1. China has experienced phenomenal economic growth. With challenges such as an aging population, increasing local debt thanks to stimulus spending from the 2008-2009 economic crisis, and calls to revalue its currency, can China maintain such growth rates in the years to come?
No, China can’t maintain the phenomenal economic growth (9 percent to 11 percent) commonly seen over the past thirty years. Your question has been answered at the recent National People’s Congress in Beijing, when Premier Wen Jiabao announced, in all seriousness, that China would go for a 7.5 percent annual growth rate. This is to reflect the priorities of the 12th Five-Year Plan, which has started this year. The current Hu-Wen government has increasingly focused on improving the so-called minsheng (people’s wellbeing) instead of breakneck growth. The less ambitious growth strategy is premised on the new goals of restructuring the model of economic development so that more emphasis will be placed on raising productivity, enhancing the quality of growth, strengthening indigenous innovation, increasing domestic consumption and striving for sustainable growth. The Chinese economy has clearly come to a critical stage, so that a quantitative “made in China” pride no longer solves the nation’s economic needs, and a qualitative “invented in China” status, with all that entails, becomes the new catch slogan. The necessity for reform and restructuring has been stressed by the government very strongly. However, whether the government can fundamentally tackle the key economic challenges – including those you’ve mentioned – is not clear since the crux of many issues lies in the political sphere.
2. What do you feel are China’s greatest economic challenges? Will the coming leadership change to the 5th generation of leaders signal any changes in economic policy?
China faces multiple and inter-related challenges. Despite enormous achievements during the reform and open-door era, problems caused by the Chinese-style predatory market economy and social dislocation are many, such as alarming wealth disparities (the Gini Coefficient in China is, dangerously, more than 0.4), shortages (and waste) of resources, mass rural migration to urban centers, environmental degradation, government corruption, forceful land acquisition, poor conditions of the disadvantaged including rural women, children, minorities and the elderly. Premier Wen hit the nail on the head of the challenge when he said at the National People’s Congress that “without a successful political structural reform, it’s impossible for us to fully carry out economic structural reform, and the gains we have made in this area may be lost.”
Wen has been harping on the theme of political reform and government transparency for some time, but there hasn’t been any substantial measure taken to follow up on the pledge. Will the new leadership under Xi Jinping and Li Keqiang turn out to be the champions of political reform, and more than just about fine-tuning the bureaucracy and scapegoating a few corrupt officials? So far, there’s no evidence for that. The personal backgrounds and past performances of Xi and Li don’t suggest anything promising. Any substantial reform on the political front would require grave pressure from outside the regime. However, as we’ve seen from the way the regime dealt with the Wukan event, the authorities seem to have learned rapidly how to satisfy the will of some social sectors without jeopardizing the overall legitimacy of the regime itself. The spectacular purge this month of Bo Xilai, party secretary of Chongqing and a member of the Political Bureau of the central party reveals that political operations in China continue to be a shadowy game.
3. While China’s economy continues to grow, its regional and international influence is also rising. Many have called the coming century the “Chinese century.” Do you feel Chinese leaders also feel the same way? Do you believe China will continue to try and follow the mantra of late Chinese leader Deng Xiaoping and bide its time, or has China’s economic development created the necessity for the country to seek a greater role in world affairs?
The talk of a “Chinese century,” which is like a positive variation of the “China threat” theory mooted earlier, isn’t taken seriously by Chinese leaders and the people. One of the rare foreign policy consensuses between Chinese leaders and the people is the view that the Western world has exaggerated China’s power and influence, perhaps with self-serving purposes such as requesting China to shoulder some global responsibilities which the Chinese believe shouldn’t be undertaken for a developing country. However, on the other hand, China has clearly felt its own dramatically expanding global weight and has realized that it should take up more responsibilities for what are typically called “global issues” such as climate change and financial crisis. In particular, thanks to its own increasing global economic profile, reflected in resources-related investment projects and the increasing number of Chinese people working overseas, Beijing by necessity must play a role in the making of international rules in order to protect its own interests.
As a result, we’ve seen China becoming very pro-active in United Nations forums and various multilateral (such as G-20) and regional organizations (such as APEC, East Asia Summit, ASEAN). Gone are the days when China could only watch powerful nations debating at the U.N. Security Council on the sort of issues which didn’t really have much to do with China’s direct interests, when the country basically made itself busy to copy or follow the so-called international conventions made up by other nations.
