HONG KONG: For many of China’s manufacturers of baby and children’s products, painful reverberations from last year’s historic decline in the country’s population are already upon them. Domestic sales are shrinking and the scramble is on to develop new streams of revenue, whether that be diversifying into products for adultsContinue Reading
On March 31, 2023, Russia published its new Foreign Policy Concept. Rapid growth in Asia has fuelled Russia’s drift toward the East and the pivot has now been integrated into official policy. This is a tectonic shift for Russia domestically but the material effects in Asia will be felt gradually.
Russia lists global regions in order of priority in the Foreign Policy Concept. The West has been relegated to penultimate priority before the Antarctic, which signals a 180-degree flip. Moscow asserts its desire for “peaceful coexistence” but the ball is in the West’s court.
Russia’s first strategic priority after former Soviet Union states is the Arctic region. It is only now bringing its plans for the North Sea Route out of the cold. Russia’s moves in the North Sea will have a direct effect on logistics from China, easing its geo-economic difficulties and allowing more efficient transit of goods via Southeast Asia.
The Arctic is also a confrontation point with circumpolar states, which will likely further delay thawing of relations with the West.
While seeking “peaceful coexistence”, Russia does not see a detente with the United States and other Western states in the foreseeable future. This sentiment is illustrated by high-ranking officials including Deputy Secretary of the Security Council Dmitry Medvedev.
Russia’s Foreign Policy Concept lists China and India as its first and second priority relationships with Southeast Asia as its third. China’s importance is obvious, deep and enduring.
So is India’s, considering the tight relationship between Moscow and New Delhi since India’s independence. The long history of cooperation in the military and economic spheres has created significant institutions of cooperation — for example, the joint missile program BrahMos requires deep mutual trust throughout the verticals of government.
Crowded out of global fora, Russia is reprioritizing its relations with regional organizations such as ASEAN going forward, juxtaposing them with Western-dominated groupings including the Quad, Chip4 and AUKUS. The strategy may resonate with Chinese policymakers and roughly half of Southeast Asian decision-makers.
The interest expressed towards joining the BRICS format by 19 states, mostly from the Global South, is evidence that Russia’s bet on non-global decision-making fora can be a winning strategy.
Russia’s foreign policy strategy places economics first. Russia is shifting its economic attention to Asia and will likely concentrate on the rapidly growing nations of Southeast Asia.
Russia–Asia links began to develop long before Russia’s official pivot to greater focus on Asia and prior to the hostilities between Russia and Europe. Links include the Power of Siberia pipelines, increases to the Trans-Siberian railway’s capacity and rejuvenation of the North–South Transport Corridor into Iran.
Frequent references to infrastructure projects now pepper Moscow’s strategy. New market access initiatives in sectors where Russia has an advantage or is on par with the West should be expected. Some of these market initiatives are already visible — for example, India contracted Russia’s Transmashholding corporation in April 2023 to produce trains.
Russian energy, commodities and niche specialties like nuclear technology may be a boon to energy-poor but relatively cash-strapped Southeast Asian states. India becoming one of Russia’s major oil customers is a case in point.
While Russia has no state ideology, its many peoples have long been traditional and conservative. Russia has found itself the de facto defender of thought that is seen as reactionary in the West. As Western values evolve, Western countries find themselves distancing from the Global South.
Russia, in contrast, is moving closer to its southern counterparts and has now made “traditional spiritual and moral values” part of its foreign policy.
This is a significant shift after three decades without explicit value-led foreign policy. Russia will likely use the soft power of tradition to pave the way for market access through press and diplomatic campaigns. In Moscow’s eyes, Russia’s success in Africa shows that backing primary exports by bolstering traditionalist governments is a functional foreign policy model.
Since the first Far Eastern Economic Forum in 2015, Russia has been taking steps to increase capacity, interest and opportunities with Asia. Changes in education, social attitudes and business relationships have laid the groundwork for the pivot that Moscow has now put in writing.
Economies in Southeast Asia are growing and so are potential markets for Russian exports. Russia’s turn to the East is a long time coming and not the effect of conflict in Europe.
The lack of sanctions toward Russia from most Asian states is an advantage and Moscow’s strategy maintains that current negative perceptions toward Russia may yet be overturned to facilitate increased cooperation.
Russia’s foreign policy structure is compatible with China’s Global Civilizational Initiative — both argue for multipolarity in international relations, the importance of resisting hegemony and the need to respect different civilizations.
