China has quickly risen to become the second largest economy in the world, poised to overtake the US within 5-10 years. They are a nation of nearly 1.4 billion people. They have nuclear capabilities, and they are ruled by the communist party of China. Apart from these facts, westerners don’t know much else about the sleeping giant. This three part article will attempt to cover China’s current position relative to the rest of the world by unpacking the most relevant factors; their economy, their government, and their society. The goal, though ambitious, is to be a rough primer on China’s current position. Coursing throughout this piece will be the underlying question of what the implications are of a strong communist China as the 21st century unfolds. The best place to begin this investigation is with how China has become so successful economically under communism, rivaling the capitalist giants of the west.
Part 1) The Chinese Economy Today
The Communist Party of China has been in control of the national economy since the end of the Chinese Civil War that ended in 1949. China today is still at its core a top-down communist state that has introduced elements of bottom-up capitalism to their economy. Since the early 1980s, under the influence of Deng Xiaoping, China has been allowing free market principles in “Special Economic Zones” or SEZs such as Shenzhen and the “Open Coastal City” of Shanghai. These SEZs have facilitated enormous foreign investment and trade with China. Through these developments, China’s population has seen extraordinary progress in their quality of life, pulling hundreds of millions of its people out of poverty. This does not mean that China’s economy is a free market economy, however. The communist party still dictates which cities will become SEZs and even which companies within the zones will succeed through direct state funding or subsidies. Within the zones, wealth is primarily accumulated by those affiliated with the party or at the very minimum in good standing with the state. Their system benefits those in line with the party over real merit of innovation or labour.
The Chinese Communist Party (CCP) not only controls how China develops internally through SEZs, but also how their economy competes within the global economic system. The CCP strategically controls which imports to allow into China that will increase their productivity, while banning any imports that will negatively impact their productivity. This protectionism of domestic industry has isolated them from more competitive markets around the world, benefiting domestic supply chains and their economic progress.
While protecting industries in China, the CCP has been aggressively making their exports more appealing to other nations. They do this through a few methods. Firstly the CCP heavily subsidizes input costs (land, energy etc.) for major Chinese companies, allowing them to have lower expenses relative to other competitors on the global marketplace. This makes the Chinese companies (usually manufacturers) more profitable for foreign investors compared to companies in other countries that have little or no state help in their production costs. Another technique the CCP uses to make trade more appealing is by manipulating the value of their currency. Since their currency, the Yuan, is not freely traded, their central bank is capable of deliberately downward adjusting their currency in comparison to the USD. By devaluing the Yuan, China is making its exports more appealing to foreign trade since their dollars will go further. The combination of state subsidies and a devalued currency make their exports very appealing to other nations.
The practices above are determined as unfair by the World Trade Organization and contrary to the fair principles of free trade. The major beneficiaries of these unfair practices have been China and the foreign shareholders of companies doing business in China. Though this has meant the importation of very cheap goods for nations trading with China, it has come at the expense of other workers whose industries have been dismantled by these unfair practices. The displacement of these workers has happened at such a fast rate that it is hard for them to adapt and find new work. China’s CCP is not engaging the world with free trade, but instead using unfair practices to extract more wealth from other nations while protecting their own.
The Chinese economy has also benefited hugely from the unfair development of their industries. Take for example their technological advancements. Theft of intellectual property from a Silicon Valley tech giant (and US military) is simply much cheaper and effective for the Chinese than having to conduct their own research and development. Another example is their lack of human rights and environmental laws. Without needing to worry about workers' conditions, they can offer more efficient and cheap labour. If land reclamation isn’t required after companies use land, this again makes them more competitive than other nations who take those concerns seriously. These are just a few examples of the unfair competitive advantages the CCP uses to grow their economy.
The Belt and Road Initiative
The Chinese Communist Party has also been increasing its economic potential through its belt and road initiative. The initiative aims to build trade routes stretching from Europe, Africa, Russia, and the middle east to economic centres in China. The CCP is spending $8 trillion USD to develop this project. A majority of the countries involved with the initiative are poor, developing nations with huge amounts of natural resources. These developing nations have poor infrastructure to extract and move those resources to be traded. China will be helping these nations develop the infrastructure needed (ports, roads etc.) through loans from their state owned banks. This has been promised by China to be a win-win scenario, where developing nations will get necessary infrastructure to take advantage of their natural resources therefore building their national wealth, while allowing China cheap access to natural resources it desperately needs. The loans have interest rates of 1% or lower. Even with these low interest rates, some of these poor countries may have issues repaying the debt. If the debt is not repaid, China has the right to essentially foreclose on the infrastructure they've built. This will allow China and the CCP to directly control these trading routes. The benefits for the developing nations of having infrastructure to get their resources to market as well as a guaranteed importer (China) for the resources may outway the risk of dealing with the CCP and the potential for the “debt trap” they might be setting. Time will only tell if these developments really will benefit the developing nations as is promised by China. What is certain is that $8 trillion USD (~40% of US GDP in 2018) is an extraordinary amount of money to spend on such a project. There are probably better and cheaper methods to attain the natural resources China wants. This is because, as stated by the CCP, the belt and road initiative is not only looking to produce economic growth from the project for China, but to also expand their sphere of influence.
