China’s Future Political and Economic Moves

Commentary: President Xi wants to avoid China losing its dominant role in the world as a result of the now hopefully ended pandemic. Indeed, he wants to redesign it at a time when, due to past and present mistakes, the productive, social and healthcare system of the United States and part of the EU shows strong failures

Photo: Reuters

On May 22, 2020 China will organize its largest institutional political assembly, the National People's Congress. Institutionally, it should have been held on March 5, but it had been postponed to May 22.

There are two obvious meanings underlying this political choice, which results directly from President Xi Jinping. 

The first and most evident is the return to full normalcy, after the now officialised end of the outbreak in Wuhan, Hubei and of the other minor ones. Secondly, it is the sign of a rediscovered political, organizational and economic operation, pending a confrontation between China and the United States that is expected to become ever less easy to resolve on both sides, but also strongly decisive for the new world geo-economic equilibria.

There will be about 5,000 delegates from all areas of the country representing the 56 constitutionally recognized minorities who, over a period of about ten days, will institutionally define the annual budget, the country’s annual and multi-year economic goals, as well as some important bills. It is a Congress that establishes China’s "global strategy", albeit in a concrete and simple way.

Certainly there is still the block on the entry of Chinese coming from other countries, but workers have returned to factories and almost all schools and universities have been reopened, as well as shops, although there are signs of possible new spreading of Covid 19, which so far the Chinese government has not neglected at all.

The attention will be obviously focused on the Central Government’s Report, which in this case will certainly be needed to have the necessary consensus and support from all regions in the country, so as to avoid both the danger of factionalism, which is central to the CPC’s theory and practice, and above all to provide economic and organisational consistency and unity to all the work that peripheral areas shall carry out on their own.

This is a typical mechanism of the Third International’s tradition.

I was once confidentially told by Deng Xiaoping, who also came from one of the recognised minorities, that they did not want Communism as it was achieved elsewhere, but just Socialism, albeit with Chinese characteristics.

Without bearing this in mind, even today little is understood of the Chinese political system and of its medium and long term goals.

At economic level, in fact, in the first quarter of 2020 China's GDP fell by 6.8% compared to the same period of last year.

The sharpest economic downturn since 1976, when Mao Zedong died and the GDP decreased only in that period, and later started to always grow again by 1.6%.

A final important sign to Western analysts was sent by President Xi Jinping on May 18 last, at the Assembly of the World Health Organization.

Obviously the first signal follows the vast diplomacy of support and economic and health collaboration, which characterized China immediately after the outbreak of the Wuhan epidemic-pandemic.

In other words, President Xi Jinping wants to eradicate the idea that the Covid-19 virus is only “made in China” - an idea that characterizes the great “fake news” that has alarmed the United States and so far collected 116 adhesions to the request - recently made by the EU - of an independent study on the virus origins and on the new ways of spreading among human beings it has shown. 

The first information and economic goal pursued is to avoid - first and foremost - the worldwide defamation of China, of its economy and of its reliability, and also avoid having to pay large sums of money for repairing the damage caused by Covid-19, should some countries, just like the United States, want to resort to this legal-administrative and insurance instrument to achieve their real goal, i.e. preventing China from playing - for a sufficiently long time - its current role as global competitor at economic, political and military levels.

Hence, as President Xi Jinping clearly stated at the WHO Assembly, China does not feel to be and is not responsible for any life lost in the world due to the Covid-19 pandemic. 

President Xi Jinping also added that China reacted as quickly as possible - as opposed to the slowness of action in other Western countries - thus clearly perceiving the threat posed by the pandemic. The President also said that it was China that first spread the sequencing of the entire virus genome, through the usual procedures, i.e. the official transmission of data to the WHO. 

