NPC highlights China’s problems

S P SETH

That there are problems with China’s rapid economic growth has been known for some years. After double-digit growth rates over many years in the past, China is now settling for single-digit growth. Last year it was 7.4 per cent, said to be the slowest in more than two decades. This year, as announced by Premier Li Keqiang, it would be “about 7 per cent”, half-a-percent down from last year’s aspiration of “about 7.5 percent”, and a “new normal” for the Chinese economy. Speaking at the annual session of the National People’s Congress (NPC), Li was quite candid about the problems facing China’s economy, even though its growth rate would still remain the envy of many countries. In his annual report card, he said, “With downward pressure on China’s economy building and deep-seated problems in development surfacing, the difficulties we are to encounter in the years[s] ahead may be more formidable than those of last year.”

After Mao Zedong’s death in 1976 and the end of the Great Cultural Revolution, which turned China upside down during the sixties and into the seventies, China was set on a high growth trajectory during the eighties under Deng Xiaoping as China’s new helmsman. Despite the great convulsion of the students-led democracy movement of 1989, put down by the army, Deng managed to keep the ship of the state on an even keel committed to keep the economy growing and to transform China into a strong country. In the process, he was prepared to discard communist ideology to favour capitalist growth but under the tight political control of the Communist Party of China (CPC). And he didn’t mind if this made some people rich and increased the rich-poor gap. It also greatly widened the gap between coastal regions as the favoured development zones and the interior of the country, as well as between urban and rural areas. Everything else was subordinated to the economic growth index.

In the process, over the years, such high-speed industrial development led to all sorts of problems. The growth of urban industrial centres encouraged developers and their party backers to virtually expropriate rural lands on the outskirts of overlapping boundaries, with nominal or very little compensation causing social tensions. Of course, such developments led to a tremendous boom in real estate prices, making developers very rich and contributing to a bubble/bust situation. So much so that some of these apartments and estates have no buyers because of the their high price tags.

Another serious problem from such high-speed development has been the plague of corruption from highest to low levels of the party and bureaucracy. President Xi Jinping has made the eradication of corruption as his crusade, and some high rollers in the party have become its victims. It sometimes has the look of a political purge and is causing some fear in the party ranks and among associated people, like relatives and cronies occupying cozy and powerful positions in state monopolies. And it is also said to extend to the military. But the high-pitched anti-corruption drive seems to go well with people who have been sick of everything goes in the system. Talking of corruption, Premier Li said in his NPC report, “Shocking cases of corruption still exist. Some government officials are neglectful of their duties, holding on to their jobs while failing to fulfill their responsibilities.”

As China’s pollution levels having been rising, environment has emerged as an important public policy and health issue. Premier Li duly touched on it in his report when he told the NPC delegates that, “Environmental pollution is a blight on people’s quality of life and a trouble that weighs on their hearts.” China’s cities, like Beijing, are blanketed with smog and one often sees people wearing masks to minimize its health dangers. China’s acute environmental problem is largely due to the overriding primacy of development over other considerations and failure to devise a comprehensive integrated national policy factoring in other factors. But China is not the only culprit in this regard. It has been, like other developing countries, a late starter in economic development when enough damage had already been done to the environment due to industrial development in, what are now called, developed countries.

But there are indications that China is now taking environmental pollution seriously. A recent joint announcement with the US on addressing climate change suggested that China’s carbon emissions should peak by 2030, starting a downward process from then on. It will increasingly reduce the use of fossil fuels like coal, cut energy intensity, expand trials for trading in carbon emissions, use non-fossil fuels like solar, and further expand its nuclear energy sector. The environmental pollution is of great public concern. A documentary on the subject, Under the Dome, on China’s catastrophic smog went viral on the internet viewed by many millions before it was ordered to be removed for fear of “hyping” up people’s concerns. Indeed, before it was ordered to be withdrawn, the documentary won praise from China’s new environment minister, Chen Jining. He also said that China faced an “unprecedented conflict between development and environment.” Despite internet censoring of the documentary, President XI appears serious on the issue of climate change. He reportedly said the other day that China would punish “with an iron hand any violators who destroy ecology or environment, with no exceptions.” How successful and how soon environment would become an important determinant of China’s overall development priority would remain to be seen.

