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President Xi’s Dog and Pony Show

By Dr. Miklos K. Radvanyi

Historically, most illusions have existed to disappoint. Western illusions that economic development and increased prosperity would somehow liberalize both politics and the economy in the People’s Republic of China have not fared better. The Sino-optimist in chief President Clinton envisioned in one of his frequent speeches that free enterprise would result in political freedom in the post-Mao China. Wexing almost poetic he predicted that the people “will demand a greater say.” His successor President George W. Bush also opined that China’s WTO entry would bring political benefits by enhancing “more open contacts with the world of freedom.” Not to left behind, self-described “citizen of the world” President Obama saw his mission in delivering rousing speeches about the burgeoning friendship between the two countries without ever developing a coherent China policy.

Initially, the optimism of successive American presidents appeared to be warranted. Mao Zedong, the incorrigible visionary with his belief in world revolution against Western domination and with his disastrous economic and social policies was replaced at the end of the 1970s by the cat and mouse pragmatist Deng Xiaoping. Having encouraged more economic freedom for a starter to his reforms, Deng had to quickly realize the potential political threats to the monopoly of Communist Party of China in the shape of the 1989 Tiananmen Square protests. He died a disappointed and embittered man, for his reforms failed to change iota the unworkable and rigid political system. After his death, he was followed by two faceless party bureaucrats, Jiang Zemin and Hu Jintao. Their policies consisted of protecting the monopoly of the party, while taking advantage of China’s low cost manufacturing capabilities.

Enter in 2012 the new President Xi Jinping. In act one of his reign, President Xi engineered an anti-corruption campaign to eliminate his political opposition. In the ensuing purge, he reorganized the highest bodies of the Communist Party of China and the top leadership of the People’s Liberation Army. In act two, he assumed the combined role of head of state, head of the government, including the position of military commander in chief, and leader of the party, thus becoming the undisputed dictator of the People’s Republic of China. Finally, in act three, he was appointed dictator in perpetuity at the 19th National Congress of the Communist Party of China, commonly referred to in Chinese as Shijiu Da.

Held in the Great Hall of the People in Beijing between October 18 and 24, 2017, the National Congress amended the party constitution by including in it “Xi Jinping Thought on Socialism with Chinese Characteristic.” Hand in hand with the revision of the party constitution came the changes in the state’s constitution too. The new article 1 of the amended constitution states that “The socialist system is the fundamental system of the People’s Republic of China. The leadership of the Communist Party of China is the most essential feature of socialism with Chinese characteristics.” Indeed, the party is the state and the state is the party. With this radical fusion, the dogma of collective leadership went out of the window too. Thus, the absolute dictatorship of Mao Zedong has been restored on steroids. L’Etat, c’est moi. I, President Xi, am the state. I, the dictator for life cannot do wrong.

Yet, restoration is as far away from reforms and revolution as “Socialism with Chinese Characteristics” is from democracy. Reverting to Mao’s interference in the domestic affairs of foreign countries, President Xi has made an unsolicited offer to the world to export “Chinese wisdom and a Chinese approach to solving the problems facing mankind.” His flagship initiative called One Belt One Road designed to demonstrate “Chinese wisdom” is already in deep trouble. Projected to cost at least between $4 and $8 trillion and beyond, this initiative is increasingly questioned for its “Chinese wisdom” both domestically as well as internationally.

Domestically, China’s spiraling debt and huge rural poverty have forced many in leadership positions to lift the veil of illusions and face reality. At the same 19th National People’s Congress, Prime Minister Li Keqiang reported that the GDP growth rate will drop from the previous 7 percent to 6.5 percent. Even if accepted that Li told the truth, this was the lowest growth rate since 1990. However, considering the utter unreliability of Chinese statistics, it is safe to assume that the Chinese economy has not grown significantly or at all between 2017 and 2018. According to several news outlets, Li also mused about the effectiveness of the economy’s ongoing transformation, conceding that it will be protracted and painful. More precisely, Li compared the Chinese economy to a butterfly fighting to emerge from its cocoon. Good luck to this endeavor.

Internationally, the People’s Republic of China has not fared better lately. Trying to resurrect the eponymous Silk Road, the One Belt One Road initiative contains a land-based as well as a sea-based concept. Going back to the early Han dynasty, the initiative has historically been characterized by its exclusive militaristic and imperialistic objectives. Believing wholeheartedly in “The Chinese Century”, Xi has in mind the total domination of East Asia, South Asia, Central Asia, and beyond. The recent espionage scandal across Africa and the aggressive financial penetration of Europe have only been the two most visible signs of Beijing’s real intentions, namely to replace the United States of America as the world’s only superpower. Called the “harmonious world” strategy, it intends to colonize as many countries as money can buy.

