Is China Up to the Task?
Doubt , if not pessimism, is expressed by by David Shambaugh
on the ability of China’s new leadership in an article of 21 November, 2012 here in
YaleGlobal Online, a platform of the Yale Centre for the Study of
Globalisation.
Shambaugh is professor and director of the China Policy Program Elliott School of International Affairs at George Washington University, and Senior Fellow in the Foreign Policy Studies Program at the Brookings Institution. The article heralds his forthcoming book “China Goes Global: The Partial Power (2013)” Click here
Shambaugh recognizes “a surprising strong consensus” both inside and outside China on the following critical domestic reform areas-
“ – reorienting the economic growth model away from investments into physical infrastructure and subsidized exports to one driven by domestic consumption and innovation, emphasizing the knowledge economy and service industries;
– breaking the government’s monopoly over several sectors, while empowering civil society and loosening controls over the media, so as to facilitate the free flow of information needed in a real market economy and innovation society;
– adequately resourcing “public goods” for the populace – including healthcare, environmental protection, improved quality of education, pensions, old age care – while seriously addressing social stratification and inequity;
– instituting the real rule of law – so as to counter rampant corruption, rising crime, systemic abuse of privilege and power, and facilitate the predictable functioning of a market economy;
– addressing seething discontent among ethnic groups in Tibet and Xinjiang in positive ways instead of relying on intimidation and repression;
– permitting greater political pluralism, even within a one-party system”.
“In the foreign-policy arena”, Shambaugh thinks that “China’s neighbours hope it will adopt a more accommodating and less confrontational posture, particularly over maritime territorial disputes. Beijing also needs to work with the United States to stem the strategic competition and mistrust now pervasive in the relationship. Its relations elsewhere in the world are increasingly afflicted by the growing perception of China as a mercantilist state soaking up natural resources and investing in strategic assets. China also needs to play a greater role in global governance commensurate with its power and position in the international community”.
However, the eminent professor thinks that China’s new generation of leaders is hamstrung by four inherent constraints -
Shambaugh explains that “The composition of (China’s ) exports needs to move up the value chain – and this is linked to shifting investment from “hard” to “soft” infrastructure: education, science, cutting-edge technologies, innovation and cultural creativity. For China to make these transitions requires more than a shift in financial allocations, though, as it requires loosening of the political system, media censorship and civil society. A “knowledge economy” cannot easily be built in an authoritarian system.”
To be fair, Professor Shambaugh is to be agreed as his prognosis is much more balanced and analytical compared with most China studies characterized by sectoral or pre-judgemental bias, hyping either the “China threat” or “China collapse” at one end of the spectrum to “China rules the world” at the other. According to his description of his forthcoming book, his conclusions are based on “six distinct dimensions of China’s global emergence (perceptual, diplomatic, global governance, economic, cultural, and security) and multiple manifestations of each”.
While Shambaugh’s scepticism is well-placed, it must nevertheless be seen in the following context –
On “path dependence”-
Ever since China started to reform and open up in 1978, the country’s development has been a continuous work-in-progress, to stay above waters of a continually changing tide. This perennial status of flux, of adaptation and change, has been at the core of China’s economic miracle, compressing over a century’s economic progress into a few decades. However, this has been breeding existential threats in unbalanced growth, rampant corruption, social inequity and ecological degradation and a hotbed of other social ills.
As early as the beginning of China’s 11th Five Year Plan (2006-2010), the leadership has been highlighting the so-called five imbalances (between rural versus urban, human versus environmental, economic versus social, national versus local, and inward versus outward investments). Ever since, the leadership has ushered in a swath of initiatives to hone “ a nation of innovation” including a battle for talent. Click here and the promotion of the kind of “soft” infrastructure highlighted by Shambaugh: education, science, cutting-edge technologies, innovation and cultural creativity, though the outcome so far is at best inconclusive.
