In 2013, as soon as Xi Jinping came to power, he tried to tackle the reform of the State- Owned-Enterprises (SOEs). Their inefficiency was dragging down China’s overall economic performance, and their slush funds were corrupting the whole political system on behalf of a few retired and semi-retired party veterans, ruling the country almost like “power-lords.”
His idea was simple: Inject private capital into the SOEs so that private entrepreneurs could keep the state management in check. The opposite happened to SOEs with robust political backing. They bullied private investors and treated their money as some kind of donation to the state company. As a result private investors refused to finance SOEs and SOEs kept on going with their inefficiency, and only the anti-corruption campaign kept graft in check.
Mr. Xi then looked to private companies to turn around the economy.
But large private companies mainly owed their fortunes to the patronage of this or that “power-lord,” and in a culture prizing for centuries strong personal loyalty, none basically would be willing to turn against their old mentors. Besides, if they turned against their mentor, could they really trust the new bosses to be there forever for them? Once a traitor, always a traitor.
Moreover, these entrepreneurs had made money in a system of patronage and cutting corners; would they perform just as well in an open, fair market?
Meanwhile, outside pressure came from America, which wanted full access to China’s market and full convertibility of the RMB. These measures would open China to a massive inflow of foreign capital, and investors would be enthusiastic about the prospect of the country’s innumerable possibilities. But it would also expose China to the risky sudden outflow of capital at any given downturn. This would cause a market crash, then social turmoil, and thus political upheaval.
The consequence of the 1998 Asian financial crisis was that decades-old dictatorships in Indonesia and the Philippines were wiped out as the local currency plummeted, inflation impoverished most people and left them with nothing to lose but their wretched lives. China remembered that well and didn’t want to go down that rabbit hole two decades later.
Then Mr. Xi was left to his own devices. He could get the support of the middle class, happy to be rid of excessive corruption and seeing a more assertive China rising.
But without the assistance of the money makers, who feel excluded, and begrudged by hundreds, if not thousands, of senior cadres with fingers and connections all over the country, Mr. Xi may have a growing issue[1]. Also for this, he advocates for an increased concentration of power in the latest incarnation of the 1988 theory of neo-authoritarianism.
The theory emerged in autumn 1988, after then party secretary Zhao Ziyang had been stripped in August of his economic portfolio. Zhao had tried early in the summer to launch a comprehensive price liberalization effort. In a few weeks, this emptied all shops of any goods and created inflation unprecedented in the history of the People’s Republic.
The party panicked, and Zhao was replaced by premier Li Peng as economic czar, with the backing of veteran Chen Yun. Zhao didn’t give up and promoted young Turks who claimed China needed to cut all cumbersome power structures, and concentrate power in one man who could then push the necessary reforms to their bitter end. Then there would be an open, free market and eventually there could also be a democratic China.
Back to 1989
Between late 1988 and early 1989 the young Turks advocated a concentration of power in the hands of one man. Also, they were looking at the experience in Taiwan, where almighty President Chiang Ching-kuo opened the government and turned the local dictatorship into a democracy just in those years.
Incidentally, the theory divided the liberal camp, then firmly behind Zhao. Many wondered: if Zhao gets all the power, will he give it back? Chiang had done it; would Zhao really do it?
The situation eventually led to the Tiananmen protest, when Zhao pushed against the old guard and was finally toppled.
Perhaps we are back to a pre-Tiananmen situation, minus the mass protests almost impossible presently, but with a different background. Mr. Xi, like Zhao, is pitted against the veterans. Unlike 33 years ago, Mr. Xi now has all the power—in theory. Now, formal power distribution is clearer, but the real power is different.
Then, officials had just come out of the Cultural Revolution, which white-washed all power bases, so nobody was entrenched enough to drag his feet against the top leadership. They were also disillusioned and dispirited, being recently punished just for being loyal communist cadres, so they were willing and eager to go along with any new idea or proposal.
Now officials come from four decades of growing clout and welfare. Their position is highly entrenched. Each of them has complex networks of people, each with its own power base and connections.
Then, if Mr. Xi issues an order, people below are careful to avoid mistakes. First they want to cover their backs. Thus, they do not take risks; they become sticklers for dotting “i”s and crossing “t”s. They have little incentive in taking risks, as people can no longer grease their palms, the most significant incentive for an official initiative in the past. Promotions are hard anyway, and depend on the favor of the top boss. Then who, without the prospect of promotions and personal gain, would try to take an initiative that could just have a downside?
That is, 33 years ago, Zhao had the veterans against him, but lower officials, disillusioned about their past and their present, would have followed him. Mr. Xi may have marginalized the veterans, but lower officials have everything to lose in following him.
Moreover, China’s idealistic liberals, part of the national soul, were backing Zhao in 1989, despite his dubious neo-authoritarianism, and dreaming of democracy. Now the democratic horizon is far hazier, as a growing disillusionment in the Party with the situation of the United States shows China that the West is no longer an ideal to aspire to.
In fact, Zhao had international backing. The West would have supported his reforms. Mr. Xi has few or no friends in the West, which conversely see him and the system of his country as hostile to the West and the current global order. Indeed, Xi’s enemies, the veterans and the middle-ranking party cadres, have friends and support in the West. They complain about Mr. Xi day in and day out, claiming that if China gets rid of him, its problems with the world are over.