Now, China wants to have a say – for love and necessity. So, to summarize my point: Deng Xiaoping’s “bide your time” mantra, which was really a tactic in the aftermath of 1989 Tiananmen square massacre that saw the country isolated by the international community, is no longer feasible. For a start, China has new global interests to protect, and this can’t be done without itself becoming part of the rule-making process. Second, the international community is requesting that China take more responsibilities as a global power – in this sense, one should invoke a Chinese idiom “while the tree may want to rest, the wind keeps pushing its branches.” As I said, though, the Chinese generally think their country’s “global power” status has been exaggerated by the outside world and that China shouldn’t be unfairly asked to provide the global public good at the expense of its own national and economic interests as a developing country with a very low per capita GDP. I expect China to take up more and more responsibilities and demand more and more say in world affairs, but mostly in areas and on issues which are directly related to its own interests as defined by the government.
4. The United States has refocused its foreign policy in a “pivot” to the Pacific. What response should China have to such a shift in strategy if any? Does China run the risk of being encircled by a growing alliance network?
Being encircled by U.S.-led military alliances isn’t news to China, since the country has always felt threatened by such an alliance network from day one, until President Richard Nixon descended on Beijing in 1972 (the two governments have just celebrated the 40th anniversary of this historic ice-breaking tour). Beijing and Washington have maintained profitable, collaborative relations ever since, without the U.S. alliance network in the region becoming an issue – that is, until the Obama administration’s decision to reengage Asia.
It’s true that the George W. Bush administration came to power with a definition of China as a “strategic competitor” and beefed up its relations with Taiwan. However, this alarmist approach was quickly replaced by the protracted global war on terror. This strategic distraction, which saw the U.S. bogged down in the Middle East, Central Asia and homeland security, gave China many years of diplomatic “free run” in East Asia. Beijing certainly made good use of this opportunity to strengthen its diplomatic, economic and security presence. But it has now become concerned with what seems to be the systematic steps taken by the U.S. in the region, since they are more than just coming back to where the U.S. was before.
New approaches which are concerning, or at least “uncomforting,” to Beijing include: the United States’ definitive support for regional states in the South China Sea dispute vis-à-vis China; expansion of its security alliance by deploying troops in Australia and incorporating Vietnam; stealing China’s show at regional forums such as the East Asia Summit; improving relations with India and even Burma, and pursuing a regional trade framework that excludes China. Therefore, in parallel to the continual collaborative relations between China and the U.S., encirclement does seem to have emerged. However, this is a diplomatic fall back approach rather than a Cold War-style “encirclement.” In this age of globalization and mutual dependence, I don’t think the Chinese government and its policy advisers are alarmed by the U.S. moves in a real security sense, although China’s goodwill diplomacy towards ASEAN, and its comprehensive cooperation with Putin’s Russia, suggest that Beijing is responding to the U.S. posture.
However, China is arguably more interested in confidence building with the U.S. directly. In that sense, it’s more important for the two countries to watch their relations in the year of an election in the U.S. and leadership transition in China so that specific issues such as the U.S. complaints of China over its currency, market access and intellectual property rights don’t escalate into political crises.
5. China recently witnessed a well-publicized domestic “mass incident” in the city of Wukan. Will such uprisings be something China will face with increasing frequency in the future? What steps can China take to avoid such incidents?
“Mass incidents,” the official euphemism for large-scale protests, riots and petitions reflecting popular resentment over government corruption, environmental harm, land expropriation and judicial injustice, have become widespread in recent years. Estimated to be around 10,000 in 1993, mass incidents exceeded 180,000 in 2010, twice as many as in 2006.
According to the Annual Report of China’s Crisis Management 2010 by Shanghai Jiao Tong University, 72 mass incidents in 2010 can be classified as “influential.” This would mean that every five days the country experienced an influential crisis or social incident. This trend points to further increases in the future, largely due to the expected lack of progress in political reform. On the other hand, the government has also proven to be a fast learner of the methods that effectively keep an overall lid on things, preventing the uprisings from becoming a national political crisis. With the rise of mass incidents, China’s public security spending has surged. In 2010, spending on internal policing outstripped the defense budget for the first time. This year, the National People’s Congress voted overwhelmingly to approve new powers for the state police. While heavy-handed crackdowns are always necessary for the regime, the political cost of imposing harmony is rising. Therefore, policies in the field of social management have been designed to deal with the various economic and social grievances in mind so that from neighborhood committees to municipal governments, issues related to inflation-caused difficulties, strikes caused by plant closure, personal safety, major traffic disasters and significant environmental issues are expected to be dealt with swiftly, before their escalation.
Meanwhile, ordinary people have been given institutional forums to release their social energy and advocate for their needs in ways controllable by the government. This tactic has been tested in Wukan, where provincial authorities satisfied the villagers’ main demands, namely compensation for their land illegally sold by the original village head, his removal and prosecution, and reelection of a new village committee in open and competitive fashion. On the other hand, provincial government clearly warned of the dire consequences of any further disturbance in the future. Leading activists in Wukan clearly understood what this meant. We’ll see more and more Wukans, which will again be dealt with through both soft and hard approaches. In the long run, this may not be sustainable in dealing with complaints without the reform of the cores of the party-state itself.