There has thus been a clear sense of changed direction since 2006 – now reinforced by the 12th Five Year Plan (2011-15) – towards a dramatically different path based on slower but more balanced, higher-quality, more equitable and more sustainable growth. There is a broad-based awareness that the cheap labour pool is dwindling and China must redouble efforts to respond to the so-called Lewis Curve Turning Point Click here and the challenges of the Middle Income Trap. Click here
So the point here is that “path dependence” is not immutable.
On the “Soviet shadow” –
True, the Communist Party is caught in a quandary. But what Daron Acemoglu and James Robinson describe as “extractive institutions” (“Why Nations Fail”, Profile Books, 2012) have generated growing social unrests that threaten to undermine the stability of the whole regime. It is no coincidence that from Wukan, Shifang to Ningbo, a recent series of uncharacteristic, high-profile, government about-turns have begun to happen, overturning local projects approved in Beijing in response to public protests against land grabs and pollution. In particular, the so-called “Wukan model” of open and fair village elections was daringly promoted by Wang Yang, one of China’s rising, if recently checked but no means “disabled”, pro-reform “stars”.
It is also instructive that a host of reform proposals in a new 468-page World Bank report were given the rare imprimatur of the State Council (Development Research Centre). These include the promotion of civil society, including the role of the media to monitor governance (if initially only at the local level), and the strengthening of the rule of law, although, admittedly, there is still a long and winding road towards greater legislative oversight and judiciary independence.
But if the story is to be believed, Alexis de Tocqueville’s “French Revolution” is doing the rounds amongst China’s top leadership, including Li Keqiang, the Premier-in-waiting and Wang Qishan, the new anti-graft czar. And fighting corruption has been termed a matter of “”life or death” for the Party and the nation, according to both out-going President Hu Jinatao and President-in-waiting Xi Jinping at the 18th Party Congress.
The point here is that the “”Soviet shadow” also means that “not managing change” in tune with the times will only threaten the whole regime’s survial.
On “vested interests”
The reason why the 18th Party Congress was unexpectedly delayed was the shock of the Bo Xilai affair. Regardless of factional vested interests, nothing concentrated the minds of the collective leadership better than when the whole apple chart was about to be overturned by the overarching ambition of a scheming, if charismatic, individual. This was also an epiphany that vested interests must be curved, if not eradicated, particularly those represented by the monopolistic state-owned enterprises which sapped the vitality of the private sector. Indeed, this is one of the major reform areas highlighted in the World Bank/Development Research Centre report.
As for the military, a series of top military promotions and reshuffling took place during the mysterious disappearance of then Vice President Xi Jinping. It is probable that he took French leave to boost the loyalty of the military leadership in preparation for his taking over the Military Commision chairmanship in a first-of-its-kind complete power transfer at the Party Congress. As it is now confirmed, the Party’s top leadership has been reduced from nine to seven members, downgrading the security and propaganda apparatus below the level of the Politburo Standing Committee.
All these changes are of course not enough to break the so-called “iron quadrangle” of the military, the security apparatus, state-owned enterprises and arch-conservatives. This is not totally unlike the American example of the military-industrial complex forewarned at the time of President Einsenhower plus its modern adjuncts of big business and Wall Street.
The point here is that vested interests, when push comes to shove, can also trigger reform in order to maintain overall regime stability.
On Aggrieved nationalism
The nation’s psychological baggage is a reality borne of centuries of foreign oppression. Some of the remaining territorial disputes are in fact their outcome. Such disputes are unlikely to be resolved anytime soon. So territorial integrity is likely to remain a sore point in the national psyche for a long time to come.
Nevertheless, China has now become more proactive in the global commons, for example in international peace-keeping, as the largest contributor of peace-keeping forces amongst Permanent Members of the Security Council. The country is also instrumental in brokering the six-party talks on North Korea and is taking a keener interest in addressing conflicts in the Middle East. But such a role cannot be equated to acquiescence with one-sided demands or abrogation of China’s own national interests. Indeed, no self-respecting nation would do this.