Therefore, President Xi's speech at the WHO is intended to reaffirm China’s centrality. This will certainly be reaffirmed also at the forthcoming National People's Congress, but with another secondary objective, i.e. to underline the isolation of the USA and its “factionalism”, just when China is regaining - after the pandemic - the primary role it has played in recent years as the leading country of the new globalization, while Donald Trump's “America First” policy is isolating the United States from the EU and from China itself and is reproposing an old "Cold War" tension with the Russian Federation, as well as finally rebuilding fences and spreading polemics in the Middle East and Latin America. Self-isolation or probably an old-style and "out of time" perception of the US global role, which is still inevitable but must be rethought without solemn and currently useless memories of the past.

This is the other communication, economic and political goal of China’s current and future actions, in this phase when the Covid-19 still appears to be retreating.

Deng Xiaoping told me so very clearly. 

He told me they wanted Socialism, not Communism. In Deng’s mind, in fact, Communism is Western stuff. Indeed, the Chinese Communists had rightly interpreted Marx, who did not want the transition to Socialism and the structural end of capitalism in the peripheries of the world but, if anything, in its evolved centre, namely Germany and Great Britain. According to the CPC’s documents, Togliatti and Gramsci - before him - had "made mistakes". 

And certainly not out of servility towards the USSR that, at the time, was an unavoidable point of reference for the Italian Communist party (PCI).

Hence we should never think that the CPC stopped studying Karl Marx's texts, albeit with creative intelligence. 

Quite the reverse. Nowadays Marxism is often mentioned in China, as the theory for shifting - within capitalism - from the production of goods and services to mass financialization that the Chinese government currently uses, above all, to propose - with extreme caution -  its entry into the world market.

And Deng, who was always a dear personal friend, is now one of the two true historical references for President Xi Jinping, together with Mao Zedong. 

Hence unification of China, together with the still necessary Great Modernization, in addition to those established by Deng Xiaoping at the beginning of post-Maoism, which was never real Communism, because it never set as its goal the transformation of the remaining global capitalist world, but its penetration, with Chinese and, above all, national objectives and styles.

Moreover, just to eliminate again this brand of “Made in China” virus and of adverse actions and hacking against the websites of Western research centres - which is an accusation made by the EU - President Xi Jinping has clearly stated that - when discovered and tested - the therapies should become “global public goods”.

Another strong signal sent by China to the West is clear: do not think you can make the usual big deal with the future anti-Covid 19 vaccine because when we have it anyway - and we will probably have it before you - we will distribute it as free patent and we will not ask for additional costs or fees. 

It is easy to imagine what could be the propaganda and geopolitical result for China in this case, which would find itself distributing modern and above all free anti-viral vaccines to all the regions, in Latin America, in Asia and in Europe itself, which have been radically and further impoverished by the pandemic. 

What could Westerners say in this case? Could they say their vaccine is cheap, but better? 

It is easy to imagine the effects of this counterfactual propaganda.

It is also easy to imagine the potential geopolitical impact of such an operation.

At the next upcoming National People’s Congress another political and economic weapon of Chinese propaganda is and will be the reaffirmation of China's political, scientific and financial contribution to the World Health Organization, just as the United States has declared that its contributions to the WHO have been frozen.

Where there is a "void", the Chinese fill it. Westerners have left on their own, but they have lost both a possible ally and a major source of information. Bad choice. Opponents must be penetrated and not be cursed with a ritual that is very closely related to that of Protestant sects or American new religions such as Scientology. The eighteenth-century-style sectarianism is not a good way for spreading a political message - just think of the neo-evangelical sects that made Bolsonaro’s electoral fortune in Brazil.

Hence, for the Chinese, simultaneous implementation of Sun Tzu's rules and the Thirty-Six Stratagems.

Finally, however, President Xi Jinping has not rejected the idea of a "large world analysis" on Covid-19, but regarding the global responses to the pandemic, not only the vague theories on its territorial origin.  

These are the guidelines that, in all likelihood, we will see in action at the forthcoming National People's Conference.

But there are two other essential political signs from China that we must consider: one is the core of the future Chinese expansion, which is still Africa - another great void of Westerners that China is filling strategically and economically - and the other is the new Chinese attention - and of President Xi, in particular - paid to the Great South of the world. A legacy of Mao's Thought. 