An important element of China’s modernization and building a strong country has been, and is, an emphasis on modernizing and expanding its defence forces. There are two reasons for this. First, China is seared by historical memory of its humiliation at the hands of, first, the west and then Japan. The two opium wars imposed on China by the British in the 19^th century are an illustrative example of the first. And Japan carried on its depredations through the thirties and during WW11. And now that China is strong it is determined to not let this happen again. But the flip side is that Beijing not only wants to be militarily strong to defend itself but it also wants to turn Asia-Pacific region into its regional enclave as, it believes, it was historically when China was the centre of the world.

And this is creating a lot of tension with its neighbours over sovereignty of some of the disputed islands in South China Sea and East China Sea. China is determined to hold its ground and has been increasing its defence budget by double-digit figures over several years now. Officially, China’s defence budget last year was $132 billion, the second largest after the United States where it is inching towards $600 billion. Justifying such rise, a spokeswoman for the NPC said, “As a large country, China needs the military strength to be able to protect its national security and people.”

All in all, the picture that emerged from the NPC session is of a country, led by the Communist Party of China under its general secretary Xi Jinping, who is also  President of the country, confident of steering the ship of the nation to revive China’s ancient glory. The important question is: will its neighbours accept China’s version of its history and geostrategic vision? That might be examined some other time.

Note: This article first appeared in the Daily Times.

Contact: sushilpseth@yahoo.com.au

        

China and Afghanistan

S P SETH

Afghanistan has historically proved to be the graveyard of foreign powers trying to interfere in the country to advance their own interests. During the 19^th century’s two Afghan wars, the British found it to their cost that it was not possible to subdue Afghanistan. In the nineties, Moscow’s military intervention contributed to the collapse of the Soviet Union. And starting in the new century, the US and its allies have failed disastrously to pacify the country and create a self-governing political architecture. Now China is reportedly envisaging an activist role to mediate/reconcile the Taliban and the Afghan government in the wake of substantial US withdrawal. Of course, China’s role, if pursued seriously, is different because, as of now, there is no suggestion of a military component in it. It would for the most part be political, leading to economic benefits. The problem, though, is that in Afghanistan any substantive initiative of any sort leads incrementally to military involvement of one kind or the other. But that would be in the future, if it were to happen.

This is how China’s foreign minister, Wang Yi broached the subject during a recent visit to Pakistan. He said, “We will support the Afghan government in realizing reconciliation with various political factions including the Taliban.” And he added, “China is ready to play its constructive role and will provide necessary facilitation at any time if it is required by various parties in Afghanistan.” Dwelling on Pakistan’s role, Wang said, “I have got a strong sense that Pakistan takes very seriously the issue of Afghanistan and it has a strong will to take a constructive part in the resolution of this matter.”

The Chinese foreign minister’s announcement in Pakistan would suggest a serious intent to facilitate a resolution of Afghanistan’s intractable problem. And in this way Beijing was indicating its special interest reflecting that, in some ways, it regarded the region as part of its sphere of influence. At the same time, Wang seemed to suggest that China was on the same page as Islamabad to resolve the issue.

China obviously has an advantage over other disastrous foreign adventures in Afghanistan. First, as noted, there is no suggestion of a military component in its proposed initiative. Second, China has excellent relations with Pakistan that regards Afghanistan as its strategic space. Therefore, Pakistan’s own strategic rationale against India might dovetail into the two countries’ shared objectives. Which should propel Pakistan to lean on Taliban to be coopted into Beijing’s grand design.

In the past, China has generally avoided such a role in the affairs of other countries. Its inclination to be so involved in Afghanistan would, therefore, be highly unusual. And there have to be some potent reasons for it, especially when it doesn’t look like that all the concerned parties in the Afghan scenario have sought China’s role, though the Afghan government appears to have done it. By handing over some of the Uighur militants and separatists from China’s western province of Xinjiang, Kabul has gone out of the way to show its goodwill in a matter that is of great concern to China. Which is the persistence of Uighur Muslim insurgency and separatism plaguing Xinjiang. One of the Afghan security officials involved in the transfer to Chinese authorities of the Uighur prisoners reportedly said that, “We offered our hand in cooperation with China and in return we asked them to pressure Pakistan to stop supporting the Taliban or at least bring them to the negotiating table.”

From the Afghan government’s viewpoint, it would make sense to have China on their side now that the US and its allies have substantially wound down their role in Afghanistan, leaving Kabul to deal with the Taliban largely on its own politically and militarily. The Taliban are a potent force as evidenced almost all through the long US-led military operations, and their threat to the Afghan government is becoming even more pronounced with the audacity and frequency of their operations. Therefore, unless the Taliban are integrated as part of a new Afghan political architecture, the country is unlikely to see peace and normalcy. That is where China’s possible mediation role becomes important. And in the process it might also confer some legitimacy on the Ashraf Ghani government.