Meanwhile, China is now embarking on a mission to promote the country’s soft-power, including Confucianism and other aspects of China’s culture and heritage. But notwithstanding the gravitas of China’s economy, debates about the merits of the so-called Beijing Consensus and growing world-wide interests in the Chinese language, China is unlikely to have many genuine followers until the country succeeds in showcasing a new attractive civilization with a heart and soul that appeal to the spirit of the times.("China's Economic Success and Its Implications for the World Order" Click here
In the final anaysis, despite many negative connotations, “in the past ten years under the current leader, Hu Jintao, the economy has quadrupled in size in dollar terms. A new (though rudimentary) social safety net provides 95% of all Chinese with some kind of health coverage, up from just 15% in 2000. Across the world, China is seen as second in status and influence only to America,” according to The Economist front cover article of 27 October 2012.
Shambaugh is professor and director of the China Policy Program Elliott School of International Affairs at George Washington University, and Senior Fellow in the Foreign Policy Studies Program at the Brookings Institution. The article heralds his forthcoming book “China Goes Global: The Partial Power (2013)” Click here
Shambaugh recognizes “a surprising strong consensus” both inside and outside China on the following critical domestic reform areas-
“ – reorienting the economic growth model away from investments into physical infrastructure and subsidized exports to one driven by domestic consumption and innovation, emphasizing the knowledge economy and service industries;
– breaking the government’s monopoly over several sectors, while empowering civil society and loosening controls over the media, so as to facilitate the free flow of information needed in a real market economy and innovation society;
– adequately resourcing “public goods” for the populace – including healthcare, environmental protection, improved quality of education, pensions, old age care – while seriously addressing social stratification and inequity;
– instituting the real rule of law – so as to counter rampant corruption, rising crime, systemic abuse of privilege and power, and facilitate the predictable functioning of a market economy;
– addressing seething discontent among ethnic groups in Tibet and Xinjiang in positive ways instead of relying on intimidation and repression;
– permitting greater political pluralism, even within a one-party system”.
“In the foreign-policy arena”, Shambaugh thinks that “China’s neighbours hope it will adopt a more accommodating and less confrontational posture, particularly over maritime territorial disputes. Beijing also needs to work with the United States to stem the strategic competition and mistrust now pervasive in the relationship. Its relations elsewhere in the world are increasingly afflicted by the growing perception of China as a mercantilist state soaking up natural resources and investing in strategic assets. China also needs to play a greater role in global governance commensurate with its power and position in the international community”.
However, the eminent professor thinks that China’s new generation of leaders is hamstrung by four inherent constraints -
- A “path dependency”
Shambaugh explains that “The composition of (China’s ) exports needs to move up the value chain – and this is linked to shifting investment from “hard” to “soft” infrastructure: education, science, cutting-edge technologies, innovation and cultural creativity. For China to make these transitions requires more than a shift in financial allocations, though, as it requires loosening of the political system, media censorship and civil society. A “knowledge economy” cannot easily be built in an authoritarian system.”
- The “Soviet shadow”
- “Institutionalized” or vested interests
- “Aggrieved nationalism”
To be fair, Professor Shambaugh is to be agreed as his prognosis is much more balanced and analytical compared with most China studies characterized by sectoral or pre-judgemental bias, hyping either the “China threat” or “China collapse” at one end of the spectrum to “China rules the world” at the other. According to his description of his forthcoming book, his conclusions are based on “six distinct dimensions of China’s global emergence (perceptual, diplomatic, global governance, economic, cultural, and security) and multiple manifestations of each”.
While Shambaugh’s scepticism is well-placed, it must nevertheless be seen in the following context –
On “path dependence”-
Ever since China started to reform and open up in 1978, the country’s development has been a continuous work-in-progress, to stay above waters of a continually changing tide. This perennial status of flux, of adaptation and change, has been at the core of China’s economic miracle, compressing over a century’s economic progress into a few decades. However, this has been breeding existential threats in unbalanced growth, rampant corruption, social inequity and ecological degradation and a hotbed of other social ills.
