"Malaysia Prime Minister Mahathir Mohamad and the Sultan of Johor are seen in a blue Proton Saga... "When asked whether there is any tension with the sultan, Dr Mahathir said: “No, I don’t see anything because I went to see him and he drove me to the airport. I don’t want to comment on the sultans because if I say anything that is not good then it’s not nice because he is the sultan”"

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Friday, January 04, 2019

China’s Great Leap Backward / China under Xi

China’s Great Leap Backward – Foreign Policy

"In the last 40 years, China has racked up a long list of remarkable accomplishments... What made these achievements all the more striking is that the Chinese government accomplished them while remaining politically repressive—something that historical precedent and political theory suggest is very, very difficult. No wonder, then, that the China scholar Orville Schell describes this record as “one of the most startling miracles of economic development in world history.”...

The miraculous quality of China’s achievements makes what is happening in the country today especially tragic—and alarming. Under the guise of fighting corruption, President Xi Jinping is methodically dismantling virtually every one of the reforms that made China’s spectacular growth possible over the last four decades. In the place of a flawed but highly successful system, he is erecting a colossal cult of personality focused on him alone, concentrating more power in his hands than has any Chinese leader since Mao Zedong.

In the short term, Xi’s efforts may make China seem less corrupt and more stable. But by destroying many of the mechanisms that made the Chinese miracle possible, Xi risks reversing those gains and turning China into just another police state (think a gigantic, more open version of North Korea): inefficient, ineffective, brittle, and bellicose. And that should worry not just China’s 1.4 billion citizens but the rest of us as well.

To understand what makes Xi’s personal empire-building campaign so dangerous, it helps to first understand what made China exceptional for so long. Throughout modern history, most tyrannies and one-party states have shared a few basic traits. Power is held by a very small number of individuals. To maintain their power, those individuals repress dissent and rule by intimidation. Because bureaucrats and citizens live in fear, they compete to flatter their bosses. Nobody tells the truth, especially when it could make them or their leaders look bad. As a result, cloistered tyrants—their egos bloated by constant, obsequious praise—find themselves increasingly cut off from reality and the rest of the world (think Kim Jong Un, Bashar al-Assad, or Robert Mugabe) and end up ruling by whim and instinct with little sense of what’s actually happening in their own countries. The impact of this ignorance on domestic and foreign policy is disastrous.

For 35 years or so—from the time Mao died and Deng Xiaoping launched his reforms in the late 1970s until Xi assumed power in 2012—China avoided many of these pitfalls and defied the law of political averages by building what scholars have called an “adaptive authoritarian” regime. While remaining nominally communist, the country embraced many forms of market capitalism and a number of other liberalizing reforms. Of course, the old system remained highly repressive (remember Tiananmen Square) and was far from perfect in many other ways. It did, however, allow the Chinese government to function in an unusually effective fashion and avoid many of the pathologies suffered by other authoritarian regimes. Censorship never disappeared, for example, but party members could disagree and debate ideas, and internal reports could be surprisingly blunt.

No longer. Today, Xi is systematically undermining virtually every feature that made China so distinct and helped it work so well in the past. His efforts may boost his own power and prestige in the short term and reduce some forms of corruption. On balance, however, Xi’s campaign will have disastrous long-term consequences for his country and the world.

Perhaps the most unusual feature of the system Deng created was the way it distributed power among various leaders. Rather than let one person exercise supreme authority, as do most dictatorships, Deng divided power among the Communist Party’s general secretary (who also gets the title of president), the premier, and the Politburo.

Deng hoped this system would ensure that no one person could ever again exercise the kind of control Mao had—since his unchecked power had led to vast abuses and mistakes... As Minxin Pei, a China expert at Claremont McKenna College, explains, the collective leadership model Deng designed helped weed out bad ideas and promote good ones by emphasizing careful deliberation and discouraging risk-taking.

Since assuming power in 2012, Xi has worked to dismantle China’s collective leadership system... More members of the Communist Party’s powerful Central Committee have been disciplined since 2012 than in the entire period dating back to the Communist Revolution.

Not content to merely eliminate any competition, Xi has also consolidated his power by abandoning the term limits on his job and by refusing to name a successor, as his predecessors did halfway through their tenures. He’s also had “Xi Jinping Thought” enshrined in China’s constitution (an honor shared by only Mao and Deng); assumed direct control of the armed forces; and made himself “chairman of everything” by creating a large number of working groups on policies ranging from finance to Taiwan to cybersecurity—all of which report directly to him.