Compatibility between Russia and China may have a multiplier effect on multipolarity. The entente between Beijing and Moscow in Africa and the Middle East sets a precedent for Asia. Russian and Chinese resources and industry may yet prove mutually reinforcing in Asia.
Despite Moscow’s intentions, Russia’s presence in Asia has been low. But Russia has been laying the groundwork for the pivot for over a decade and Asia is becoming even more vital. Russia’s shift toward Asia may be gradual, taking place in a select range of sectors and focusing on a limited number of countries to start with — but the direction has been set.
Oleg Yanovsky is Lecturer in the Department of Political Theory at Moscow State Institute of International Relations (MGIMO).
This article was originally published by East Asia Forum and is republished under a Creative Commons license.
SINGAPORE: Singapore’s second-biggest lender Oversea-Chinese Banking Corp (OCBC) reported on Wednesday (May 10) a better-than-expected 39 per cent jump in first-quarter profit from a year earlier on the back of strong net interest income growth. OCBC, which is also Southeast Asia’s second-biggest bank by assets, said January to March netContinue Reading
China has ordered a Canadian diplomat to leave the country after a Toronto-based Chinese diplomat was expelled and accused of trying to intimidate a lawmaker.
The Chinese Foreign Ministry announced on Tuesday that Shanghai-based Canadian envoy Jennifer Lynn Lalonde has to leave China by May 13. It said the move is a reciprocal countermeasure to Canada’s “unscrupulous move” to expel China’s Zhao Wei.
Some commentators said the incidents will fuel Canadians’ anti-China sentiment, which has grown since five Chinese police overseas stations were identified in the country last December.
In March 2021, China sanctioned Canadian MP Michael Chong, the Tory shadow minister for foreign affairs, in Canada, over his involvement in a subcommittee that studied the situation of the Uyghurs and other Turkic Muslims in China’s Xinjiang region. The subcommittee had urged the Canadian government to sanction four Chinese officials and a Chinese entity.
Canadian Prime Minister Justin Trudeau said in a tweet at that time that “China’s sanctions are an attack on transparency and freedom of expression – values at the heart of our democracy.”
In the same year, the Canadian Security Intelligence Service (CSIS) wrote in a document that an officer with the Chinese Ministry of State Security had sought information on a Canadian lawmaker’s relatives, who might be located in the People’s Republic of China, for further potential sanctions.
The strictly-confidential report said the Chinese officer’s effort was to “make an example of this MP and deter others from taking anti-PRC positions.”
The report was made public by the Globe and Mail on May 1. Citing an unnamed national security source, the Canadian newspaper said the targeted lawmaker was Chong while the Chinese officer was Zhao.
Chong said in a statement on May 1 that he was disappointed to learn that the Trudeau government had known two years before that Zhao was targeting his family in Hong Kong.
“When the government became aware an elected MP was being targeted for an intimidation campaign by a PRC diplomat here in Canada, they should have taken two actions,” he said. “First, they should have informed me. Second, they should have declared the diplomat persona non grata.”
“The fact that the government neither informed me nor took any action is indicative of its ongoing laissez-faire attitude toward the PRC’s intimidation tactics,” he said.
Trudeau said he learned of the Chong case only after reading the Globe and Mail story. He said the CSIS had not shared the report outside of the agency before.
Chong later told Parliament that while the CSIS report might not have reached the prime minister, if similar cases happen again they need to be evaluated to higher levels in the government. Meanwhile, the Royal Canadian Mounted Police reportedly is investigating the source of the leaked CSIS documents.
It took a whole week for the Canadian government to make a decision to expel Zhao because of the authorities’s fear of China’s economic, consular and diplomatic retaliation, according to Margaret McCuaig-Johnston, a senior fellow at the Graduate School of Public and International Affairs at the University of Ottawa, writing in an article published Tuesday.
If all Sino-Canada trade were to stop, Canada would face a debilitating blow, she says. However, the Canadian government must not weigh the safety of an MP, or any Canadian, against economic losses the country may incur, she adds.
Canada should encourage the development of new markets in other countries, which respect the rule of law, across the Indo-Pacific region, she says.
On Monday, Mélanie Joly, Minister of Foreign Affairs, announced the Canadian government’s decision to expel Zhao.
“We will not tolerate any form of foreign interference in our internal affairs,” Joly said in a statement. “Diplomats in Canada have been warned that if they engage in this type of behavior, they will be sent home.”