As early as the beginning of China’s 11th Five Year Plan (2006-2010), the leadership has been highlighting the so-called five imbalances (between rural versus urban, human versus environmental, economic versus social, national versus local, and inward versus outward investments). Ever since, the leadership has ushered in a swath of initiatives to hone “ a nation of innovation” including a battle for talent. Click here and the promotion of the kind of “soft” infrastructure highlighted by Shambaugh: education, science, cutting-edge technologies, innovation and cultural creativity, though the outcome so far is at best inconclusive.
There has thus been a clear sense of changed direction since 2006 – now reinforced by the 12th Five Year Plan (2011-15) – towards a dramatically different path based on slower but more balanced, higher-quality, more equitable and more sustainable growth. There is a broad-based awareness that the cheap labour pool is dwindling and China must redouble efforts to respond to the so-called Lewis Curve Turning Point Click here and the challenges of the Middle Income Trap. Click here
So the point here is that “path dependence” is not immutable.
On the “Soviet shadow” –
True, the Communist Party is caught in a quandary. But what Daron Acemoglu and James Robinson describe as “extractive institutions” (“Why Nations Fail”, Profile Books, 2012) have generated growing social unrests that threaten to undermine the stability of the whole regime. It is no coincidence that from Wukan, Shifang to Ningbo, a recent series of uncharacteristic, high-profile, government about-turns have begun to happen, overturning local projects approved in Beijing in response to public protests against land grabs and pollution. In particular, the so-called “Wukan model” of open and fair village elections was daringly promoted by Wang Yang, one of China’s rising, if recently checked but no means “disabled”, pro-reform “stars”.
It is also instructive that a host of reform proposals in a new 468-page World Bank report were given the rare imprimatur of the State Council (Development Research Centre). These include the promotion of civil society, including the role of the media to monitor governance (if initially only at the local level), and the strengthening of the rule of law, although, admittedly, there is still a long and winding road towards greater legislative oversight and judiciary independence.
But if the story is to be believed, Alexis de Tocqueville’s “French Revolution” is doing the rounds amongst China’s top leadership, including Li Keqiang, the Premier-in-waiting and Wang Qishan, the new anti-graft czar. And fighting corruption has been termed a matter of “”life or death” for the Party and the nation, according to both out-going President Hu Jinatao and President-in-waiting Xi Jinping at the 18th Party Congress.
The point here is that the “”Soviet shadow” also means that “not managing change” in tune with the times will only threaten the whole regime’s survial.
On “vested interests”
The reason why the 18th Party Congress was unexpectedly delayed was the shock of the Bo Xilai affair. Regardless of factional vested interests, nothing concentrated the minds of the collective leadership better than when the whole apple chart was about to be overturned by the overarching ambition of a scheming, if charismatic, individual. This was also an epiphany that vested interests must be curved, if not eradicated, particularly those represented by the monopolistic state-owned enterprises which sapped the vitality of the private sector. Indeed, this is one of the major reform areas highlighted in the World Bank/Development Research Centre report.
As for the military, a series of top military promotions and reshuffling took place during the mysterious disappearance of then Vice President Xi Jinping. It is probable that he took French leave to boost the loyalty of the military leadership in preparation for his taking over the Military Commision chairmanship in a first-of-its-kind complete power transfer at the Party Congress. As it is now confirmed, the Party’s top leadership has been reduced from nine to seven members, downgrading the security and propaganda apparatus below the level of the Politburo Standing Committee.
All these changes are of course not enough to break the so-called “iron quadrangle” of the military, the security apparatus, state-owned enterprises and arch-conservatives. This is not totally unlike the American example of the military-industrial complex forewarned at the time of President Einsenhower plus its modern adjuncts of big business and Wall Street.
The point here is that vested interests, when push comes to shove, can also trigger reform in order to maintain overall regime stability.
On Aggrieved nationalism
The nation’s psychological baggage is a reality borne of centuries of foreign oppression. Some of the remaining territorial disputes are in fact their outcome. Such disputes are unlikely to be resolved anytime soon. So territorial integrity is likely to remain a sore point in the national psyche for a long time to come.
