Hello and welcome to the final edition of Series 2 of What China Wants.
As I’m sure you are aware by now, the purpose of this newsletter is to examine China’s global rise and to understand what it wants to do with its newly found wealth and power. Does Beijing seek to fit into the existing global order, or instead does it want to remould things into something entirely different?
As we saw in Series 1, it’s very clear that China is trying to shake things up internationally. Beijing has a strongly pronounced vision of a new world order in which it, rather than Washington, is top dog in everything from technological standard setting to military might.
The challenge, as every leader knows, is turning vision into reality. What we have seen in Series 2 is that Beijing faces a number of hurdles in its global push.
Some, such as the development of a Western-led alliance to counter some of China’s more aggressive moves, are external. The possibility of an American financial embargo is of particular concern. Such a move would deliver a hammer-blow to a country that still relies on dollars to pay for its basics like food and fuel, and access to Western capital for its growth.
Many of the challenges facing the country, however, are internal. These include its shocking environmental record, the massive gap between rural and urban, hundreds of millions of chronically undereducated workers, and a shrinking labour force. There are also deep-seated structural issues, for example in the real estate sector (see my interview with Stewart Paterson discussing Evergrande), which could destabilise the economy.
President Xi is certainly concerned by the challenges facing his country, and this worry has been behind the recent Red Reset that is rippling across the country. According to Xi and his advisors like Wang Huning, the difficulties faced by China – economic, social, and political – can only be solved by tightening central control and returning to a purer form of socialism. Whilst this may shore up the Party in the short term, there is distinct concern that this is not the way to win in the end: high-value growth has never been sustainably achieved through centralised state planning.
That said, the new economies of technology and data might allow the CCP to buck the trend, but it is a significant risk. Despite China’s bluster, there is every possibility that it will join countries like Mexico and Russia in not escaping the middle-income trap. This would be a severe test of the CCP’s leadership after years of ramping up domestic expectations about where China is headed.
Still, this doesn’t mean China is a busted flush - far from it. Indeed, Beijing is ramping up its efforts to court the world, especially the developing nations in Africa and Asia, in a multi-pronged push. Its economic influence is rising, and so is its political sway.
Not only that, but it is trying to export its values and its political systems with increasing vigour. For instance, changing the international technological standards of everything from the internet to the autonomous vehicle development platforms will remove “nefarious Western influence”, whilst providing its companies with better commercial opportunities. And by encouraging nations to embrace its Party-Army model, where the ruling party co-opts the armed forces as a branch of its own organisation (as is the case in China), it is able to win the elites of some of the more corrupt nations over to its side. Zimbabwe is an obvious example.
You will note that I have not included debt-trap diplomacy in this list. Personally, I’m not convinced that this is a major issue outside of a small handful of nations, as my interview with Luke Patey revealed. What is more important for Chinese influence is the broader economic structures being put in place, like trade dependency and critical infrastructure investment through the Belt & Road Initiative, that tie nations closer to Beijing. I’ll further explore all this in Series 3.
In sum, China’s rise is not written in the stars - there is plenty that can go wrong for it over the coming years, both inside and outside its borders. What it won’t be is boring.
Many thanks to all my interviewees these past few months, and to you for reading and providing all the feedback and conversation.
On a final note, please do check out my “Chinese TV & books to enjoy this Xmas” – and if you are interested in Chinese history, then have a look at the latest in this series, all about the fall of the Ming Dynasty. That post contains links to all the other China history newsletters.
Merry Christmas and here’s hoping for a calmer, safer 2022. See you for Series 3 in the New Year.