In the policy line, already established for the national People's Congress to be held on March 5 last, there are some rather new aspects: firstly, the new deadline for the eradication of absolute poverty throughout the country, which has been postponed for the meeting to be held next Wednesday, while the deadline for China to become a leading nation in technological innovation is still 2035. The same holds true for 2050, the deadline for the project to turn China into a world leader. 

In other words, to make Deng Xiaoping’s Fourth Modernisation, the military one, the axis of China’s real technological, civil and organizational transformation.

Throughout China, the Covid-19 pandemic has in fact stepped up processes that had already been defined in the past by the central Government: firstly, the acceleration of digitalization, which has obviously been favoured by the "lockdown" that China has adopted - as happened in almost all European countries and the United States, where the closure of companies and distribution has forced consumers to inevitably resort to e-commerce.

Obviously, also in China, as elsewhere in the world, greater attention has been paid to what is still called - who knows for how long - "national interest". 

However, this has not happened in the EU countries on the verge of bankruptcy, such as Italy itself, where any aid provided by the other EU Member States is only for their own gain, since they are obviously just waiting to swallow up what remains of Italian SMEs, and the huge colossal private savings of Italians, to rescue their banks. 

In Italy an incompetent ruling class is waiting for ambiguous aid such as the ESM or the future, equally ambiguous, slow, vague and unclear "Recovery Fund", as it was charity, generous donations and gracious concessions from old friends.

Another structural factor of the Chinese economy triggered by the pandemic has been a greater level of technological and financial competition among the countries affected, and also among Chinese companies themselves in their domestic market, which has obviously grown in importance and has largely replaced reduced exports and also imports, actually blocked by the combination of the pandemic and the trade war between China and the United States. 

Socialism that makes once again "substitution economy", as was the case in the 1950s. 

Another economic factor that the pandemic has reactivated or accelerated, in China as elsewhere, is the major role of the private sector and the no-profit sector.

This will certainly be at the core of the next National People's Congress, which sees local, ethnic and political autonomies strongly represented. Nevertheless, it mainly represents - in a politically significant way - also some technical-scientific elites, fully integrated in the CPC, which, however, have a strong influence both on the Party and on the "inner circle" of President Xi Jinping.

President Xi wants to avoid China losing its dominant role in the world as a result of the now hopefully ended pandemic. Indeed, he wants to redesign it at a time when, due to past and present mistakes, the productive, social and healthcare system of the United States and part of the EU shows strong failures, which immediately spill over and affect what were once called the "productive forces".

As President Trump said, the United States has harshly asked for a gradual "decoupling" - albeit fast and certain - of the American companies from China. Due to the very characteristics of the current Chinese economy, however, President Xi Jinping knows all too well that - whatever happens to the Chinese economy today and in the immediate future - the Global Value Chains (GVCs), on which China cannot but fully rely, are all semi-destroyed.

A few months ago, Chinese companies were among the largest companies in the world to apply for "force majeure" certificates to terminate existing supply contracts in the world. 

Certainly, the real attack by Trump's America on the Chinese economy will be launched through the new Global Value Chains, which, almost certainly, will now encircle China, but will no longer penetrate it.

China will play its cards which - as we will see soon - will also be played at the forthcoming National People's Congress, with a network of probable internal Chinese marginal areas that will very fiercely compete with the new probable external pro-USA network of new CGVs which - we imagine - will pass through India to Vietnam, and through Taiwan, to India and obviously Japan. This is the reason for Taiwan’s recent "revival" as an unlikely geo-economic opponent of China, upon US clear indication.

Another issue that will be surely well explored by the next National People's Congress - with President Xi Jinping who will be able to strongly innovate the Chinese economy, even with a higher rate of liberalization - is that of strengthening the State, so as to make it ever more effective as a "power multiplier" and as developer of a national policy line, "with Chinese characteristics" - exactly as Deng Xiaoping repeated to me - which combines military, finance, productive economy, diplomacy and intelligence Services, with a view to winning the real war of China today, i.e. the war against the USA which, however, no one will ever fight on the ground and with the old means of "classic" military power. 

 

Professor Valori is President of the International World Group