Mr. Xi’s friends are people he can buy with direct or indirect financial incentives, but who makes a persuasive, cogent argument for Mr. Xi’s efforts for China, as they did for Zhao or Deng?
Who are Xi’s friends in and out of China? What can he do? These are the questions for China’s paramount leader but also the issues that concern the rest of the world, which is worried about the country’s situation.
[1] See also http://www.settimananews.it/informazione-internazionale/china-the-party-or-xi-jinping/
Well said, Hmm… Sisci was probably shunned by the Chinese officialdom when he lived in China and now tries to look interesting with his bad-mouthing. He hasn’t got a clue. Why do La Settimana and Goldberg’s Asia Times take him seriouy? What a loser!
But Dr Sisci knows China and Chinese politics and culture like few others. You may disagree with his conclusions but you do not have to be so ignorant in your observations.
I think you’re sadly mistaken if you think this is true. Anyone who has studied Chinese history, politics, culture and philosophical beliefs would have doubts about his knowledge after reading his articles. If you think he has knowledge, it is because he displays a superficial knowledge in Chinese culture and politics, and you yourself probably are unknowledgable about these topics.
Sicci’s displayed knowledge is equivalent to a undergrad who has taken a few introductory undergraduate courses in Chinese topics or a wiki on the topic here and there. He knows a bunch of buzz words that makes him appear knowledgeable about the topic, but he clearly has no deep understanding, or has any sense of Chinese perspective or understanding on the matters he writes about.
There’s people who don’t claim to be a sinologist who appear to have a better understanding than Sicci. Even Goldman who makes mistakes here and there has a better understanding of China than he does, but at least he doesn’t claim to be knowledgeable about the topic.
Calling oneself a “Sinologist” and occasionally throwing out contrived references to exotic sounding terminology like “Tianxia” does not confirm that one “knows China”. All we have to judge Francesco’s “expertise” is this column-cum-security blanket, from which it is plainly obvious that all he knows about China is an illusion, a fantasy of what he wants it to be but which it simply will not become, certainly not within his lifetime.
The sad thing is that this is increasingly the norm for self-described “Sinologists” (I don’t even need to append the term Western here, they are all from the West). Modern realities show that China is not a curious trinket they can pull out of their trophy cabinet and safely ponder on their own terms like some static archaeological artifact. It is its own thing which will dynamically evolve as it sees fit. They’re just along for the ride.
You know who Xi’s friends are in China. Any person who is born after the Cultural Revolution. The new generation of Chinese who believes in a new China, a modern China, a renaissance China that is taking its rightful place in the world. Any Chinese still worships the West, especially USA, is too stupid to see the reality of 21st century.
Another Xi’s friend is the Chinese AI system. This AI is top the world, and can out think, out smart, out anticipate human intelligence, especially the corrupt “old guards” who were born before the Cultural Revolution. There is no stopping China’s rise, no one in this world have real gold to bet against China.
What’s new? Sicci is again simply pining for a hypothetical situation in which China commits cultural and political “seppuku”. His reason? China would have “friends”. Except we already have seen another country who already had a liberal political and cultural climate, and was forced to commit “seppuku” by Western states who could not stand to see that an Asian nation may have top standing in the world. China saw it too, as the Western nations dismantled Japan’s growth engine, and ganged up on Japan forcing the Plaza Accords, forcing Japan to accept a “vassal”-like status. This is what Sicci is calling for.
And why? What has the US shown, such that nations should give up their sovereignty to become a mere “vassal” of the US? US lacks moral authority. It lacks economic authority in terms of how its economic rule has led to major financial upheaval. Politically, the people it rules are largely unequal in status, whether politically, economically or culturally, racially with “brown” people being the lowest, and xenophobia in an abundance. Where has the US shown its superiority, such that other nations should follow it?
Sicci CLAIMS to be a sinologist. However, I have yet to see anything he’s written that would make me think he has any deep understanding of China. He often takes snippets of Chinese history or philosophy, and attaches ideas and lessons to it that has nothing to do with how China understands that snippet. He simply views everything from a Western lens. E.g. How can you talk about tianxia without talking about moral authority? Sicci is nothing more than a charlatan.
Here’s a thought. Instead of wasting time pining for hypothetical situations in which China commits seppuku, and a US imposition of a “Qin style” fenshu, or book burning on China to impose its political, economical, cultural dominance, why not try to use your little knowledge about China, to write about a framework in which China and other nations find points where they share common values, in which an international framework could be written on how countries should properly act towards one another.
There is two lessons that Sicci must learn. From the aftermath of WW2, Western nations saw WW2 developing from issues of sovereignty. In therefore Western nations decided to give up sovereignty to keep peace, and we see this in EU, and the US “imperial” stance. This is the lesson China learned from the Warring states period. Meanwhile the 3rd world, that which was neither part of the West, or the Soviet Union, learned an entirely different lesson. The issue was sovereignty. But the problem was that other nations did not RESPECT other nations sovereignty. We see this as nations around the world declared independence from their colonial “shackles”. This is the “maodun”, or contradiction that must be solved. Two different lessons learned due to TWO DIFFERENT experiences. Sicci’s imposition of Western values that were designed to largely solve Western problems, will almost likely not be the prescribed medicine that other nations need to cure their problems that have show different symptoms.