11 April 2019
xi jinping

China's Third Revolution

Elizabeth Economy’s recent book, “The Third Revolution: Xi Jinping and the New Chinese State”, carefully documents the dramatic changes underway under President Xi, writes John West.

China’s great reformer, Deng Xiaoping, described the reforms he launched in 1978 as a “second revolution”, following the first revolution of Mao Zedong. The second revolution was characterised by reform and opening up of the economy, and a low profile foreign policy.

The rise to Chinese leadership by Xi Jinping marks the end of the Deng era, and the beginning of China’s Third Revolution, writes Elizabeth Economy. In fact, Xi is doing almost the exact opposite of what Deng was doing. Domestic policies are more repressive and authoritarian, while China has become more ambitious and expansive on the international stage.

Key elements of Third Revolution

Professor Economy identifies four elements in the Third Revolution:

(i) Consolidation of institutional power in Xi’s own hands. He has control of all important government commissions and committees. He has forced parts of the government to pledge fealty to him. The constitution has been amended to remove term limits on the presidency, such that he could become “president for life”. This is marked departure from Deng’s collective decision making, which was a reaction against the excesses of Mao period.

(ii) Deeper penetration of the Chinese Communist Party (CCP) into Chinese society and economy. The government is instituting a surveillance system, the “social credit system”, to evaluate and sanction individual behaviour. CCP committees are now being installed in Chinese companies and also joint ventures, so that the Party can play a key role in investment and other corporate decision making. Overall, we have seen a re-assertion of state control of the economy, with state-owned enterprises resurging in importance. In contrast, under Deng, the CCP had substantially withdrawn from society and economy.

(iii) A wall of regulations and restrictions on what’s coming into the country. There used to be more than 7000 foreign NGOs working on issues like poverty reduction, public health and the environment. Following Xi’s new law in 2017, there are now only some 300 foreign NGOs legally registered in China. There is also greater censorship of the Internet, and an explicit policy to limit Western cultural influences.

(iv) A more ambitious foreign policy motivated by Xi’s “Chinese dream” of the great rejuvenation of Chinese nation. Xi is acting to realise China’s claims to sovereignty, notably in the South China Sea. And Xi is also expressing impatience with the status of Taiwan. He is very keen for this “renegade province” to become an integral part of China. He is also eroding the independence of Hong Kong.

Xi is also moving to reclaim China’s centrality on the global stage through initiatives like the Belt and Road Initiative (BRI), and the Asian Infrastructure Investment Bank. China now has a controlling interest in 76 ports in 35 countries. Ostensibly, these are for commercial purposes. But experience shows that as soon as China gets a new port, a People’s Liberation Army navy ship shows up for a visit.

China is very actively courting allies, especially in Africa. This helps China vis-a-vis the West in fora like the United Nations in discussions like Internet sovereignty and human rights. But relations with India are very tense, as India feels encircled by BRI projects in Sri Lanka, Maldives.

Where did the Third Revolution come from?

It had long been anticipated that China would one day overtake the US as the world’s biggest and most powerful economy. But the global financial crisis of 2008 was seen as an inflexion point. It gave many Chinese the impression that the inevitable ascendancy of China was happening more quickly than previously thought. There was however some correction in this as the US economy recovered, and President Obama launched his pivot to Asia, and the Trans Pacific Partnership.

There was also a concern that the CCP was losing its legitimacy due to problems like endemic corruption and the terrible environment. The anti-corruption campaign has become Xi’s signature policy. Anti-corruption campaigns have been a staple of Chinese history, which typically last for a year or two. But under Xi, year after year, more and more people keep getting arrested. Some 500,000 officials were arrested in 2017. It is a very robust anti-corruption campaign!

China’s Third Revolution has come as a big surprise to most international observers. In 2013, most thought that Xi would ramp up reform which had stalled under Hu Jintao. Most Westerners underestimated the persistence of repressive forces in the CCP. Indeed, Professor Economy sees China’s Third Revolution as being 90% a radical break from past trends, and only 10% a continuation of the past.

Is there are China model? Yes, Professor Economy sees an emerging China model based on infrastructure, openness to trade and investment, and political and social stability. Controlling society is key. There is also a new ideological emphasis on Confucius and Marx.

Xi’s China and the US

Has Trump been effective in dealing with China?

Professor Economy acknowledges that Trump has been very effective in putting China on the back foot. China was shocked by Trump’s meetings with KIM Jong-un, the Taiwan Travel legislation which allows senior US officials to meet with their Taiwanese counterparts, the licensing of military technology to Taiwan, and the trade war. But while Trump has broken China’s sense of complacency, the question is where to from here, what is the US really going to achieve.

Xi Jinping’s China does offer the US and other countries opportunities, if we are ready to take advantage of them, but not if US withdraws from the international stage. China partnered with the Obama administration on the Paris Agreement on climate change. The US has also worked with China on the Iran deal, North Korea, and ebola and disease prevention in Africa. But Trump has undone much of this great work.

Threats to the Third Revolution

How secure is Xi Jinping’s Third Revolution? Are there any potential threats to Xi? Professor Economy identified three:

(i) effective management of China’s economic challenges, notably, massive debt, demographic time bomb, pensions, the environment and poverty. A big economic slowdown or an environmental disaster could challenge Xi’s legitimacy.

(ii) broader societal pressures for openness in response to social repression, Internet censorship, and the social credit surveillance system. China has numerous social movements contesting repression, like feminists, LGBT and environmental activists.

(iii) there are always risks that you cannot see -- Xi may have amassed a lot of institutional authority, but has he amassed enough power and loyalty to protect him from dissent. We don’t know about the potential for splits in the leadership. But many retired leaders and Chinese liberals were distressed by the decision to abolish presidential term limits. There are indeed reportedly grumblings from pockets of discontent.

Professor Economy’s book is a welcome addition to the growing cottage industry of books which are critical of China’s economy and politics. Its information and analysis seem very sound, and are part of emerging critical consensus on China. But recent history shows only too well that we have to be sceptical of consensuses among the world’s leading experts!
Tags: china, xi jinping, elizabeth economy

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