Nevertheless, China has now become more proactive in the global commons, for example in international peace-keeping, as the largest contributor of peace-keeping forces amongst Permanent Members of the Security Council. The country is also instrumental in brokering the six-party talks on North Korea and is taking a keener interest in addressing conflicts in the Middle East. But such a role cannot be equated to acquiescence with one-sided demands or abrogation of China’s own national interests. Indeed, no self-respecting nation would do this.
Meanwhile, China is now embarking on a mission to promote the country’s soft-power, including Confucianism and other aspects of China’s culture and heritage. But notwithstanding the gravitas of China’s economy, debates about the merits of the so-called Beijing Consensus and growing world-wide interests in the Chinese language, China is unlikely to have many genuine followers until the country succeeds in showcasing a new attractive civilization with a heart and soul that appeal to the spirit of the times.("China's Economic Success and Its Implications for the World Order" Click here
In the final anaysis, despite many negative connotations, “in the past ten years under the current leader, Hu Jintao, the economy has quadrupled in size in dollar terms. A new (though rudimentary) social safety net provides 95% of all Chinese with some kind of health coverage, up from just 15% in 2000. Across the world, China is seen as second in status and influence only to America,” according to The Economist front cover article of 27 October 2012.
An article here for the South china Morning Post dated 19 September 2012, China's Economy and Policy, the flagship publication of Gateway International, a global
China consultancy firm, postulates
that brighter
days are ahead for China’s economy.
The latest OECD report “Looking to 2060: Long-Term Global Growth Prospects” dated November 2012 here suggests that “China will overtake the eurozone in 2012 and the US within the next four years to become the largest economy in the world. By 2060 …… the combined GDP of China (27.8%) and India (18.2%) will be larger than that of the OECD – and the total output of China, India and the rest of the developing world (57.7%) will be greater than that of developed OECD and non-OECD countries (42.3%)”.
Notwithstanding competition and rivalry, which are common to all political systems, the different factions, power-centres, and vested interests of the Party polity all embrace and continue to benefit from China’s continuing reform and progress. The question is not whether to reform but where, how much, and how fast, and of course, how to apportion their respective power and influence.
Depending on the time horizon and a host of imponderables, brighter prospects may or may not materialize. Nevertheless, I am more inclined to the view that the bottle is at worse half full. There is serious leakage that needs to be fixed but more water is coming in. At any rate, the jury is still out.
If one is to believe that in reply to Richard Nixon, Zhou Enlai said it’s still too early to tell the impact of the French revolution, perhaps it is still too early to be pessimistic about China, especially at such an epochal watershed when no change is no option.
China will remain a work in progress for years to come. So, Professor Shambaugh is accurate. China remains a "Partial Power".
The latest OECD report “Looking to 2060: Long-Term Global Growth Prospects” dated November 2012 here suggests that “China will overtake the eurozone in 2012 and the US within the next four years to become the largest economy in the world. By 2060 …… the combined GDP of China (27.8%) and India (18.2%) will be larger than that of the OECD – and the total output of China, India and the rest of the developing world (57.7%) will be greater than that of developed OECD and non-OECD countries (42.3%)”.
Notwithstanding competition and rivalry, which are common to all political systems, the different factions, power-centres, and vested interests of the Party polity all embrace and continue to benefit from China’s continuing reform and progress. The question is not whether to reform but where, how much, and how fast, and of course, how to apportion their respective power and influence.
Depending on the time horizon and a host of imponderables, brighter prospects may or may not materialize. Nevertheless, I am more inclined to the view that the bottle is at worse half full. There is serious leakage that needs to be fixed but more water is coming in. At any rate, the jury is still out.
If one is to believe that in reply to Richard Nixon, Zhou Enlai said it’s still too early to tell the impact of the French revolution, perhaps it is still too early to be pessimistic about China, especially at such an epochal watershed when no change is no option.
China will remain a work in progress for years to come. So, Professor Shambaugh is accurate. China remains a "Partial Power".
Best regards,
Andrew
www.andrewleunginternationalconsultants.com
posted by Chinawatch at 3:12 pm
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