Chinese foreign minister Wang, in his statement during his Pakistan visit, seemed to put the Afghan government in the centre when he said that, “We will support the Afghan government in realizing reconciliation with various political factions including the Taliban.” Of course, Pakistan’s central role in the process is also acknowledged with its “strong will to take a constructive part in the resolution of this matter.”  And in advancing this process, China seems to have the support of the United States.  According to a senior US state department official, “The US and China have agreed to work together to support Afghanistan’s government of national unity, security forces and economic development to ensure that Afghanistan can never be used as a safe haven for terrorists.” At the same time, by denying training and refuge to Muslim Uighur insurgents from China’s western border province of Xinjiang, Afghanistan will be of great help in its anti-insurgency operations in that province.

Political stability in Afghanistan is also very important as China interests itself in exploring and recovering its mineral resources. One can, therefore, see why China would like to play a more active role to stabilize Afghanistan in the wake of US withdrawal. But will the Taliban welcome this role, especially when it might legitimize the present political order and the Ghani government? It would seem unlikely but with Pakistan’s help, Beijing might be able to make a beginning. It is assuming that Pakistan has a determining influence on the Taliban leadership, which hasn’t always been the case.

China might soon find out that Afghanistan is a beehive of all sorts of contending and clashing interests. For instance, how will China bring about reconciliation among the mosaic of diverse ethnic groups that inhabit Afghanistan from one part of the country to the other? As Patrick Cockburn pointed out in an article in the London Review of Books a while ago, “The Pashtun are the largest community in Afghanistan, but at 42 per cent of the population they aren’t quite a majority.” The second largest ethnic group at 27 per cent are Tajiks. And then there are Hazaras, Uzbeks, Aimak, Turkmens and Baloch. And they are not easy to coalesce together to constitute an Afghan nation of shared identity.

While Pakistan might be able to lean on Taliban, it doesn’t have much sway with other ethnic groups. Indeed, Pakistan’s close ties with Taliban might be a hindrance to a common Afghan national identity. This is not all. There are also regional powers like India and Iran that have their own interests and spheres, and they might not take kindly to a shared China-Pakistan project aimed at excluding them. One can see the pitfalls ahead for China, as with other powers before them. And if they succeed in reconciling Afghanistan’s fractured ethnic and political landscape, it will be the first in the country’s history. And they will reap enormous strategic and economic benefits.

Note: This article was first published in the Daily Times.

Contact: sushilpseth@ yahoo.com.au

China: navigating the future

S P SETH

There is a proliferation of books on China these days. A recent one, Age of Ambition by Evan Osnos, a US journalist who reported from China from 2005 to 2013 consecutively for Chicago Tribune and New Yorker, raises some important issues. We will come to it a later. But the fact that China is attracting so much attention is not surprising considering that the country is now an economic powerhouse. China’s economic success owes much to Deng Xiaoping who took over the country’s leadership after Mao Zedong’s death, and propagated the motto that: to get rich is glorious. And his successors have since built on it, following the same precept and broad policies. But the accelerated process of economic growth has created some serious problems. The most dangerous, in some sense, is the ever-widening income disparity between the rich and the poor, between urban and rural areas as well as between costal regions and the interior. It is dangerous because it engenders social instability about which the Communist Party of China remains extremely worried. The culture of greed and moneymaking has also entrenched corruption, which is self-perpetuating at the higher political levels. That, in turn, tends to reinforce cynicism about the political system.

Even though President Xi Jinpiang is said to be undertaking an anti-corruption drive, there is also a strong view that such campaigns are highly political. Take, for instance, the highly publicized corruption investigation against Zhou Yongkang, the country’s former security czar and a member of the all-powerful Politburo Standing Committee, as well as his family and inner circle. He is in serious trouble because of his association with Bo Xilai’s failed attempt to hijack the political transition and leadership from Xi Jinping. Bo Xilai, a former party chief of Chongqing, is now serving a long prison term. Xi obviously feels quite secure and confident now to take on and snuff out the dangerous political cabal around Bo Xilai, apparently led by the then security chief and then member of the Politburo Standing Committee. There is now a highly publicized campaign under way to root out high level corruption, intended to burnish XI’s credentials as a new age leader to reform and modernize the party.

