In order to maintain its regime, Beijing must face up to three challenges
This column was previously published in Les Echos on 1st octobre 2019
For the heavily criticised Chinese Republic and its president, Xi Jinping, the 70th anniversary of the regime is the occasion to rethink a system that must inevitably reinvent itself.
On the occasion of the 70th anniversary of the People’s Republic of China, there is no farewell drink planned at Zhongnanhai, the seat of government. But, even if the Communist Party intends to remain at the helm for a long time to come — with 2049 as its target — in order to ensure China’s supremacy over the USA, President Xi Jinping is nevertheless going to have to face up to an unprecedented challenge.
The first challenge is political. Contrary to the general perception that prevails in the West, Xi Jinping is being heavily criticized even within the ranks of the Communist party, which explains the long delay in convening the next conference of the Central Committee. In the view of numerous critics, the sudden conquering attitude with regard to foreign countries — the complete opposite of Deng Xiaoping’s doctrine — has come ten years too soon.
The “debt trap” of the silk roads is becoming a real nightmare for China in countries like Venezuela and the Democratic Republic of Congo, and the “Made in China 2025” plan that prioritizes ten industries of the future, seems only to have served as a trigger for a technology war with Trump’s USA. Both of these initiatives, seen as a spearhead for the nation’s future, have now been relegated to second place in government propaganda.
The second challenge is economic. Even though it was a very clever move by the Chinese central bank in 2017 to plead for the end of the recreation of monetary easing, a technology clash with the USA had not been foreseen. The co-occurrence of these two brakes on economic activity caused the escalation of the conflict between the private sector and Xi Jinping in the second half of 2018.
The technology clash with the USA was not foreseen.
Confidence will have to be restored within the business community.
The loss of confidence within the business community has only partially been restored by the gradual return of credit in the private sector in 2019. This has occurred at a time when the disappearance of China’s balance of payments surplus has led the government to review the mismanagement of state grants, as in the case of the electric battery industry which is still not competitive in spite of the appalling total of 60 billion dollars of public funds that have been poured into it over the last ten years!
Finally, there is a social challenge. For the moment, the only real manifestation of Xi’s promise of a “Chinese Dream” is in a revival of nationalism which is being used to fill the vacuum left by the decline in the notion of family — resulting from the single child policy — which is the cornerstone of Chinese society.
Social media have revolutionized the Chinese lifestyle. On average, Chinese people spend six hours a day on social media, bringing a new lifestyle based on a curious fusion of real and virtual worlds. The government well understands that it will have to take control over the contours of these worlds, which are currently difficult to delineate. This is all the more necessary now that the young people of Hong Kong have just reminded their leaders that real estate hyperinflation can become a time bomb. And this also serves as a reminder of the hyperinflation in food prices at the end of the 80s, which was the real cause of the Tiananmen uprising…
Bearing in mind these challenges facing the Chinese Communist Party, the West must be careful not to make the mistake of underestimating the ability that Chinese leaders have shown over the last 40 years to reform in order to adapt their economic and social model by means of experimental areas — for example, the “Greater Bay Area” in Guangdong province. Therefore, the People’s Republic of China and its president should not consider this 70th anniversary so much as an opportunity to “begin a career as a dictator” (as de Gaulle once said) but rather as an opportunity to rethink a system which — as was the case at the end of each decade, in 1980, 1989 and 2008 — must inevitably reinvent itself.