A second important feature of the old system was that bureaucrats at every level could expect to be rewarded for good performance. This wasn’t quite a meritocracy, and the system included a fair degree of corruption and patronage. But both of those features actually served the common good in one key way: If an official performed well, he or she could expect a cut of the proceeds and steady promotion. Xi, by contrast, has “replaced this incentive-based system with one based on fear,” as Pei puts it. And there are two big problems with this shift. First, it has warped officials’ priorities, from showing results to showing loyalty. The second problem, according to Alexander Gabuev, a China specialist at the Carnegie Moscow Center, is that “when fear is all you have, bureaucrats become too frightened to do anything without explicit orders from the top. So the whole bureaucracy becomes passive. Nothing gets done.”

Another related asset of the old system was the way it encouraged local governments—at the village, county, and provincial levels—to experiment with new initiatives, from building free markets four decades ago to allowing private land ownership more recently. Such experimentation turned China into a country with hundreds of policy laboratories, enabling it to test different solutions to various problems in safe, quiet, and low-stakes ways before deciding whether to scale them up. This system helped Beijing avoid the kind of absurdities and disastrous mistakes it had made under Mao—such as when, during the Great Leap Forward of 1958-1962, central planners insisted that farmers in Tibet plant wheat, despite the fact that the arid, mountainous region was utterly unsuited to the crop.

Of course, Beijing had to tolerate a certain level of autonomy in order to allow local officials to try new things. Xi, by contrast, seems to view such independent thinking as an intolerable threat. At his behest, the government has begun discouraging small-scale pilot programs...

Just as China’s tech industry is notorious for stealing and applying foreign innovations, Chinese officials long did something similar on the policy level, carefully studying what worked in other countries and then applying the lessons at home. (The best example of this process, of course, was the construction of China’s free markets themselves, which drew on models from Japan, Taiwan, and the United States.) Like Deng’s other innovations, Xi has curtailed this practice as well, by making it much harder for government officials to interact with foreigners. In 2014, authorities began confiscating bureaucrats’ passports. Like so many of the government’s other recent restrictions, this move has been justified in the name of combatting corruption—the idea, ostensibly, is to prevent dirty officials from fleeing the country. But the fact that the policy has recently been extended all the way down to elementary school teachers and reinforced by other, related strictures—officials now must apply for permission to attend foreign meetings and conferences and account for their time abroad on an hour-by-hour basis—reveals that the real priority is limiting contact with outsiders and their ideas...

On the domestic level, Beijing’s policymaking is already becoming less agile and adept. Examples of this more rigid approach, and its downsides, aren’t hard to find. Consider last winter, when the government decided to force an abrupt nationwide switch from the use of coal to gas in heating systems. It sounded like a smart move for a country as polluted as China. But the edict was enforced suddenly across the country, with no exceptions. Thus in China’s frigid north, many coal-burning furnaces were ripped out before new gas ones could be installed—leaving entire towns without heat and forcing villagers to burn corn cobs to survive.

If China continues down its current course, expect many more cases where even well-intentioned policies are implemented in a rash and clumsy way, leading to still more harmful consequences. Since personalized dictatorships are necessarily bad at admitting fault—for nothing can be permitted to damage the myth of the omnipotent leader—China will also likely become less adept at correcting mistakes once it makes them...

With each new budget-busting move, and in the absence of reform, the odds that China will experience a seriously destabilizing economic crisis—which China bears such as Ruchir Sharma, the head of emerging markets at Morgan Stanley, have been predicting for years—keep rising... “Because of Xi’s concentration of power, no one will give him advance warning if one of these bombs is about to go off. And because he doesn’t actually understand macroeconomics very well, and everyone is afraid to contradict the emperor, there’s a huge risk that he’ll mismanage it when it does.”... “Xi has really put China at enormous risk. And because his only tool is repression, if things go wrong we’re likely to see even more crackdowns.”...

The history of other autocracies, such as Vladimir Putin’s Russia or Kim’s North Korea, suggests that Xi’s relentless power play could produce even worse consequences. Since taking power, Xi has charted a far more aggressive foreign policy than his predecessors, alienating virtually every neighbor and the United States by pushing China’s claims in the South China Sea, threatening Taiwan, and using the military to assert Beijing’s claims to disputed islands.

Should China’s economic problems worsen, Xi could try to ratchet up tensions on any of these fronts in order to distract his citizens from the crisis at home...

Things could get scarier still, Pei warns, if China’s economic problems spin out of control completely. In that case, the Chinese state could collapse—a typical occurrence among typical dictatorships when faced with economic shocks, external threats (especially a defeat in war), or popular unrest—but one that, given China’s size, could have cataclysmic consequences if it happened there."


Of course some China cheerleaders just take the anti-corruption drive at face value, or take short term economic development as the only thing that matters (even though it's not like there wasn't development before Xi either).

***

China censorship moves from politics to economics

"Washington’s latest tariffs on $200bn of Chinese exports dominated business news across much of the world. But in China, readers of domestic news websites saw very different headlines — internet companies Tencent and Baidu led with stories of how the Communist party, “with Xi Jinping at its core”, was developing Ningxia, a backwater in China’s north-west.