“This decision has been taken after careful consideration of all factors at play,” she said. “We remain firm in our resolve that defending our democracy is of the utmost importance.”
Chong was the third “Michael” from Canada targeted by the Chinese government. In December 2018, Canadian consultant Michael Spavor and former Canadian diplomat Michael Kovrig were detained in China on charges of espionage, shortly after the arrest of Huawei Technologies’s chief financial officer Meng Wanzhou in Canada.
After Meng reached an agreement with US prosecutors and was released in September 2021, both Spavor and Kovrig were freed.
Anti-China sentiment
Simon Lau, a Canada-based Hong Kong commentator, says Trudeau has no choice but to expel Zhao as the Liberal Party he represents needs the support from the New Democratic Party to maintain a majority in the Parliament.
Lau says the book Claws of the Panda, written by a former Canadian security agent in 2019, revealed that Beijing had launched campaigns to influence Canada since the 1990s but the Trudeau government turned a blind eye.
He says most Chinese people in Canada are afraid to speak out against China as they don’t want their relatives in Hong Kong and mainland China being intimidated. As a result, he says, pro-Beijing groups now dominate the voice of Chinese in Canada.
According to Statistics Canada, there are about 1.71 million Chinese people, or 4.7% of the 36.32 million population, in Canada.
Lau also says many Canadians are worried after Madrid-based human rights campaigner Safeguard Defenders revealed last December that Beijing has set up more than a hundred overseas police stations globally, five of them based in Canada.
Citing its latest survey, Angus Reid Institute, an opinion research foundation in Canada, said in March that 62% of Canadians say their federal government should view the Beijing regime as a threat or an enemy. By comparison, 72% of surveyed Canadians say that Russia should be viewed as a threat or an enemy while 58% have a positive impression of the US.
Beijing’s response to Zhao’s expulsion was bitter.
“China never interferes in other countries’ internal affairs,” a spokesperson of the Chinese Embassy in Canada said in a statement. “Instead of protecting China’s diplomatic and consular personnel’s legitimate rights, the Canadian side has chosen to condone and echo the anti-China forces’ hype-up and conduct extreme actions against a Chinese consular official. China does not accept this completely.”
The spokesperson added that if Canada continues to act wantonly and arbitrarily, it will be met with China’s resolute and strong reactions.
“The Canadian side ignored China’s diplomatic discontent and declared a Chinese envoy persona non grata on the grounds of the lies of China’s interference in Canada’s internal affairs,” Wang Wenbin, a spokesperson of the Chinese Foreign Ministry, complained during a media briefing on Tuesday. “China strongly condemns and resolutely opposes this, and has expressed diplomatic discontent and lodged strong protests against Canada.”
Wang said it is ridiculous that Canadian media and politicians spread fake information by citing some so-called confidential documents and smear China with their political manipulation driven by ideological bias. He said the expulsion of Zhao violated a basic international principle and undermined Sino-Canada relations.
He said it is just and necessary for China to expel Lalonde. He said if Canada does not stop its unreasonable provocations, China will definitely fight back while Canada will face the consequences.
Read: China ‘will talk,’ but only if US changes its tune
Follow Jeff Pao on Twitter at @jeffpao3
PARIS: Indonesia has reported an outbreak of African swine fever on a farm on the Riau Islands near Singapore, the World Organisation for Animal Health (WOAH) said on Tuesday (May 9). The outbreak that killed 35,297 pigs in a herd of 285,034 on a farm located on Bulan island wasContinue Reading
SINGAPORE/PARIS: The resumption of live pig production and exports from Indonesia’s Pulau Bulan could take up to a year, said the Singapore Food Agency (SFA) on Tuesday (May 9).
Singapore stopped the import of live pigs from the island after African swine fever (ASF) was detected in some pig carcasses, said the agency last month.
The carcasses were from a consignment of live pigs from Pulau Bulan and have been removed from the abattoir line.
The World Organisation for Animal Health (WOAH) on Tuesday said Indonesia had confirmed an ASF outbreak on a farm on Pulau Bulan.
In a Facebook post, SFA said Singapore authorities would continue to assess the situation.
“Such food supply disruptions can happen from time to time. We will continue to work with the industry to diversify our import sources and strengthen our food resilience,” it said.
For example, Mexico was recently approved to export chilled pork to Singapore, SFA noted.
President of the Meat Traders Association in Singapore Alvin Kwek also added that its members have activated “more than 20 sources” of chilled and frozen pork from different countries.
