- (september 2015)
War and Peace in 21st Century China.
Addressing the crowds, as well as
30 foreign heads of state (including Russia's president Vladimir Putin and South Korea's prime minister Geun-hye Park as well as
US ambassador Max Baucus),
at the military parade of early september commemorating
the end of World War II (that for China started in 1931), China's president Xi
sounded unusually pacifist, pledging that China would never seek to expand its
borders and never try to control its neighbors. This could be just words,
of course (Hitler specialized in promising world peace) but it was noted even
by the Chinese themselves that the president did not mention Taiwan. Mainland
China regards Taiwan as a rebellious province, not an independent country.
History is not absolute truth: it always depends on who reads it (not only
on who writes it). China had an internationally recognized government during
the terrible years of the Japanese invasion 1931-45. That government, led
by Kaishek Chiang, fought alongside the USA and Britain against Japan.
There was an entire division of US pilots fighting in China, and at one point
Chiang's chief of staff was a yankee. However, at the end of the world China
got engulfed in a civil war between Chiang's government and Zedong Mao's
communists. In 1949 the communists won the civil war and Chiang's troops fled
to the island of Taiwan. The West kept recognizing Chiang's government in exile
while the communist world recognized Mao's communist dictatorship.
Mao caused widespread destruction, famine and death in mainland China, while
Chiang and his accolytes (no less brutal, in reality) laid the foundations for
Taiwan's astonishing economic boom. While Mao's China was sinking into a
bottomless abyss, Chiang's Taiwan was becoming one of the most technologically
advanced countries in Asia (and, today, in the world).
While Mao was launching the "cultural revolution" against intellectuals
in mainland China (during
which millions got killed), Taiwan
was appointing the physicist Li Kuo-ting as minister of Economy (1965):
he is widely considerd "the father of Taiwan's economic miracle".
While Mao was sending 20 million Chinese, including the scientists, into the
countryside Shih Ming and Andrew Chiu were founding Taiwan's first semiconductor
company, Unitron, that two years later would design Taiwan's first personal
The seat of China in the United Nations was still kept by Taiwan
until the most evil and second most stupid of all modern US presidents,
Richard Nixon, decided to befriend serial killer Mao, whose total murders make
Hitler look like an amateur. You can tell the integrity of a man by the
company he keeps. A few years later the two old rivals died: Chiang in 1975
and Mao in 1976. Nixon had laid the foundations for the Taiwan issue: Taiwan
was expelled from the United Nations and China's seat went to Mao's
communist mainland. Nixon's masterpiece was to give Mao the same veto power
that the other great powers had, probably Nixon's idea of how to reward
the murder of millions of people. Since then communist China has kept arguing
that there is only one China, that the United Nations Organization recognizes
China as the only China, and therefore Taiwan is a renegade province.
Never mind that Taiwan has become a democracy: the UN still recognizes communist
China as the legitimate China. Never mind that Taiwan is really the China that
won the war against Japan, and that Mao's army was in reality benefiting from
Japan's war against Chiang's army.
China and Taiwan remained de facto two separate countries with two separate
regimes and different foreign allies. Mainland China was too poor and weak to
threaten Taiwan in any economic or military terms.
In the early 1980s Xiaoping Deng seized power and launched a serie of economic
reforms that set China on the current path of development (and astronomic
growth), mirroring what Taiwan had done two decades earlier.
Deng adopted three fundamental policies: allow different regions to experiment with different models; stay out of international trouble; replace the cult of personality that prevailed during Mao's times with a consensus-driven approach.
Credit Deng's wisdom if China has had peaceful and orderly transitions of power every 8 years.
Deng died in 1997, without ever having assumed any major official title.
His successor, Zemin Jiang, the party's chairman from 1989 to 2004 and
the man who boosted China's nationalism with the
Olympic Games of 2008, added another principle: don't make the mistake that
the Soviet Union made. He saw the Soviet Union disintegrate after liberalizing
its political system. Hence no tolerance for Tibet's independence war and no
tolerance for Taiwan's rebellion: they would represent two dangerous precedents
for the other provinces. The Chinese leadership saw that the collapse of the
Communist Party had caused the collapse of the Soviet Union, and it had to
intention of repeating that mistake.
Fast forward to 2015 and mainland China now has the economic and military
power to hurt Taiwan.
