Priceless – China and its new assertiveness

Ros Price, Investment Committee Member.

More than two thousand delegates meet, on a five yearly basis, in the Great Hall of the People in Beijing, in order to revise the constitution of the Communist Party of China as well as appoint the New Central Committee, Politburo  and incidentally to appoint or re-appoint the Party leader and the 18th such meeting has just come to an end with the announcement of the new names on the Politburo Standing Committee.

This year the proceedings have been watched more closely than ever as President Xi Jinping looked for and gained confirmation for his second five year term. Many now expect this  to be made an even longer term given the lack of a visible successor appointed to the new Politburo standing committee announced at the end of the proceedings, none of whom were young enough to mount a challenge to Xi in five years’ time, with some suggesting that Xi is planning on extending his rule beyond the ‘normal’ two terms of five years.

It seems President Xi sees himself in the same light as the two previous great transformational rulers in China, Deng Xiaoping and perhaps more worryingly for the rest of the world, Mao Zedong. It is to be hoped that the reforms and changes President Xi is planning will not involve the violence of the Cultural Revolution instigated by Mao but as we noted  he does not see himself to be bound by the two five year terms that previous leaders have adhered to in recent times. Also the work of Deng to modernise China’s vast economy has yet to be completed – much needs to be done in the shape of reform and liberation. The publication of a book this Summer by the vice-president of the Central Party School made the case that China is in need of new heroes to bring about new ways of thinking and it goes on to make clear that the person to bring this rejuvenation of thought about is Mr Xi. As we saw during the conference, Mr Xi has had the most singular honour of having his ‘Thoughts  on Socialism with  Chinese Characteristics for a New Era’ included in the Communist Party constitution. The only other person to be granted this honour was Mao himself.

Whilst to us here in the West this may not seem that remarkable, for China it really is. After Mao, the other outstanding leader, Deng Xiaoping only had his thoughts added after his death and he served as leader in a ‘first among equals’  – a consensus, collective leadership. So when the inclusion of such political thoughts is included now after a first five term into the annals of the Party, it indicates that Mr Xi is now elevated above his fellow committee members. Mr Xi is the paramount leader in China – some might even say a dictator – but I can think of many leaders in our western democracies who would give their eye teeth to be in a similar position of power relative to their governance structures! Of course given the millennia of Chinese history the idea of the ascendancy of one man to rule is not new. Indeed it is more the norm and there seems only a marginal level of agitation to move to the western democratic system. The idealism of Tiananmen Square is a vanishing memory. The idea of Deng to  bring economic prosperity with stability to the majority of the people has been an excellent plan for the Chinese economy. Now Xi is aiming to move onto the next phase for China’s future, with him as the country’s guiding light.

And that next phase in its growth and development? Mr Xi gave the party his thoughts in his three and a half hour address and we have perhaps seen some ideas earlier in the year when he went to Davos, to the World Economic Forum. Here though he told the conference about his ambitious vision of both the relatively near and farther future for his country – a very bold new future at that. He declared that the Chinese nation now stands tall and firm in the East and that he wished to realise the Chinese dream of national rejuvenation. Even so there was little of note on domestic policy detail and apart from making the Party  stronger there was no other plan for political reform although there were some economic reforms put forward. Most notably, by implication, he was criticising his predecessor for wasting his period in power by letting rampant corruption stall China’s progress and indeed the Party was told that the disciplinary anti-corruption agency is to be transformed into an overarching agency able to look into all aspects of the country governance and business – catchily named the Supervisory Commission. Of course there is firm evidence that the President has not been above using the anti-corruption campaign to gain more power over his rivals although the current head of the agency has not been re-appointed to the Politburo, ostensibly because of his age – there has in the past been an unwritten rule that people cannot continue to be appointed or re-appointed to high office after the age of 68. Perhaps though most importantly for the West, Xi set out his goal of making China a super power in every sense by 2050.

So what does that mean for us here in the Western democracies who have been hearing of the rise of Asia for  a number of years now? Some suggest that the growing confidence in their future to be seen in official circles in Beijing now verges on arrogance. Will hubris follow leaving us in our current comfortable if declining ascendancy?  China has thrown down a serious challenge on three fronts: ideological, economic and maybe most dangerous, geopolitical. China it would seem is retaining one party rule and restricting what little political freedom that had been, increasingly combining tight political control with strong and rapid economic growth, with much of that now coming from the so-called new knowledge  economy and technology. China is fast moving away from being a low cost manufacturing economy and its success now with cutting edge technology is quite remarkable – it is little remarked on here that China is now well ahead of us in things like mobile payment technologies. For how long can we comfortably assume the western democracies will lead in technological development?

The geopolitical impact is also something we need to look at carefully. The use of so-called soft power is being very carefully, and  it has to be said, successfully applied in China’s foreign policy to date. We are all perhaps used to China’s previous goodwill Panda diplomacy, but China’s One belt one road policy is a new departure using its great wealth  to develop new markets for its goods and services, by building comprehensive trade  infrastructure with new rail links directly to Europe, roads and ports in Asia and the Middle East. These will of course see two way traffic though the aim of China is to build a Eurasian economic powerhouse eventually not simply rivalling but surpassing that of the US and Europe. Of course it has already ‘bought’ much of Africa through yet more infrastructure developments there, and these are ‘paid’ for in kind, with raw materials and agricultural produce. So China has secured vital supplies of raw materials and food stuffs from across the African continent. Last winter, President Xi startled many here in the West with his firm espousal of free trade when he went to Davos for the World Economic Forum, which was swiftly followed by his avowal to support the Paris Treaty on global warming after President Trump pulled the US out of it. There is just the subtle hint that China is gradually going to replace the leadership of the US in as many soft power ways that it can. Similarly the US dominance of the South China Sea is surely at risk from China’s increasing rather more hard military power and it is easy to see why Japanese Prime Minister Abe , newly elected with the necessary two thirds majority is aiming to change the Japanese constitution in order to cease being a neutral power. We should not forget either that China has a permanent seat on the United Nations Security council of course, especially when it comes to dealing with that little issue of North Korea.

We can expect so much change in the coming years before China achieves it stated deadline of 2050 but we cannot deny it is a powerful vision for its future progress even if set out in a somewhat modest and cautious way at the Communist Party Congress just concluded in Beijing. Fortunately at present the Chinese stance is one of optimism – Xi said ‘the prospects are bright, while challenges are also grave’. And perhaps most optimistic of all for us here in Europe, President Xi maintained  ‘the door China has opened will not close, but will open wider and wider…’