They have sufficient stock of frozen pork to last for “months” should the supply chain for pork be disrupted, he said in a press release.
“We urge industry players and consumers alike to be open to alternative supply sources and remain flexible by considering using chilled or frozen pork from alternative sources.”
SFA also urged consumers to explore “other protein options”.
Citing Indonesian authorities, the Paris-based WOAH said the ASF outbreak had killed 35,297 pigs in a herd of 285,034 on a farm on Pulau Bulan.
The outbreak was detected on Apr 1 and confirmed on Apr 28.
Pulau Bulan is located within the Riau Islands and adjacent to Batam island.
ASF is not dangerous to humans but is fatal for pigs. It has plagued China for years, with an initial wave during 2018 and 2019 killing millions of pigs and leading to a dramatic decline in meat output that roiled global markets. China is facing a recent surge in infections this year.
The source of the Indonesian outbreak is still unknown but veterinarian authorities told WOAH that humans, vehicles, feed, flies and wild boar may have played an important role in the introduction of ASF on the farm.
They also confirmed that the investigation started after the disease was detected by Singapore’s SFA in imported pigs.
SINGAPORE: A digital platform for financial institutions in Singapore to share information on suspicious customers or transactions will be set up after parliament passed the Financial Services and Markets (Amendment) Bill on Tuesday (May 9).
The new platform will be jointly developed by the Monetary Authority of Singapore (MAS) and six major commercial banks – DBS, OCBC, UOB, Standard Chartered Bank, Citibank and HSBC.
These banks will be given access to the platform, called the Collaborative Sharing of Money Laundering/Terrorism Financing Information and Cases (COSMIC).
It is set to be rolled out in phases, starting from the second half of 2024.
In the initial phase, COSMIC will focus on three key financial crime risks in commercial banking, namely abuse of shell companies, misuse of trade finance for illicit purposes and financing that aids the proliferation of weapons of mass destruction.
Sharing of information will be voluntary during this initial phase that will last for two years.
This is to allow the platform to achieve operational stability while MAS engages financial institutions to calibrate features and address operational issues, said Minister of State for Trade and Industry Alvin Tan as he tabled the Bill for a second reading.
MAS intends to make information sharing mandatory for higher-risk situations in the later stages, as well as widen COSMIC’s coverage to include more risk areas and financial institutions.
Further legislative amendments will have to be proposed in the later stages to effect these mandatory requirements. MAS will consult the industry and the public before introducing these amendments, a spokesperson told CNA.
The initiative is part of efforts to beef up Singapore’s defences against money laundering and financing of criminal activity.
Mr Tan, who is a board member of MAS, said that while financial institutions have made significant strides in this aspect, they are currently unable to warn one another about unusual activity involving their customers given customer confidentiality obligations.
“Criminals exploit this by making illicit transactions through different financial institutions to avoid detection,” he added.
COSMIC, which aims to eliminate these information gaps, will “make it easier for financial institutions to detect and thereby deter criminal activity”, Mr Tan told the House.
Currently, Singapore’s Banking Act mandates that regulated financial institutions and their officers uphold confidentiality when handling customer information.
A private-public partnership, dubbed Anti-Money Laundering and Countering the Financing of Terrorism Industry Partnership (ACIP), was established in 2017 to allow the MAS, the Commercial Affairs Department (CAD) and financial institutions to share specific information on a case-by-case basis.
Such a mechanism has “built trust among stakeholders” and demonstrates the benefits of information sharing, MAS said in response to CNA’s queries.
COSMIC will allow such information sharing “to be conducted at scale and in a structured format, to more efficiently and effectively pick out suspicious actors”, the spokesperson said.
More threats are likely to surface in the long term amid the intensifying efforts by Washington to cripple China’s ability to produce advanced computer chips, said Lin Han Shen, senior adviser at the Asia Group consulting firm in Shanghai. But China’s traditional strengths in mass production, and its ability toContinue Reading
Getty ImagesLinkedIn has become the latest tech firm to axe jobs, closing 716 roles out of a 20,000 workforce.
The social media network which focuses on business professionals will also phase out its local jobs app in China.
In a letter by the company’s chief executive Ryan Roslansky, he said the move was aimed at streamlining the firm’s operations.
In the last six months, firms including Amazon, LinkedIn’s parent Microsoft, and Alphabet have announced layoffs.
