In a recent essay in The Foreign Policy magazine, Stephen Walt analysed why governments, even well-intentioned ones, make bad decisions. Top of the pile of iconic bad decisions was President Vladimir Putin's sudden decision to invade Ukraine. The decision to invade Ukraine has been followed by a series of equally bad decisions on managing the war and public relations.
In less than six months, Russia's superpower glory has ignominiously come crashing down, irretrievably so for the foreseeable future. Its defence forces, considered second only to the US in terms of technology and capabilities, will never be seen with any awe. The latent fears of its Slavic neighbours in its near-abroad, which has subsided in the decades after the collapse of communism, is now back with full force. It's now inevitable that EU and NATO will encircle Russia, something which Putin has fought hardest to avoid. The country has lost its most important strategic lever over Europe, energy dependency. It has ensured that a generation or more of European leaders will think twice before engaging with Russia. It has ensured that its relationship with China is now one which is more of dependency than any reciprocity. Russia has become a rogue state to the western nations, similar to the likes of North Korea, Venezuela, and Iran.
All these have happened in a few months, thereby making the original decision salient. However, what if a similar outcome emerges over a longer period of several years, but triggered by one decision? I cannot but not avoid drawing parallels with the election of Xi Jinping as China's President in 2013 and the series of actions that have since followed culminating in his coronation as President for an unprecedented third term. Incidentally, as if timed to perfection, just before the coronation, the US gifted President Xi with perhaps the most biting US sanctions on China till date.
The latest US sanctions banning the export of equipment and services to semiconductor manufacturers in China is a clear signature of China's exclusion from the global economic system. The export controls ban the export to China of US semiconductor equipment that cannot be provided by any foreign competitor. See this explainer for its impact. They also impose a license requirement for exports of US tools or components to China-based fabrication plants that make advanced chips and for exports of items used to develop Chinese made chip production equipment. An FT editorial wrote,
Previous sanctions on Huawei almost broke the Chinese smartphone and network gear maker. The latest restrictions not only threaten entire sectors but Beijing’s broader policy goals too. The latest US measures include restrictions on the export of advanced chips used in artificial intelligence as well as curbs on the sale of chipmaking equipment to any Chinese company... Now mass production of any type of chip will become difficult. Local makers have been catching up rapidly with design and development aspects of chipmaking in recent years. But the final stage — making chips and etching the precise patterns on silicon wafers — remains highly reliant on imported gear. SMIC uses equipment made by US chip gear makers Lam Research and Applied Materials. Secondary sanctions would extend to Dutch peer ASML, the world’s biggest supplier of advanced chipmaking gear... The arrested development of local artificial intelligence, data centres, electric and smart cars sectors could easily prove to be the heaviest technological blow the US has meted out to China.
This twitter thread says that by forcing all Americans working in Chinese semiconductor industry from leaving, the sanctions had done more than four years of Trump to "paralyse Chinese manufacturing" overnight.
In his two-hour opening speech at the 20th Communist Party Congress, widely seen as his coronation for a historic third term, Xi focused on issues of national security and corruption, and the importance of state in the economy. He promised a larger role for socialism and the public sector. As the NYT wrote, this marked the clearest sign of China returning to its roots - "a state controlled economy that demands businesses conform to the aims of the Chinese Communist Party". He also emphasised that "state-owned capital and enterprises get stronger, do better, and grow bigger".
From 2019 to 2021, state-owned enterprises acquired more than 110 publicly traded Chinese companies, valued at more than $83 billion, according to Price Waterhouse Coopers. Such acquisitions were rare before Mr. Xi took over in 2012; by then state-owned enterprises’ share of the economy had been declining.
This article explores the growing centralisation of powers and emergence of an authoritarian government which is now being considered less tolerant of dissent than even Russia and Iran. It speaks to three prominent Chinese academics who are now living in exile in the US,
They all believe that China, with its vast surveillance systems and punitive social control, now resembles Stalin’s Soviet Union and Mao’s China. In their view, even Russia and Iran have more space for dissent.