After Mao's death one president after the other have reaffirmed that
determination to eventually reunite mainland and Taiwan.
The belligerence of the 1970s was tempered by Hu Jintao in the 2000s, who
quietly adopted the principle of "peaceful reunification, one country,
two systems" (as the People's Daily intoned in october 2009), basically
proposing a repeat of what mainland China did when it got Hong Kong back from
Britain in 1997 (Hong Kong still has its own capitalist economic system and
a separate set of laws).
But this was the first time that a sitting president of China did not mention
Taiwan at all when speaking about foreign policy.
China's military build-up has worried some in the USA, although it is still
a tiny fraction of what the USA spends in armaments.
Xi, almost casually, mentioned a reduction of 300,000 troops, which amounts to
13% of China's active-duty soldiers. If Barack Obama did the same in the USA,
the Republicans would probably file for his impeachment.
Of course, the real goal of this reduction may not be a change in Taiwan policy.
There are two easier explanations: 1. China has modernized its army to the
point that it doesn't need a lot of men anymore. 2. Xi has launched a
campaign against corruption, which was widespread especially within
the army. Two of the biggest scandals in recent years have involved a defense
minister, Boxiong Guo, who was arrested in july, and a military chief,
Caihou Xu, who died in march after being indicted (both had been appointed by
The day before the parade China's official organs emphasized that Xi had
pledged to work towards a denuclearized Korean Peninsula and the peaceful
reunification of North and South Korea
This "pacifist" speech comes after months of increasing tension in the
seas around China, with Xi provoking Japan, the Philippines and Vietnam
with his territorial claims.
The only antagonizing tone of the celebrations was, inevitably, the
frequently repeated litanies against Japan's brutal aggression of China, that
resulted in millions of civilians being deported, killed, raped and enslaved
(and many used for scientific experiments that included vivisection).
If there is one thing that would truly cause anger in China, that is a
rearmament of Japan. But that is not unique to China. South Korea shares
the exact same feeling. The people countries were treated like animals
by the Japanese occupiers, and Japan never fully apologized.
(Footnote: The USA rarely misses an opportunity to miss an opportunity. Its president was somewhere playing golf the day of the parade instead of attending in person).
To emphasize the unity of the Communist Party,
Xi was flanked by all the living presidents and prime ministers:
Jiang Zemin, Hu Jintao, Li Peng, Zhu Rongji and Wen Jiabao.
It is hard to tell who else has power in China, but certainly there must
be high-ranking officers in the
People's Liberation Army
who don't like what is going on,
and they certainly have old friends in the Communist Party.
In the previous days the official Chinese media had freely commented on
the need for former members of the apparatus to stop meddling into politics,
hinting that many of them were guilty of corruption. De facto, this was a
warning issued against those who might have wanted to plot against Xi.
This has sounded like a veiled attack against the Communist Party elders who
used to meet in secrecy
(notably at the traditional Beidaihe summit)
to try and influence central policy. Chinese media
emphasized that from now on the official policies will be discussed in the
open, not in secrecy.
Shortly afterwards, Yongkang Zhou, one of the "elders", became the first member of the politburo standing committee to be purged since the heydays of Mao's Cultural Revolution.
The crusade against corruption launched by Xi upon his inauguration clearly
undermined the army, whose officers are known to thrive on bribes. The most
notorious victim of Xi's crackdown on military corruption was
general Xu Caihou, the second highest ranking military officer.
Whether it is a coincidence or not, only time will tell, but the biggest
embarrassment to president Xi has come from a disaster that has killed 158
people in Tianjin after the explosion of a chemical warehouse. China is abuzz
with conspiracy theories that blame Xi's opponents for having planned that
incident in order to disrupt the anniversary parade.
(There are also rumors of an assassination attempt against Xi engineered by
Chongqing's party secretary).
Many of the purged officials came from peasant families, whereas Xi and his
closest associates are second generation politicians, children of communists
who served under Mao.
Whether a coincidence or not, Xi has launched a massive program of urbanization,
which parallels his call for an economy based on consumption (rural
citizens save, urban citizens consume).
"Urbanization can launch a process of value creation", said Xiang Songzuo, chief economist with the Agricultural Bank of China and a deputy director of the International Monetary Institute at Renmin University.
