In an op-ed at the Wall Street Journal scholar Michael Auslin remarks on developments in Chinese foreign policy and politics:
China will remain an integral part of the global economy. Its strengthening military will give it influence beyond Asia. And its political voice will be heard in international councils. Yet the world now understands the dark side of doing business with Beijing, while Chinese citizens chafe against Mr. Xi’s increasing domestic repression. With the Chinese Communist Party unwilling to reform, Beijing faces major strains ahead.
The Chinese government has linked economic aid to its strategic objectives. In particular, its Belt and Road initiative has promised $1 trillion of infrastructure spending throughout Eurasia. But Chinese aid increasingly is seen as a “debt trap†ensnaring less-powerful nations. They often surrender key facilities or agree to a greater Chinese presence in their countries after they becoming unable to repay development loans.
Malaysia and longtime Chinese ally Pakistan have announced they will be cutting back on Sino-funded projects for fear of indebtedness to Beijing. A recent election in the Maldives oriented the small Indian Ocean nation away from China. Expect more skittishness on the part of potential Chinese partners in vital locations around the globe.
Beijing’s heavy hand against foreign corporations—for example, demanding they list Taiwan as part of China or risk repercussions to their businesses—also is wearing Western patience thin. And the U.S. and Europe are angry over decades of rampant intellectual-property theft. Many companies are playing along for fear of losing China’s market, but they will take the first opportunity to rebuff Beijing’s demands.
Another blow has come courtesy of Mr. Trump. However much criticized at home, his tariff war is hitting China’s economy hard. Its stock market is around a four-year low, while Beijing’s bluster is offset by repeated overtures to resolve the confrontation. Thanks to China’s $350 billion trade surplus with the U.S., Washington can target a broad range of Chinese goods with tariffs. The damage to American firms from the current trade war may be significant, but China can’t weather a prolonged battle nearly as well.
The trade war has highlighted other weaknesses in the Chinese economy. Doubts about the country’s official 6.7% economic growth are widespread, while its massive debt burden, estimated at 300% of gross domestic product, raises alarms, especially within the private and state-owned-enterprise sector. Some Chinese businesses have gone on foreign spending sprees and now seek to unload their holdings. Insurance giant Anbang, for example, wants to sell its $5.5 billion real estate portfolio, which includes the Waldorf Astoria Hotel. Beijing has clamped down on other big spenders, due to fears of corporate failures as well as an overheated property market. Rampant speculation has led to regional bans on corporate property purchases amid concerns of a real estate bubble.
All these problems come on the heels of increased repression in China. Mr. Xi, now president for life, has created a cult of personality unseen since the Mao era. He dominates his putative co-leaders, and his anticorruption campaign served to eliminate potential elite opposition figures. He has clamped down on civil society with impunity.
The country also is poised to become the world’s first total surveillance state. It already has 200 million surveillance cameras and plans to operate more than 600 million, all using the most advanced facial recognition software. This even extends to special glasses worn by the police.
Despite Mr. Xi’s repressive policies, the first signs of discontent have emerged. Mr. Xi’s ambitious reform program, first unveiled in 2013, has resulted in little change. A critique of the government from a professor at the prestigious Tsinghua University recently went viral, while Chinese officials have begun to walk back their boastfulness about the state of the economy. Mr. Xi has had to defend his propaganda blitz.
There are still hundreds, likely thousands, of protests every year against official corruption and the government’s heavy hand. Then there is the severe yet largely hidden repression of Muslim Uighurs in Xinjiang, where as many as one million are reported to be held in modern concentration camps. Combined with its repressive policies in Tibet, the Chinese Communist Party has engendered a seething hatred from the country’s minorities.
No one should expect a revolution soon in China. And as shown by El Salvador’s recent switch of diplomatic recognition from Taipei to Beijing, its economic pull remains attractive to many poor nations. But China’s road ahead is increasingly rocky. Far from adopting many of the norms of the postwar world, Beijing has attempted to rewrite them in its own favor. Now the question is how far will China’s leaders go in curbing their assertive behavior and rapacious policies. Sticking to the current path will lead to greater tension between China and the world and risk more unrest at home.
Chinese politics are more opaque if anything to us than their government or economy are. My advice: ignore the press releases and observe the behavior. If the Chinese people behave as though the Chinese economy is in recession, it probably is. If China’s authorities behave as though they were losing control, they probably are.
I don’t think we should waste time trying to discern what will happen in China or what we want China to do. In particular we need not be concerned that China’s influence will eclipse our own. I have confidence that the Chinese authorities will be their own worst enemies. I think we should reserve our attention to what will happen in the United States and what we will do.