This is a fascinating graphical feature on how Xi Jinping rose to power and his team of officials.
For decades after Deng Xiaoping’s reforms in the 1990s, the leaders followed unwritten rules, such as ensuring a balance of ages and political factions across the highest echelons of the party and ceding their posts at the end of two five-year terms. This system had ensured peaceful transitions of power after 30 years of increasingly chaotic rule under Mao... This has prevented rival groups, or one individual leader, from becoming too influential. Xi has eliminated those restraints. He has achieved this by manipulating appointments to the upper echelons of the Chinese Communist party (CCP) and purging key rivals from the leadership. It is through his control of the personnel system and a sweeping corruption crackdown that he has been able to bulldoze the factions that once dominated the party, stacking key positions with loyalists and sidelining any potential challengers to his leadership...
Wang, a seasoned bureaucrat, was tapped to lead an unprecedented crackdown as Xi’s new anti-corruption tsar. The campaign was legitimised by rampant corruption across the party-state, but it soon became a tool for Xi to purge his political rivals... Among the first in a series of key military and political heavyweights to fall was Zhou Yongkang, the former head of China’s internal security apparatus and a supporter of Jiang. The arrest of Zhou shattered an unwritten rule since the end of the Cultural Revolution — under Xi, even incumbent or retired standing committee members were no longer untouchable.
This essay from Cai Xia, who for 15 years was a professor in the Central Party School, and who trained several of the current politburo standing committee, politburo and central committee members is a must read. Her prognosis is bleak,
Emboldened by the unprecedented additional term, Xi will likely tighten his grip even further domestically and raise his ambitions internationally. As Xi’s rule becomes more extreme, the infighting and resentment he has already triggered will only grow stronger. The competition between various factions within the party will get more intense, complicated, and brutal than ever before. At that point, China may experience a vicious cycle in which Xi reacts to the perceived sense of threat by taking ever bolder actions that generate even more pushback. Trapped in an echo chamber and desperately seeking redemption, he may even do something catastrophically ill advised, such as attack Taiwan. Xi may well ruin something China has earned over the course of four decades: a reputation for steady, competent leadership. In fact, he already has.
The article informs how Xi was a middling performer and how his princeling connections helped him at all levels of his rise up the Party hierarchy. It helped that many Party leaders held his father in high esteem. And Xi has repaid loyalty
After ejecting his rivals from key positions, Xi installed his own people. Xi’s lineage within the party is known as the “New Zhijiang Army.” The group consists of his former subordinates during his time as governor of Fujian and Zhejiang Provinces and even university classmates and old friends going back to middle school. Since assuming power, Xi has quickly promoted his acolytes, often beyond their level of competence. His roommate from his days at Tsinghua University, Chen Xi, was named head of the CCP’s Organization Department, a position that comes with a seat on the Politburo and the power to decide who can move up the hierarchy. Yet Chen has no relevant qualifications: his five immediate predecessors had experience with local party affairs, whereas he spent nearly all his career at Tsinghua University.
In this context, I have described the actions of President Xi as the "Xi Jinping turn", the latest example of the recurrent "bad emperor" problem the country has faced in its long history. I had identified at least four big problems with the Xi Jinping turn - roll-back of economic liberalisation and capitalism with Chinese characteristics, replacement of supremacy of the Communist Part with that of the President and associated centralisation of powers, abandoning of peaceful co-existence with outside work and adoption of needless aggression by the PLA and its wolf-warrior diplomats, and the grandiose and poorly executed Belt and Road Initiative project. This post summarises the problems created under Xi and has links to several other related posts.