“With the market and customer demand fluctuating more, and to serve emerging and growth markets more effectively, we are expanding the use of vendors,” Mr Roslansky wrote.
He also said the changes would result in creating 250 new jobs which employees affected by the cuts in its sales, operations and support teams would be eligible to apply.
After mostly withdrawing from China in 2021, citing a “challenging environment”, the remaining app called InCareers will also be phased out by 9 August. InCareers only covers the Chinese market.
A LinkedIn spokesperson said the firm will keep a presence in China to help companies operating there to hire and train employees outside the country.
LinkedIn has been the only major Western social-media platform operating in China.
When launched in 2014, the firm had agreed to adhere to the requirements of the Chinese government in order to operate there.
At the time, US senator Rick Scott called the move a “gross appeasement and an act of submission to Communist China”, in a letter to LinkedIn chief executive Ryan Roslansky and Microsoft boss Satya Nadella.
When President Xi Jinping came to power at the 2012 Party Congress, he had to face serious and systemic challenges to the structure of the Chinese state.
Simply speaking, these challenges were branded “corruption.” But it was far more than corruption; it was the complete disruption of the decision-making process of the state coming after years of festering of long-existing problems.
It was unclear who made decisions, how, and through what process; things could be hijacked at any moment for any given reason. The Chinese state was facing unprecedented fissures that could disrupt the country and, by extension, also create significant problems abroad.
This predicament didn’t happen because of ill feelings or the lousy judgment of past leaders but because China was facing new problems the old state structures had not been geared for since the beginning.
In 1949, when the People’s Republic of China (PRC) was established, the new country was facing issues that were unprecedented in its long history.
Unlike other dynasties established through foreign intervention (like the one founded by the Manchu in 1648) or through “popular revolutions” (like the one that put the Ming Dynasty in power in 1368), the PRC didn’t want to brush up and reenact the feudal dynastic past. That is, it didn’t want to reapply most of the toolkit that made the Chinese state reestablish itself over and over again during the past 20 centuries.
The PRC was founded by a Western-inspired Communist Party that believed the old Confucian thinking was the root of decadence. The fall of the past dynasties was due to imperial thinking and imperial statecraft. Therefore, the new state had to be grounded on different rules.
However, these rules were not ready-made. China possibly never suffered a similar situation.
In the third century AD, China was returned after centuries of internal wars that slaughtered most of the population. Amid the vast bloodshed, China also went through an unprecedented cultural and intellectual revolution.
Buddhism came to China from India and radically changed the Chinese way of thinking about the world. After some five centuries of turmoil and strife, and an uncertain power balance, a unitary China was re-established under the Tang dynasty. And the empire was very different than before.
A similar political and cultural shock swept China in the last moments of the Qing empire through the civil war, the Japanese invasion and the foundation of the People’s Republic. China was searching for a new identity, a new way of thinking and a new way of ruling itself.
The PRC underlined its specific nature by calling on “Chinese characteristics.” These Chinese characteristics were to set apart the Chinese Communist Party (CCP) from the Russian Communist Party and claim that the CCP and, therefore, its PRC were to be quite different from the USSR and how it was managed.
In the first decade or so of the PRC, the influence of the Soviets was paramount in China; still, after less than a decade or so, the PRC started to shed the Soviet influence and tried to move in a different direction, which was not that of Moscow, not the example of Western countries, and not the feudal past of China.
It was uncharted territory where only the wisdom and the practical sense of the leaders of the time tried to move statecraft and decision-making along.
Without points of reference, however, the Chinese state soon became engulfed in a messy decision-making process that eventually centered only on Mao Zedong, who ruled by basically issuing statements that were to be followed countrywide.
The fledgling structure of the state set up after the republic’s foundation, the Party design that took shape in the anti-Japanese resistance and then the civil war, and the first attempt to manage the country were de facto destroyed by this method of ruling and the systemic punishment and re-education of Party leaders.
In 1976, at the end of Mao’s rule, the Party and the country were in shambles, and it was not clear how they could move forward. Everybody was disillusioned and didn’t believe in the Party any longer. Fortunately, at the time, China was not under heavy external pressure and the demise of Mao’s rule created new hope in the people.
The country therefore managed to move forward. The big step in moving forward was Deng Xiaoping’s reform and opening up, which provided economic inspiration and real fuel for the nation. It motivated everybody and also held the country together because collectively the Chinese felt that they could get to a better tomorrow.