Moreover, the construction and militarization of artificial islands throughout the South China Sea and beyond signal a political-military strategy of massive intervention where and when Chinese investments and assets are threatened. To wit, the more intrusive Chinese penetration abroad is, the stronger the anti-China feelings are. In Africa, where the Chinese presence is most palpable, voices about colonization and racism are growing louder by the day. The Muslim states of the former Soviet Union complain about Beijing’s treatment of its Uighur Muslim minority and the lack of adequate financial contributions to the One Belt One Road initiative in their countries. In addition, Europe has not appeared to warm up to the Chinese initiative. With the exception of the government of Hungary, no European Union member state has shown any interest in allowing the People’s Republic of China to enter their markets in a meaningful way.

Clearly, there is a People’s Republic of China that President Xi and the Communist Party of China want the rest of the world to see and then there is a country that exists behind the illusionist tricks of Beijing’s relentless and misleading propaganda campaign. The reality is that the People’s Republic of China is being torn apart by uncontrolled public and private debt, exacerbated through the corrupt official and mafia-like shadow banking system, the long-festering demographic crisis with an increasingly aging population, a diminishing younger generation that is incapable of providing a viable safety net, rural poverty that even exceeds the worst living conditions in the poorest underdeveloped countries, and close to hundred million children whose parents abandoned them for a better life in the coastal cities.

Most importantly, the dangers inherent in the murky shadow lending are well documented by the analyses of Moody’s and the IMF. According to the former, shadow lending comprises more than 80 percent of China’s GDP. To add insult to injury, the most recent IMF study on global financial stability warns that albeit “regulators (in China) have taken a number of steps to reduce risks in the financial system …..vulnerabilities remain elevated. The use of leverage and liquidity transformation in risky investment products remains widespread, with risks residing in opaque corners of the financial system.” The malady of the Chinese “debt bomb” is closely related to China’s demographic disaster, going back to the infamous “one child” policy of the Mao era. It is predicted that by 2030, the population over the age of sixty will be close to four hundred million, while the population between twenty and twenty four will decline to approximately seventy million. In sum, by 2030, a single working individual will have to support at least six aging and unemployed persons.

To wit, China’s education system outside the eastern coastal cities is abysmal beyond any imagination. The multitude of children left behind by their migrating parents are either badly educated or not educated at all, creating a functionally unemployable class of unproductive masses.

The government’s own studies stipulate that more than half of the about hundred million children have IQs lower than ninety. Indeed, the future of the “Socialism with Chinese Characteristics” is extremely bleak.

However, President Xi’s most threatening nightmare is the ever present political danger of unemployment. For a starter, China’s export oriented, complex industrial system can only be maintained by the demands of the American and European markets. Most probably, President Trump’s economic policies vis-a-vis Beijing will plunge the Chinese economy into a severe and protracted recession. The newly installed personality cult of President Xi’s dictatorship has positioned the People’s Republic of China between the rock of rapid economic decline and the hard place of political uncertainties. Indeed, President Xi’s most pressing problem beyond the economic realities is the looming collapse of the one-party dictatorship.

It cannot be claimed that President Xi is completely oblivious to his country’s dire economic situation. After all, under his leadership the economy has started its precipitous decline. In spite of all the bravado, his country’s per capita income is less than half of Japan’s in the late 1980s. More importantly, to the eternal shame of his “Thought”, economic inequality in the People’s Republic of China is highest in the world. According to government estimates, the proverbial one percent accounts for almost forty percent of the nation’s wealth. His quest for centralizing the control of the rural economy has clearly been an unmitigated disaster. The truth is that the speeding train of the Chinese economy lacks a driver who might apply the breaks before the entire set will plunge into the abyss. President Xi appears to be incapable of guiding the Chinese economy from a state of rapid economic growth to the more sophisticated high-quality development. The fact that two thirds of the population live in poverty creates a horrendous political problem that cannot be solved by returning society to the failed policies of the 1950s, 1960s, and 1970s.

Presently, the People’s Republic of China is fighting for its very existence. President Xi and the Communist Party of China are passing through a great crisis. As before him Lenin, Stalin, Mao, Khrushchev, Brezhnev, Andropov, and Chernenko, his “Thought with Chinese Characteristics” is nothing but an ideology of absolute dictatorship maintained by his newly found militarism, which is the menace to Asia and a threat to mankind. This ideology is a poor substitute for statesmanship. It lacks the legitimate principles of a government in which the political leadership is supported by the consent of the people. President Xi’s “Thought with Chinese Characteristics” does not have the support of universality and the approval of the majority of mankind. While the Chinese economy is declining, his military buildup can only have a limited range of influence. For this reason alone, his dream of Chinese supremacy will only divide the world. It will never be capable to establish universal peace that the world so urgently needs.

President Trump is right. The United States of America must stand up to the People’s Republic of China and assert the supremacy of democracy and economic freedom over a regime that is hell-bent to keep its subjects in eternal political and economic bondage. If President Trump and his Administration do not relent, the United States of America will be joined by many countries that are opposed to Chinese “harmony.” On the other hand, President Xi and his country can hardly reckon on too many sympathizers in their bid for world domination.