My December 2013 China newsletter

China's defining moment appears to have arrived. The Middle Kingdom has just launched a surprisingly wide range of ambitious reforms. The Chinese currency has overtaken the euro as the world's second most used currency for trade finance. The nation is assertively posturing a great power status in the region.  

Would China be able to transform the nation by 2020? Would China's rise re-set the world order for better or worse? How does the Chinese Communist Party work? Would China be able to overcome herculean problems of corruption, inequalities, local government debt, vested interests, ecological sustainability, and rising citizen aspirations? How would China be able to turn the economy and society around towards the middle-class and consumers? How soon would the RMB become fully convertible and how likely is it to become a leading reserve currency? Is a Golden Age of Gas, including shale gas, also descending on a urbanized China in quest of a green future? 

These and many other challenging questions of our time may draw some food for thought in the following collections of analyses, presentations, reference materials and TV interviews. 

China's Rise

• The inexorable tilt of China's Rise - Op-ed article published in New Insight of the South China Morning Post, dated 14 October, 2013. The original analysis with footnotes is here    
• China Dream - Reality and Repercussions - Feature articlepublished in The Global Analyst's First Anniversary October 2013 issue (pp. 34-41) 
• Will the Third Plenum deliver a transformed China by 2020? - An analysis

Geopolitics

• China's air defense zone a test case for Great Power relations - My Op-ed article in the South China Morning Post dated 10 December
• Public ouster of North Korea's No.2 is an ill omen - A commentary
• No Asian century without global amity - Op-ed article in the South China Morning Post dated 11 November 2013.
• Will China’s Rise re-set the world order? - Guest lecture at the City University Hong Kong on Wednesday 30th October, 2013
• Possible Turkish-Chinese Partnership on a Silk Road Renaissance by 2023 -  Joint article published in the Summer 2013 Turkish Policy Quarterly
• Japan and China: A Clash of Empires? - TV discussion panel on Inside Story with Aljazeera English on 3 November 2013
• China’s economic success and its ideological implications for the world order - Presentation to the Royal Commonwealth Society in Hong Kong on 18 September, 2013 
• With risks of a US default, China calls for a "de-Americanized world" - Live TV interviewson 14 October and 16 October with RT  (Russia Today of Moscow)
• The real story behind Abe and Park's strange body language - An analysis  
• What does the US government shutdown mean for China? - Live TV interview with RT on 3 October 
• Nicanagra's Canal set to marginalize the Panama Canal  - An analysis

Energy and the environment

• "Understanding China's Arctic policies" - An analysis of the think-piece dated 14 November in The Diplomat
• Shale revolution in the Golden Age of Gas -  Presentation at the Low Carbon Earth Summit 2013 in Xi'an, 26-28 September as Speaker and forum chair 
• China's choking pollution - Is there a cure? TV interview on Inside Story with Aljazeera English dated 22 October 2013  
• The Golden Age of Gas - A collection of key references    
• Enforcing China’s RMB4.5 trillion Planned Green Economy  - An analysis   

 Economy, finance and the RMB 

• The Ascent of the RMB - My full-length research paper  (5,730 words, excluding Abstract and footnotes)
• China - Grim forecasts not supported by determined push for economic transformation -  Op-ed article in the South China Morning Post of 19 August 2013  
• China: from shadow banking to full currency convertibility by 2020  -  Article in The Global Analyst, India
• A fully convertible yuan is possible by 2020, but only if reforms can succeed -  Op-ed article in the South China Morning Post on 22 July, 2013
• Pilot Shanghai Free Trade Zone (SFTZ) - It's what you don't see that counts - An analysis  
• Can China maintain growth and overcome the Middle Income Trap by 2020? An analysis
• "Winners and losers of China's slow but steadier growth"- Financial Times
• Currency War? Well, it's been going on for centuries- An analysis   
• China's mounting debt problem - Reuters Breaking News, September, 2013 
• What is next for China ? - McKinsey Insight
• Healthcare in China - entering uncharted waters  An analysis  
• Can China remain the Factory of the World? McKinsey & Co  
• The hyper-globalization of trade and its future- Arvind Subramanian and Martin Kessler of the Petersen Institute for International Economics 

Politics

• China may not need to give up one-party rule any time soon? An analysis  of an Intelligence Squared debate in London.
• What does Bo Xilai's harsh sentence tells us? An analysis
• Trial of Bo Xilai - what is it all about?  Live radio interview on Voice of Russia on 22 August whilst on vacation in London
• How long can the Communist Party survive in China? An analysis
• How China's leadership is tempered - A cartoon video that went viral 
• In defense of China's Communist Party  - A TED talk on Youtube by Eric X Li

Urbanization and Green cities

• "Remagining China's Cities - Towards a sustainable urbanization" - China Dialogue 2013
• “One Bridge, Three Cities, and Half of China” - Research by Bauhinia Foundation on the Hong Kong-Zhuhai-Macao Bridge to be completed 2016 
• The world's leading eco-cities - Success Factors - A presentation at the First Annual International Conference on Emerging Industry, Shenzhen, 6-7 November, 2013 as Speaker and forum co-chair  
•  How to make a city great - McKinsey & Co

China may not need to abandon one-party rule any time soon?