A rural entrepreneur in central Hubei province told the FT that he laid off 20 of his 40 workers this year after the authorities told him to turn his nursery into paddy fields. “Eight of them had been living in poverty when I hired them,” he said. “Now they are poor again thanks to President Xi’s food security drive.” A county official in Zhejiang province, where Xi served as the party’s top official from 2002 to 2007, says that he and others had no choice but to implement the government’s food security policy.. For at least one farmer in Jinhua, a city in Zhejiang famous for its flower industry, China’s leader is even more powerful than the weather. “Since ancient times, the weather was Chinese farmers’ biggest worry,” says the farmer, who was forced to close his 600 mu (100 acre) tree and plant nursery in Jinhua this year and has switched to rice. “Now our biggest risk is government policy. You never know when your farm or nursery, which until a few years ago received policy support, will become illegal,” he says.
It could dull the dynamism that has been China’s hallmark since economic reforms began more than four decades ago. And it could deprive China of the mechanisms for self-correction that the Communist party has put in place in recent decades — exposing the life of a nation of 1.4bn people to the whims of a single leader.The new farming edicts (to grow only rice and wheat) are in keeping with a number of other policy decisions, in areas ranging from the technology and property sectors to Covid-19, in which the costs increasingly appear to outweigh the benefits. There is mounting evidence that Xi’s dominance over the party since he came to power in 2012 — and the party’s increasing dominance over the economy and civil society — has made it much harder for China to modify, let alone reverse, potentially damaging decisions.
The bad decisions by Presidents Xi and Putin have converged in the now infamous "friendship without limits", whose limits were brutally exposed even before the ink went dry. I had blogged here about how the Ukraine invasion and the limitless friendship did incalculable damage to China.
President Xi Jinping's legacy would be that he has single-handedly ensured China's isolation from the mainstream global economic system, and with that perhaps capped the country's future economic prospects.
Update 1 (22.10.2022)
Dramatic scenes of Hu Jintao being apparently reluctantly escorted out of the stage by two stewards. He also removed Li Keqiang and Wang Yang from the seven-member Politburo Standing Committee, replacing them with four new members, all close allies. These four, with Xi, anti-corruption Czar Zhao Leji and ideological guru Wang Huning, will now form a team full of Xi's men. One of the four, Shanghai Party boss Li Qiang, who oversaw a disastrous and unpopular Covid lockdown in the city, is likely to become the premier. More than half the members of the 24 member Politburo were also replaced.
Kevin Rudd analyses the work report presented by Xi to the 20th Party Congress and concludes a definitive break with the past and a shift towards a statist and insular dispensation going forward aimed at making China the pre-eminent regional and global power by mid-century.
It suggests a continuing drift away from market principles towards the more comfortable disciplines of state direction and control. While it does make reference to an earlier party mantra of “giving full play to the role of the market in resource application”, this continues to be tempered by reference to the need for “a decisive role being played by the state”. Also notable is an emphasis on national self-reliance in science and technology, the “strategic” allocation of resources for the development of new technologies and the central deployment of human capital, rather than allowing talent to move according to the competitive opportunities of the market. Add to this a call to “increase the security and resilience of China’s own industrial supply chains” in anticipation of future national security interruption...But the most disturbing feature is the analysis of China’s rapidly evolving external strategic environment. In previous party congress reports dating back to the 1990s, there has been a standard reference to “peace and development” as the major underlying trend of our times. Until now, a benign external environment was long seen by Deng Xiaoping and his successors as underpinning China’s ability to focus almost exclusively on economic development... The absence of external threat was seen as fundamental to an almost exclusive emphasis on growth. The emphasis of Xi’s latest report is very different. These standard phrases have been dropped. It is now clear that the Chinese Communist party no longer rules out the possibility of a major war in the foreseeable future. Xi describes a “severe and complex international situation”. The party, he says, must be “prepared for dangers in peacetime” as well as “preparing for the storm”. And in doing so, Xi calls on the CCP to continue to adhere to “the spirit of struggle”. The next five years, he declares, are “critical” for the continued building of a powerful Chinese nation. He calls for “an increased capacity for the army to win”; an “increased proportion of new combat forces”; and for the promotion of “actual combat training for the military”... The central message to take away from the report is that Xi’s definition of national security has replaced the economy as China’s central focus for the future.
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