry. The third one is the cost of fighting
corruption, that in the long run will create a better system but in the short
run will create problems in the ranks and files of the Communist Party and of
the army. Finally, China has no NATO-style alliance to help in international
disputes.
In foreign policy,
the good news for China is mainly that it is enjoying the best relationships
with Russia in over four centuries. The rest are all bad news, starting with
the unresolved World War II issues with Japan (that never fully apologized
the way Germany did in Europe) and ending with the young Taiwanese population
being increasingly hostile to any talk of reunification with the mainland.
As i have written elsewhere, China has been extremely lucky: it has benefited
from the very international system that its rivals created and that, in theory,
it opposes: the free market system
(that allows China to export goods to the entire world),
the military hegemony of the USA (that protects the international trade routes)
and global capitalism (that encourages the export of jobs to China).
If and when China should replace the USA as the world's main power, all of these
elements could collapse: the free market system could be replaced by a closer
system as it were before the fall of the Soviet Union, trade routes could
become unsafe as they have been any time when there was no hegemonic empire,
and global capitalism might be replaced by a Chinese-style government-controlled
capitalism that would be a lot more protectionist.
That is, ultimately, the fundamental paradox of 21st century China: a rising
power whose "rising" depends on China not being a major power.
See also The great illusion?.
- Articles about China before 2014
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