On the other hand, as a system of rule, Deng Xiaoping and his comrades established a new arrangement that tried to bring new order to Mao’s previous autocratic personal rule. They set up an agreement by which Deng was the first among a group of Party veterans called to make important decisions through consensus. This method created some confusion because it divided the power of the party, the power of the state and the power of the army without clear boundaries between their competencies and attributions.
In some Western countries, power is attributed to different parties but each has some borders on its strengths. In the United States, for example, the Federal Reserve can intervene in money supply, but the president cannot. There are some gray areas, but if somebody steps into them, there is a whole array of institutions and procedures to sort them out clearly and fairly quickly.
Yet borders of attributions of power were unclear in China at the time. This lack of clarity contributed to the situation of 1989, when confusing and contradictory orders came from the top to the ordinary people. People didn’t know what to obey and they chose to follow what they liked.
It was also a time when different ideas came from society, and it was unclear how the central government should respond to them. From the late 1970s to maybe the early 1990s, there was talk of the fourth modernization: democracy.
Until the late 1990s, there were strong voices in the Party—supported by Qiao Shi, then-chairman of the National People’s Congress and president of the Central Party School—claiming that the rule of law should be paramount and should be followed by the Party, and that the Party shouldn’t be above the law but subject to the law.
These drives and confusion over the lack of clear borders in the top leadership led, after 1989, to the decision to concentrate power in one man, Jiang Zemin. At the 1992 Party Congress, he had all the levers of power in his hands. He was president of the state, general secretary of the Party and chairman of the military commission.
Still, this concentration of power was largely formal and not totally real because power was still distributed among elderly veterans who could have influence and essential sway over the decision-making process of the Party and the government.
Meanwhile, the push for putting the Party under the law never quite worked out, as it conflicted with the notion that the Party had a role in the ultimate leadership of the country. This was difficult to reconcile with the idea of subjecting the Party to the rule of law.
For a spell, Jiang Zemin managed to have greater power than everybody else. After the death of Deng Xiaoping in 1997, he was the unchallenged paramount leader of the Party. Still, the decision-making process remained unclear.
Because of the rules the Party set up in 1997, Jiang Zemin was supposed to retire in 2002; however, contravening those rules, he stayed officially in power until 2004, and actually he carried on having influence and authority even after that year.
It created a situation in which the following top leader, Hu Jintao, although officially the head of the party, the state and the army, had to juggle different pushes and pulls from Jiang and retired leaders, and also pushes and pulls from members of Politburo and the Standing Committee of the Politburo.
The decision-making process became even more chaotic, confused and disorderly than before, leaving ever-more significant loopholes for corruption and profiteering that were pillaging the country’s wealth. The process was accompanied by massive economic growth, creating unprecedented wealth for everybody but at the cost of growing social disparity, ballooning internal debt and ample chaos in the organization of the Party and the state.
On the surface, it produced the phenomenon of corruption for ordinary people. Junior and senior officials took large amounts of money in return for favors granted to private or public companies. Corruption was just a superficial sign of a much deeper issue: a profound disruption and the messy situation of the decision-making process in China.
How could one make decisions? Ideas come from below and from above, findings come from sides and everything was total mayhem. The two episodes of the ex-Chongqing Party chief Bo Xilai and ex-chief of the Party general office Ling Jihua showed that senior leaders were not following the rules at a very senior level, the Politburo level.
The condition was messy and difficult to understand, let alone set in order. Not only was the Party not subjecting itself to its rules and regulations, but senior leaders were shunting all laws in the name of their pursuit of personal power. It was breaking the Party and the country apart. If the state crumbled, there would be no business opportunities either. It would simply be a time for pirates plundering the spoils.
Xi Jinping came to power with this tricky situation in the background. His answer, correctly so, I believe, was to concentrate power in his hands and establish direct and clear lines of communication and decision-making in the country, bringing borders and limits where the situation was getting muddled and entirely out of hand.
Perhaps even worse than during the time of Mao and the establishment of the PRC, for Xi there were no clear precedents and no clear examples to use. He apparently tried to find some inspiration in the imperial past, but knew very well that the imperial history was just an example, an inspiration, and not something that could be used fully in the new China.
The other ready-made tool, known to himself and his cadres was the old communist, Soviet-era party organization. The imperial past culture and the Soviet precedent were the two instruments for his consolidation and reorganization of power in China.
