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Articles on China after 2014
The Democracy Virus
Domestic and foreign challenges for China
China's paradox
So you want to be a superpower?
Articles on China before 2014

  • (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.
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  • (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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TM, ®, Copyright © 2015 Piero Scaruffi All rights reserved.