"Western liberal democracy would be wrong for China" was a motion debate in London on 9 November 2012 sponsored by Intelligence Squared, a premier forum for debate and intelligent discussion.Click here

The debate was timely. A slowing and increasingly protest-prone China with a dwindling labour pool was at a crossroads pending a new leadership, notwithstanding impressive economic rise within three and a half decades. Nevertheless, according to successive PEW survey findings, despite a plethora of challenges, the majority of the Chinese people are still expressing greater satisfaction with the way the country is progressing. Few demand regime change. This contrasts with sputtering economies in the West with political gridlock and rising social discontent, liberal democracy notwithstanding.

The debate managed to thrash out most of the issues, that freedom and democracy are universal values, that much of China’s growth is inequitable, and that behind the façade of impressive growth lies a host of ugly repression, corruption, widening inequalities, vested interests, and ecological degradation.

The outcome of the debate was not unexpected, considering how informed the audience really was about the pros and cons of China’s development model. It implied that a one-party system must be universally bad and the sooner it is given up, the better.

However, the following arguments beg to be answered -

(a)     Would multi-party liberal democracy have delivered for China at least similar outcomes in terms of economic and social development, lifting as many people out of poverty in as short a time? The example of India may be instructive.

(b)    Would elections have succeeded in maintaining national unity for a country as vast and diverse as China? Recent cases of Egypt, Thailand, and yes, even the United States, do not seem to inspire confidence.The Economist (The United States of Ameoba, 7 December, 2013) graphically shows here how America's politics have become morbidly polarised. Elsewhere, there seem to be signs of fatigue, if not failure, of multi-party democracy.

(c)     Multi-party or single-party systems all end up in one government. The proof of the system must be its ability to deliver the goods for most of the people. History seems to suggest that a one-party state does not necessarily do worse. If anything, an enlightened one-party system seems to be better equipped to achieve results as it doesn't have to worry about the next election. It is not without reason that Thomas Friedman, influential author and New York Times columnist, laments in his popular book, Hot, Flat and Crowded (Penguin Books, 2009) that America should become "China for a day (but not for two)" (Part V, Chapter 18). 

(d)     While western liberal democracies reward successful politicians, the current Chinese party system seems to select more able leaders through competitive meritocracy built over an entire career, political infighting notwithstanding. See here how the Communist Party now works.

(e)       According to United Nations Human Development Indices, China's model outperformed many democratic developing countries in virtually all indicators including life expectancy, economic well-being, law and order, health, and education, except, by definition, civil and political rights (China Modernizes, Randall Peerenboom, Oxford University Press, 2007).  There is no lack of examples to show that, for certain developing countries, democracies have failed where benign authoritarianism has succeeded.

(f)     The Intelligence Squared debate seems to be fixated at Tiananmen Square 1989. A lot of water has past under the bridge. To maintain stability, the Party must now continually earn the trust and support of the people. Their aspirations are becoming more diverse and liberal with a rapidly rising and better-educated middle-class. This means that the Party tries to keep breast with the times to stay relevant. One can see why such bold reforms as unveiled at the Party’s latest Third Plenum are now necessary. Click here If only gradually, such reforms embrace certain norms of human dignity, rule of law, judiciary independence, and civil society. However, these norms are not the prerogatives of liberal democracy. Provided a one-party state is able to respond to people’s rising aspirations, co-option of liberal norms may enhance its legitimacy without multi-party politics.

(g)     China’s ancient dynasties offer plenty of lessons in governance. The “mandate of heaven” was soon forfeited where a ruler failed to connect with the people. The flip side of the coin was certain dynasties, such as the glorious Tang dynasty (618-907 A.D.), when the ruler and the ruled enjoyed long periods of stability, prosperity and national strength. Naturally, we are way past dynastic times. But the analogy of the legitimacy of ability to connect with the people remains valid.

(h)    This is not to say that China's model is without faults and serious drawbacks. Previous Premier Wan Jiabao famously said that China's development is ""unstable, unbalanced, un-coordinated and unsustainable" Nor is this to say that China's model is the ideal solution. China refuses to tout her development as any model for anyone, as each country's circumstances are different and each stage of development demands different approaches. Above all, China does not believe in any one-size-fits-all model that suits all countries at all times, including China herself.

I was conscious of the risk of my article being accused of political propaganda. The Western mind can hardly accept that a one-party state has anything positive to commend itself at any time. I hope to raise the possibility, if only for unbiased debate, that a one-party state may well suit a stage of development of a vast country like China better than multi-party democracy, at least for now. Indeed, provided the Party continues to change with the times, as it has vowed to do, whether China may not need to abandon one-party rule any time soon.

Best regards,

Andrew

www.andrewleunginternationalconsultants.com