Democratic institutions were not present, nor was tradition and thinking. Conversely, some parts of the Party, looking at the present situation in China compared to the United States and India, the latter a democratic country similar in size to China, didn’t understand democracy and came to believe it was unsuitable for China’s dimensions and traditions.
Xi was facing issues that China possibly had not seen since the fall of the Zhou dynasty sometime in the 7th or 8th century BC—that is, the fall of an old “imperial” order and the creation and the birth of hundreds of independent states , each claiming its own tradition and hierarchy.
It was a situation of permanent war when states were destroyed and entire peoples were annihilated. Then different pundits tried to bring order by setting clear rules of engagement between existing states, as, for instance, seen under the Confucians or the Mohists.
Eventually, the Qin state managed to eliminate all competing states and established a short-lived tight order that lasted only a few years before plunging the country back into chaos until the Han strenuously managed to piece together a different set of rules in a newly unified empire. That empire became the paragon and example for all realms in the future.
In 2012, there was little or nothing of practical use for Xi and his allies to apply in the new situation. But the example from 25 centuries ago may illustrate the kind of confusion that he was facing. The risks were perhaps not as dangerous, but the intellectual challenges to produce something new without any script to follow were there.
Of course, Xi was not literally facing the disintegration of the state, but the process of its meltdown was in place. He responded that while working on the integration of the state, he had to concentrate power and establish clear channels of organization and decision-making processes.
The anti-corruption fight was the superficial reason for this process, but the deeper reason was the reorganization of the state along more efficient lines. He decided to do that along contours that the official Chinese bureaucracy managed to understand. He took inspiration from the imperial past and ideas from the Soviet tradition.
Both are part of Chinese political culture and could help China quickly reshape itself into an effective administration. Other paths could have been more challenging and might have taken longer with uncertain results.
Xi did it: He uprooted corruption. He established a new set of rules that led up to him and his decision-making, and therefore created an organized system for facing internal and external problems. The system externally may look like the old imperial system. In it, everybody is subject to the law, except the top leader, who can move the needle of the law, if necessary, in one direction or another.
But nobody else can, and therefore he managed to reinforce and isolate power.
However, this seems to be a process that has not been ultimately ended. There are clear challenges to this effective yet rigid way of ruling the country. China established an immense bureaucracy grounded on the 97 million member-strong Party.
While in the imperial times the official bureaucracy organized by Beijing didn’t go below county levels, in modern China, we have two new phenomena. Bureaucracy goes down to the village level, a community which may have only 2,000–3,000 people. They were for millennia ruled by affluent families of landowners who contributed massively to the national treasury with their taxes. Now, private hoarding of land has disappeared.
Moreover, for the first time in Chinese history, the countryside itself, for centuries home to some 95% of the population, is being wiped out. It is happening in two ways: by moving peasants and farmers to the cities, which are now home to over 60% of the population; and by urbanizing the countryside, so that most counties have urban facilities and organization.
These elements created a bureaucracy that is far greater in size than any other bureaucracy in the world in a country with a population far more significant than at any other time in Chinese history. And despite the aid and the support of critical new technologies such as electronics and computers, there is only so much, or so little, that the top leadership can do and decide in any given day.
The challenge for the future is, how can you make the Chinese bureaucracy responsible and proactive in performing its duties?
One answer, of course, is motivational—through political education. However, this may not be enough because of the fear of making mistakes or of doing something wrong. There is also a lack of upside—that is, there will be few or no prizes, or prizes will be extremely rare or questionable if something goes right.
Therefore, these de facto elements push officials to be loyal but not to take initiative because they don’t know how the top leadership thinks or how they will judge their performance.
Any judgment at the time could be wrong in the future, and the idea of guessing the intentions of the top leadership could also be risky as it could create conflict and friction with other middle-ranking officials.
It creates new challenges for the present government. However, each new policy solves some problems and, in the longer run, creates other problems. Since ancient times, the Chinese political tradition recognized politics as like timely rain.
It cannot rain too much; it cannot rain too little. Sometimes it does not need to rain, and sometimes it needs to rain a lot. That is, new policies create new problems, which must be addressed in a new way, opening up new solutions and perspectives for the country.
Xi has effectively concentrated power and has made decision-making cleaner and more direct. However, in directing internal and foreign problems, which are growing more and more complex, he’s facing not wrong decisions, not corruption, but inertia because it is simply tricky to act in such a substantially rigid system.
The lack of proactivity in a country could be tolerated and digested if two other elements did not pressure the country. One factor is that the domestic market economy needs proactive pushes by entrepreneurs and government officials to make decisions on the spot and take risks.