Someone may have reminded Xi that rapid mass urbanization in countries like
Brazil and Mexico led to slums and lumperproletariat.
In concluding, Xi certainly has enemies.
Xi's peaceful statements contrast with the way the official
media have been speaking about the Internet. The Internet is now presented to
the Chinese public as a battleground between powers intent at destabilizing
each other. De facto, Xi has broadened the definition of "act of war" so as
to include any form of "propaganda" that could harm the sitting regime.
Hence this article that you are reading will not be read in China, and will
de facto be considered an act of war.
Over the years China has banned an increasing number of news organizations,
including at one point this website scaruffi.com. It bans all the social media you
can name (Facebook, Twitter, etc). It now bans even Gmail.
Note that China has been committing cyber-attacks against the USA, but those
don't seem to be included in China's definition of "act of war". In other
words, you are welcome to try and steal top-secret information (that's fair
game), but you are not allowed to publicize widely-available information
that would stir up anti-government sentiments in China.
Xi's cyber-strategy is as much about acquiring knowledge (through
cyber-espionage) as about restricting knowledge (that the masses can access).
Xi has obviously learned from the Arab Spring: the Internet can indeed bring
about regime change even without an armed rebellion.
Xi views China not as an evil censor
but as the victim of ideological and cultural warfare by the West, a victim
that needs to set up ideological cybersecurity to safeguard its very existence.
China does not care whether the USA enjoys absolutely superiority in military
terms (especially since a lot of that military power is used to guarantee
the safety of the trade routes used by China's economy) but China does care
that the USA enjoys absolutely superiority in cyberspace.
China' reaction is to draw borders in cyberspace. At the end of 2013
Lu Wei, head of China's State Internet Information Office, wrote:
"Just as the 17th century saw the extension of national sovereignty over parts of the sea, and the 20th over airspace, national sovereignty is now being extended to cyberspace".
In 2015 the goverment took action, enacting a cyber-security code that has
a simple implication: if you do something in cyberspace that reaches China,
then you are subject to Chinese laws. Hence i can be jailed for publishing
articles about China on the Internet without the approval of Chinese
authorities according to Chinese law. Quote:
"Any person and organization shall, when using the Internet, abide by the Constitution and laws ... they must not use the network to engage in activities harming national security".
A few months ago Russia and China signed an "Information Security Pact" that represents China's first step in exporting this concept abroad
towards multilateral governance of the Internet: the two countries
pledged to make sure that Internet users in each of the two would not
destabilize the other country.
Xi, who is both president of the country and
general secretary of the Communist Party,
has accumulated more power than any of his predecessors since Mao.
He is also much more cosmopolitan than his predecessors.
At the same time he is presiding over the first major economic decline (not
quite a recession) since Mao's times. A two-month collapse in the stock
market has triggered a world-wide the financial crisis whose unfolding is
hard to predict. China is a major economy, but not quite a major economic
power. The part of the world that depends on China's economy is the poor
one: African, Asian and Latin American countries (as well as Russia) whose
economic boom was driven by Chinese demand for their natural resources.
Needless to say, those who got on board
the Eurasian Economic Union, the Silk Road initiative,
the Shanghai Cooperation Organization, and
the Asian Infrastructure Investment Bank hoping to parasite on China's
international ascendency have to scale down their hopes.
In july Chinese exports collapsed 8.3%.
In august China devalued its currency, an action that inevitably caused all
other Asian currencies to decline against the dollar.
Massive capital outflows towards the US could accelerate the depreciation of
the Chinese currency, and consequently of all Asian currencies.
China's reaction to the stock market crash bordered on comic: it arrested
hundreds of traders accusing them of having caused the panic by spreading
Again, the priority was to make sure that information does not hurt the
regime. Saving the economy is a secondary priority.
Or, better, the government thinks that the economy can be saved precisely
by avoiding negative news.
the banking system
Credit has jumped from $9 trillion to $23 trillion from 2009 to 2014.
China is sitting on $4 trillion worth of foreign reserves, that sounds like
a lot but not enough to cover that $23 trillion debt.
During Japan's two lost decades (1989-2009) stock prices fell 90%
in real terms and property prices fell 80%. It is ok if this happens.
It is not ok if someone tells the Chinese that it is happening.
See also The great illusion?.
TM, ®, Copyright © 2015 Piero Scaruffi All rights reserved.
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