The South China Sea
China has been looking to secure its geopolitical influence not just through the belt and road initiative but also by controlling the South China Sea. One third of the world's maritime trade passes through the South China Sea. It’s a huge highway for the global economy. Nearly forty percent of China’s total trade also happens through the area. Control of the area is a key factor in prosperity and stability for many parties involved. The South China Sea also contains huge reserves of oil and natural gas beneath the sea bed, which could help grow the Chinese economy for decades. The sea also accounts for around 10% of the world's fisheries. Most countries have set their boundaries in the sea according to the UN’s “Law of the Sea”, where exclusive economic zones will not extend further than 200 nautical miles from the shore. China on the other hand has felt entitled to the majority of the sea, with its claims stretching approximately 1,100 nautical miles from the shore of mainland China. They have been escalating their claim on the region in recent years through installing military bases on small man made islands in the region. The most notable cluster of islands are the Spratlys where many shallow reefs were turned into islands for their bases. The Spratly islands are about 700 nautical miles from mainland China. Three of these man made islands have sophisticated military capabilities. Another cluster of desolate islands China has installed themselves on is the Paracels near Vietnam. The Chinese have added a civilian element to the islnds to have a better claim on them. The Paracel islands however are still overwhelmingly militarized in comparison to the civilian elements, with 8 having a strong military presence. The US has been attempting to maintain international regulations in the area through “Freedom of Navigation Operations”. The freedom of navigation operations are essentially what the title alludes to: the ability of anyone, including the US military, to traverse the international water without control from sovereign entities as long as they comply with international law. In response, China has harassed American vessels that have come too close to their islands. China has used fishing trawlers manned by military personnel to patrol the region from other “intruders” while trying to not escalate the situation too much. Slow and steady, they are pushing back the international boundaries in their favour.
All that being said, whoever controls the South China Sea has incredible geopolitical power, whether it be the Americans regulating international laws and their interests in the region, or under the Chinese Communist Party and their vision for China’s future. The tensions in the region are warned by many as being a spark point for potential conflict between the two great powers. I’ll be going into much more depth on the tensions between the US (including Western Capitalist Democracies) and China in a future article. What’s certain is that the CCP is seeking to expand China’s geopolitical influence across the world, and take China’s place among the great nations of the world in the 21st century.
Part 2) The Chinese Government
The Chinese government is solely controlled by the Chinese Communist Party. The party's General Secretary and current President of China is Xi Jinping. He began his presidency in 2013. Since then he has moved to consolidate his power. Xi is shaping up to be the most powerful Chinese leader since Chairman Mao Zedong. After Mao, many of the roles in government were decentralized and a two term limit was placed on the role of President to check their centralized power. These have both been abandoned by Xi. He currently holds twelve official positions within the government including Chairman of the Central Military Commission, Commander-in-Chief of the Joint Battle Command of the People’s Liberation Army, and Chairman of the Central National Security Commission to name a few. He removed the two term limit for president in 2018 where 2,958 of China’s National People’s congress voted for its removal. Only 3 congressmen abstained from voting, 2 voted against, and 1 vote was invalid. With the removal of the term limits, he could potentially stay in power for life. Xi Jinping has also been running an anti-corruption campaign in the government to punish current or retired party officials connected to corruption. Some political observers have stated that he has used it as an opportunity to remove his political rivals. Finally, Xi’s political philosophy has been written into the Chinese constitution. “Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era” was an amendment added to the Chinese constitution in 2018. While President Xi is consolidating power within the government, he is also working to control the conversation about his regime both within China and around the world.
President Xi has been attempting to pacify the world about China’s dealings. China has been funding Confucius Institutes at schools and universities around the world. These institutes are directly funded by the CCP and more specifically the Chinese Liberation Army. Along with spreading propaganda for the communist party, they have also been accused of being fronts for Chinese espionage in academic research. They also monitor Chinese students studying abroad to ensure they are following the party's guidelines. The CCP has also been accused of directly buying both political and media influence in other countries to protect their interests. Whenever Chinese officials are confronted by questions of the CCP’s intentions or questionable actions, the response is to be infuriated by such accusations. They are not only avoiding the questions, but framing them as if they are ludicrous to even be asked and plain offensive. It’s difficult to know the exact extent of China’s campaign to influence the world's perception about their affairs, but it’s certain the CCP does not want to attract attention to their actions and is carefully managing the perception to not rouse more suspicion. This propaganda and censorship of the party’s affairs is that much more apparent and worrisome internally.
As leader of the “Central Leading Group for Internet Security and Informatisation”, Xi is able to have complete control over the internet and information. The government censors anything they do not want their citizens to have access to. By limiting access to information, China’s Communist Party, with Xi at the top, is able to manipulate their population however they see fit. One small and seemingly trivial example of this is the banning of images of “Winnie the Pooh” since they have been used to mock Xi Jingping on his resemblance to the character. Though it may seem trivial, it’s an example of how extreme the control of the Chinese government is of any information, including a joke. The state and it’s leader are not to be questioned. They are working to make sure its citizens stay on track with the party's vision for China. The CCP has implemented mass surveillance on its people to ensure this. They are working to create a “Social Credit System” where its citizens will be ranked on their behaviour. Good behaviour will be rewarded with privileges like better work and travel opportunities. Bad social behaviour like drinking alcohol on weekdays or jaywalking could lower your social credit score and restrict your opportunities. Even associating with friends that have lower scores could bring your own score down. That’s not even mentioning the repercussions of behaviour like speaking against the state. A quote directly from the blueprint for this program is that it will “allow the trustworthy to roam everywhere under heaven, while making it hard for the discredited to take a single step”. Facial and body recognition technologies will allow the Chinese communist party to monitor their citizens wherever they go. That in combination with things like personal banking information and monitoring of online activities will allow them to implement this Orwellian future for China’s citizens. The Chinese people for the most part don't have much of an issue with these developments. This is partly due to the censorship of information, but it’s mostly about how the Chinese culture itself is more conducive to top down leadership than western culture. It’s also due to the incredible rise in quality of life for the Chinese people over the past few decades and how they finally feel that they are getting the respect from the world that China deserves under the CCP.
Part 3: The Society and Conclusion
COMING SOON
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