But if taking risks routinely results in punishment, nobody will take risks. De facto entrepreneurship will subside, and at the same time, the market economy will become less vibrant, with a massive impact on the overall economy.
The second challenge is external. The external situation for China is highly volatile, complex and complicated. Countries around China and Western countries are increasingly dissatisfied with China and defy China with new issues almost daily.
These issues should be handled systemically and we cannot wait for the top decision-maker to call the shots and move ahead. These internal and external elements were very different two or three decades ago and were extremely important for the development and growth of China’s economy, society and politics.
The vibrant internal and dynamic external markets made it possible for China to open a new road and contribute to the world with great wealth.
It means that the opening internally and externally is essential to China’s welfare and well-being and has contributed to the rise and consolidation of power of President Xi. Therefore, the future of the Party and Xi’s rule is to adapt this Party structure to something that can fit both the internal and external situation.
If, conversely, it pulls out from the international free market and suppresses the vibrant internal market, the country and the Party will suffer greatly.
The challenges then are how to adapt fast to the internal and external pressures. This is a task that Xi already faced in 2012, coming from unprecedented decisions, and now the Party should study deep and hard, and dare to have bold ideas and make bold decisions that can project the country into the future.
Here, there is an exciting element in Xi’s reforms. He created a clear division of powers between officials and enterprises for the first time. Deng’s reforms transformed all officials into entrepreneurs. In the name of “getting rich is glorious,” some officials ran their administrations, and at the same time, they ran their businesses.
They did it personally at first. When limits and rules were introduced, they did it through family, friends and supporters—and administrative and financial chaos resulted from the system, which went on unregulated and undisciplined.
Again, there is also a continuity between business and administration abroad, and solutions are not clear-cut and definitive. Still, long-term practices and regulations limit what can and can’t be done. In China, it was far more confusing.
Along with foreign experiences, Xi’s reforms have ruled that officials can’t take a direct role in business, and businesses have only clearly marked venues to deal with officials. This division of competence is one of the hallmarks of modernity. It could be one of the essential venues for solving the new issues emerging from completing the first part of Xi’s reforms.
In the imperial past, private wealth was subject to the goodwill of the emperor, but there was a basic guarantee – imperial power didn’t get down to the county level. Therefore, if someone were only rich at a lower level, the emperor would guarantee “basic affluence.”
Now the Party can go down to the village and, in theory, strip anybody of all his means. One can lose everything for doing the wrong thing at the wrong time, even inadvertently.
Moreover, modernity sets up laws and institutions that secure the safety of one’s property and market actions. Without these securities, no significant economic activity can take place.
Foreign and Chinese entrepreneurs can get these securities in other countries and thus expect to get them in China if they have to risk their capital. Otherwise, they can idly spend their money or invest elsewhere, where they can calculate their risks more clearly.
During past “corruption times,” risk calculus was somewhat clear. Short of a clean and transparent investment environment with laws, institutions and procedures, an investor had to get the protection of a significant power broker and know the ropes in navigating the system complex like a jungle.
The main challenge was finding the right broker and guide in the jungle to provide timely access to necessary permits and ways forward—someone who knew who’s who and how’s how. It was a market for opportunities and people.
The old ways have been banned but no transparent market institutions and guarantees exist. Without them, it could take decades, if ever, to have a large number of entrepreneurs eager to risk again their capital on something that could change overnight, as happened with the Covid crisis, at its onset and end.
There is a trust deficit between the state and entrepreneurs. The trust deficit is presently managed if businesses are already in China and can’t really pull out of the country or if people have access to the top leadership and personally trust them. These are limited numbers and can only increase at a limited speed.
As such, even resorting to a return to the old “corruption ways” could not really solve the present trust deficit. It would lead back to the old risks of state and Party dissolution.
Deng realized the Party’s power was proportionate to the wealth it generated. He let it happen openly, with the direct involvement of Party officials in economic activity, which created chaos that was spoiling wealth creation. Xi addressed the mess, but he cannot put wealth creation at risk. The necessity for orderly process and proactive enterprise must be somewhat reconciled.
Plus, the foreign environment has dramatically changed, which is conditioning the domestic investment climate. Before, it was favorable and relatively easy; now, it has grown more complicated and hostile. For this, China can hope to invent something completely new or just adapt what is already there.
This essay first appeared on Settimana News and is republished with permission. The original article can be read here.