People in the West routinely ask: “What does China want?” Three recently published books consider this broad question from different perspectives, looking at how this powerful nation got to where it stands today and contemplating where it might be going.
In Superpower Interrupted: The Chinese History of the World, journalist and historian Michael Schuman argues the answer to what China wants is quite simple: the superpower status it always had, but briefly lost.
Schuman takes the reader on an illuminating, 3,000-year journey deep into the country’s history, as the Chinese see it, and offers a thoughtful understanding of the historical roots of its national objectives.
China is often described in the West as an “emerging” economy, playing catch-up on several fronts, but the contemporary situation is very much an aberration, Shuman reminds us.
China, the “Middle Kingdom” at the centre of all civilisations, has been a true superpower for much of its history – an economic and manufacturing powerhouse, a high-tech exporter, a paragon of civilisation and a throne to which “all under Heaven” bowed in deference.
The Chinese self-perception of exceptionalism – that their civilisation is superior and thus deserves to be on top of a world hierarchy – has been a constant through much of its history.
Barbarians and imperialists flattened the Middle Kingdom and shattered its confidence during two centuries of weakness – a brief interruption, and a mere handful of pages in the nation’s multi-volume epic history – but that, Xi Jinping and his followers tell us, will never be allowed to happen again.
While so much has changed over the centuries, Schuman says today’s governing system is not all that removed from the dynasties of yesteryear – China is still a top-down autocracy with authority emanating from the capital through an intensive bureaucracy, as it has been since the Qin unification in 221 BC.
“The Chinese Dream” is Xi’s vision for China’s national rejuvenation that seeks to restore the nation to its rightful place as world leader. The grand declaration amounts to “another imperial restoration”, Schuman says, and is in step with the nation’s cyclical history. The Son of Heaven is ascendant once more.
Yet all of China’s best-laid plans will disintegrate if the economy implodes, as many predict it surely must. The banks are drowning in bad debt; the urban landscape is littered with ghost towns and white elephant projects; zombie companies propped up by the state are only a subsidy away from bankruptcy; and trade wars and tariffs are hammering the vital export sector.
But despite the expectations of many, growth continues, wealth rises, international influence expands. The coming collapse of China is always coming, never arriving.
An opposing view – often just as vocal – believes China’s economy will continue to rocket as the Communist Party stomps to global domination.
Financial angle
Thomas Orlik, a veteran China journalist and the chief economist with Bloomberg, doesn't subscribe to either extreme and his latest book, China: The Bubble That Never Pops, presents a nuanced and clear-eyed take on the country's convoluted financial sector.
Orlik skilfully navigates us through the steps and missteps that China has taken and argues that both sides in the debate have a point – but neither are entirely right. Pulling back the curtain, he sees no elixir that can miraculously alleviate China’s many woes and allow it to soar unchallenged across the world stage. On the other hand, he argues a financial crisis is something Beijing could and should be able to avoid. And the West better hope it can, he says, because if China did falter, the pain would be intense and felt on faraway shores.
Beijing is often underestimated and there is, he finds, a lot to give Chinese policymakers credit for. Over the past two decades they faced down a series of financial crises, recapitalised and listed the major banks, halted two equity market routs, stemmed capital outflows and shrank bank debt and the shadow banking sector. Top-tier city infrastructure is world class and R&D investment is spiralling.
In their efforts Beijing was abetted by a number of factors, including its big space for development (GDP per capita in purchasing power parity terms is still less than 30 per cent of the level in the US), its enormous population, access to foreign technology, and a ready-made blueprint for growth following the footsteps of neighbours like Japan and Korea.
Its high savings rate – China as a nation saves almost half its income – and a controlled capital account that makes it difficult to move those savings offshore, are also helpful and provide banks with a flow of cheap funding. And when all else fails, China’s policymakers can always revert to their Leninist roots and simply abandon procedural or legal niceties to achieve desired outcomes.
Looking ahead, Orlik sees a bumpy road for China but also more potential growth in the digital economy, the high-tech sector and overseas with links to infrastructure investment projects like the Belt and Road Initiative. Anyone who bets against Chinese now, he says, is ignoring how effective they have been in recent years at solving problems and seizing opportunities.
Trump vs Xi
So much hinges, though, on the relationship between Washington and Beijing and that is the story of a romance turned sour. Superpower Showdown: How the Battle Between Trump and Xi Threatens a New Cold War, by Wall Street Journal reporters Bob Davies and Wei Lingling, tells the story of the US-China trade war and how relations between the world's two main economic powers have unravelled.
The narrative details in an engaging manner the threats, counter-threats, calculations and miscalculations the two heavyweights made as they engaged in trade war, tech war and nudged towards cold war. Trump, surrounded by a deeply divided team of advisers, took aim with his tweets, tariffs and tantrums, fed up with Beijing’s procrastination and refusal to level the playing field. Beijing parried, dillydallied and jabbed back.
The key elements of the dispute have not been resolved, with an initial phase deal delivering only a tentative truce, but the authors conclude that for all the costs of the trade battle to date little has been accomplished from the US perspective. The $30 billion in tariffs collected on Chinese goods went to compensate farmers who lost sales to China; the trade deficit and China’s state subsidies continue to grow; there has been no reported reduction in intellectual property theft or Chinese pressure to hand over technology; and Xi has intensified the nation’s focus on self-reliance.
Beijing can point to some changes, such as a new investment law and lower obstacles for foreign investment in certain sectors, but analysts say these reforms were in China’s pipeline anyway.
In key ways, the two-year trade battle has been counter-productive, the authors argue. As China sees it, the US has turned from a model to emulate, at least economically, into an adversary. The widespread perception in China is that Washington is purely intent on thwarting their country’s ascent, and Trump’s bullying tactics have given the Chinese leadership an excuse to double down on its state-led autocratic economic model.
Feeling like it is being pushed around by Washington is clearly one of the things that China does not want.