While this is going on, another of Xi’s worry is the slowing growth of China’s economy. By standards of other countries, China’s economy is still putting up stellar performance at over 7 per cent. But it is down by about 3 percent from an average growth of 10 per cent over the last three decades. And the worry is that it might slow down to 7 percent and even lower in successive years. Around 7 per cent it will still be healthy growth by international standards but China is said to need a consistent growth rate of over 7 per cent to absorb 10 million new entrants every year to the labour market. The old model of growth through exports and investment in heavy industry and infrastructure, including real estate, has run out of steam. Indeed, the real estate has built up a bubble that might burst creating serious problems for the economy. According to reports, there is a glut of new flats and apartments in new housing colonies that remain unoccupied.

There is, therefore, need for restructuring or “rebalancing” the economy away from exports and investment in heavy industry. There is over-supply in sectors like steel. The country needs to reorient more to consumer spending and services sectors like education and health. That is where new jobs will need to be created for the new labour force. The Chinese government is aware of this and other related economic problems and is taking measures to restructure the economy. The problem, though, is that pressing a button here and there cannot do this. It would take time and might not always produce the desired results. It is, therefore, a time of some economic uncertainty in China, where much of the legitimacy of the Communist Party’s rule has come to be identified with healthy economic growth. Combined with this is the deeply entrenched culture of widespread corruption. And it doesn’t help when, even as China’s GDP rises, the rich-poor gap is widening all the time. In other words, the country’s leadership has a lot on their plate not only to stimulate the rate of growth, but also to deal with some of its unintended but serious consequences, such as growing economic inequality and systemic corruption.

At the same time, there is considerable concern about the danger to China’s political system from western notions of universal values and human rights, and the need to guard against is “subversive” effects. According to a widely reported Document No. 9, circulated at a Communist party forum, the party members were cautioned against the ‘subversive’ nature of western values such as “universal values [of human rights], western ideas of the freedom of press; civil society, civic rights… and judicial independence.” The Chinese leadership has long regarded that the collapse of the Soviet Union occurred precisely because Gorbachev sought to politically liberalize the system bringing it under tremendous strain. China is determined not to repeat the Gorbachev experiment with, what they regard as, disastrous results. The way China dealt with the 1989 democracy movement by using the army was a clear indication that Deng Xiaoping, its then-supreme leader, was not interested in the western experiment. And as the danger from western “universal values” persists, the Xi Jinping regime has clearly articulated its position that it wouldn’t stand for it. And it will take all the necessary measures to prevent it from subverting the CPC’s political monopoly.  

But the question then is how to separate economic and political aspirations of the Chinese people? One way is to control the flow of ‘subversive’ information from the west. Which is happening in all sorts of ways. However, a growing modern economy exposed to western influences by way of trade and cultural exchanges like, for instance, thousands of Chinese students studying in the west now and over the years including children of the top leadership, tends to create its own momentum for liberal political values. Whether or not western “universal values” are superior or not is not the question? As Evan Osnos has written in his book, Age of Ambition, “The Party has unleashed the greatest expansion of human potential in world history—and spawned, perhaps, the greatest threat to its own survival.” This struggle between people’s soaring aspirations and the limits of monopoly power to mediate and guide will define where China will go into the future. 

Note: This article was first published in the Daily Times.

Contact: sushilpeth@yahoo.com.au 

    

‘Mongrels’ and ‘bastards’

S P SETH

Not many people would have heard of a guy named Clive Palmer, a billionaire businessman and a member of the Australian parliament. But he certainly created quite a stir recently when he labeled the Chinese “mongrels” and “bastards” on national television. Referring to the the Chinese government, he said “… they shoot their own people, they haven’t got a justice system and they want to take over this country. And we’re not going to let them.” His, apparently, unscripted tirade arose out of a business dispute with a Chinese company. The Chinese government-owned CITIC Pacific has accused him, among other things, of siphoning off  $12 million out of their funds into financing his political ambitions. Palmer recently founded a new political party, called Palmer United Party (PUP). And he managed to get elected to the parliament, along with a bunch of his nominees to the senate, the upper house of the parliament. And he has come to exercise considerable political influence through his senators who can and do frustrate the government’s political agenda.

Not surprisingly, Palmer’s remarks were condemned by all sides of the political spectrum in Australia as damaging to China-Australia relations. Australia’s foreign minister, Julie Bishop, called his comments “abusive and unnecessary” and said that China had every right to be offended, which it did. The Chinese embassy called his remarks “absurd and irresponsible, which are full of ignorance and prejudice.”  The state-owned Chinese media was not as restrained as the official response. The English-language Global Times reportedly said, “Palmer’s rascality serves as a symbol that Australian society has an unfriendly attitude towards China.” And that “China must let these prancing provocateurs know how much of a price they pay when they deliberately rile us.”

In rushing to her leader’s defence, senator Jaccqui Lambie only made things worse, warning that Australia risked becoming “slaves to an aggressive, anti-democratic, totalitarian foreign power.” Lambie said, “I strongly support the general point that Clive made about Communist China’s military capacity and threat to Australia. If anybody thinks that we should have a national security and defence policy which ignores the threat of a Chinese Communist invasion—you’re delusional and [have] got rocks in your head.”  The good thing is that Palmer has since apologized to China for his offensive remarks. But his colleague, Lambie, is still sticking by what she has said. 

On the face of it, Clive Palmer and his PUPs might appear a bit unhinged, and they might well be, but they are not entirely out of sync with the underlying unease, if not fear, of China’s rising power. Australia’s 2009 defence white paper underlined it. And the country’s deepening security relationship with the United States and Japan is a pointer to it. Only recently, the same Global Times newspaper sharply rebuked Australian foreign minister, Julie Bishop, calling her a  “complete fool”, after she said in an interview: “China does not respect weakness. We know that the optimum is deeper engagement [with China]. But we’re also clear-eyed about what could go wrong. So you have to hope for the best but manage for the worst.” And she pledged to stand up for Australian values. Earlier, she had strongly offended China by criticizing it for seeking to change the status quo in the South China Sea and East China Sea on the question of disputed sovereignty with its South East Asian neighbors, and Japan.

Therefore, even though the Australian government has done the right thing by condemning and repudiating Palmer’s anti-China remarks, he and Lambie were, in some ways, crudely expressing a general sense of unease in Australia about China. It is important to realize that this unease has a long history from the gold mining days in the mid-nineteenth century when some Chinese migrated into Australia to partake of the country’s new fortunes. Which led to the White Australia policy to keep them and other Asians out, that continued till the seventies. The fear of “yellow hordes” swamping Australia was part of a psyche that tends to find expression in different ways with the change of times. And with China becoming stronger by the day and challenging regional status quo, and to edge out the United States from the region, the perceived fear is starting to appear real though it is impolite and rude to talk about it like Palmer and Lambie did.

Beijing, however, is not happy about it, especially as China is Australia’s largest trading partner with two-way trade of around $150 billion, much of it in Australia’s favour. Beijing simply lost it when, during the recent official visit of Prime Minister Shinzo Abe of Japan, Prime Minister Tony Abbot reportedly “admired the skill and sense of honour” of the Japanese submariners who attacked Sydney harbour in 1942. Clubbing together the remarks of Abbot and Julie Bishop, the Global Times wrote, “If Abbot’s words were meant to flatter his visiting counterpart Shinzo Abe, Bishop’s provocation [as quoted elsewhere] appeared to have come out of nowhere.” 

But it is important to point out that the fear of China’s rising power is quite widespread in Asia. A region wide survey of 48,6000 people in 44 countries conducted by the US think tank, Pew Research Centre, reportedly found that 93 per cent of the Filipinos, 85 per cent of the Japanese, 84 per cent Vietnamese and 83 per cent of South Koreans worried “that China’s territorial ambitions could lead to military conflict with its neighbours.” Viewed against this backdrop, Australia’s unease and fear of China doesn’t appear too dramatic.

China’s reaction to Australia’s strong comments is tailored at two levels. At the official level, it is relatively restrained, even though making the point that Beijing is not amused. Beijing’s reaction, through its state-owned media, is much more robust. For instance, in reacting to Bishop’s comment about standing up for Australian values, the Global Times said cryptically that, “The country used to be a place roamed by rascals and outlaws from Europe.” And added: “ Australia’s history is not short of records of human rights infringement on the Aboriginal people.”

The fact that the two countries continue to operate normally in their bilateral relations, despite an occasional hiccup caused by outlandish remarks of a minor party leader or the blunt statement of its foreign minister, would suggest that they have no intention to ratchet up their differences. The Global Times, as the standard-bearer of Chinese nationalism, though, provocatively asked, “Bishop calls for standing up to China, but what resources does she have to do so with?” Which is true but that is where its security alliance with the USA and strategic cozying up with Japan come in.  Beijing though seems confident that, sooner or later, Canberra would be forced to accept the reality of the changing balance of power in the region.

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