As China’s economic growth slows and a trade war with the US damages consumer sentiment and the stock market, Beijing is further tightening controls on domestic media. The ruling party has for decades relied on a strong economy as a key source of its legitimacy, and in harder times economic news is increasingly subject to the same kind of censorship as politics.

“Censorship has never been so tight,” said one business journalist with two decades of experience. “There has been a big shift in the second half of this year.”

Chinese propaganda officials over the past few months have handed down instructions not to changshuai — bad mouth — the economy, according to a dozen journalists and editors at influential Chinese publications who spoke anonymously to the FT.

Topics such as consumers cutting back on spending, local governments struggling with debt repayments, lay-offs by bankrupt private companies and inefficiency at state-owned companies are increasingly off-limits, according to media staff.

Media outlets have been ordered to not to use the phrase “trade war,” and to avoid blaming trade tensions for weakness in the Chinese economy, several reporters said...

An editor at one of China’s largest magazines said economic reporting was now subjected to a level of restriction previously seen only for political topics. “The economy is now political,” the editor said.

Instructions from media regulators are conveyed to editors by phone calls to prevent them from being copied and spread via the internet, according to people familiar with the process. “This year there have been far more phone calls,” said one editor, who is contacted several times a day...

Chinese news website Qdaily.com in August was ordered to shut down for a month for publishing “illegal reports”, as China’s top internet regulator put it.

A reporter who left the publication following the ban said regulators had ordered the publication to delete about 40 articles over seven months, on topics from migrant workers to the shuttering of an independent bookshop...

Fang Kecheng, a Chinese media researcher at the University of Pennsylvania, said: “The propaganda department aims to guide public opinion, so when things are doing badly they are definitely more nervous and want to highlight the positive.”

“Ironically, the more the party-state intervenes in the coverage of the economy, the more doubt people could have . . . which would lead to even stricter control. This cycle shows the limitation and possible backfiring effect of censorship,” he added.

The narrowing of economic debate has extended beyond the media to public statements by economists and think-tanks. The head of one Shanghai think-tank, who asked not to be named, said the reform of state-owned enterprises had become a “sensitive” topic since Mr Xi made a brief comment on the issue in 2016.

Unirule, one of China’s few independent economic think-tanks, was forced out of its Beijing headquarters earlier this year. This month, Unirule’s executive director Shen Hong was prevented from leaving China to participate in a forum at Harvard University, with immigration officials citing national security for the ban, he said.

“Originally the economy was a neutral topic, but in the last two years, economic problems can’t be discussed, as well as negative news,” said Mr Shen. “The space is smaller and smaller.”"


China lovers will just say this is not a problem because the government knows what's going on because it's smart and ordinary people's lives are still improving (even if this is because we're not allowed to hear anything to the contrary) so this is not a problem.

***

The party turns sour for Xi - Nikkei Asian Review

"Long Yongtu, the former vice minister of commerce who negotiated China's entry into the World Trade Organization, publicly rebuked Beijing's management of U.S.-China trade disputes.

Speaking at the 9th Caixin Summit in Beijing, he said China should not have mixed politics with trade, in an apparent dig at Xi's desire to maintain his tough image even at the risk of trade war. He also pointed out that China's decision to retaliate against the U.S. with tariffs on soybeans is "unwise" because China needs to import soybeans.

Long is only the latest senior figure to risk Xi's ire by publicly, albeit obliquely, casting doubts on his policies. The most significant individual who recently voiced similar misgivings is Deng Pufang, Deng Xiaoping's eldest son. Deng Pufang, the honorary chairman of the China Disabled Persons' Federation, delivered a speech at the federation's national conference in mid-September that was immediately censored by the authorities because it was seen as critical of Xi (the speech's content was leaked in late October).

Deng's speech was noteworthy for its veiled but firm rejection of the key pillars of Xi's policies. By calling for "seeking truth from facts ... maintaining a clear head, knowing one's own strengths and weaknesses, and avoiding overestimating oneself and behaving recklessly," Deng implied Xi's policies violated these dictates laid down by Deng Xiaoping.

Deng's critical remarks, however mild and indirect, reflect widespread discontent among elites that Xi's policies are leading China down the wrong path. While it is impossible to know what prompted Deng Pufang to speak out, as a scion of the Deng family he most probably could afford to take the risk. Under Xi's strongman rule, few officials dare to voice dissenting views, for fear this would invite a visit from anti-corruption investigators. As signs of discontent with Xi's policy began to mount this summer, Xi has re-intensified "anti-corruption" efforts to defend his authority...

If the prestige of the Deng family makes Deng Pufang untouchable, others wishing to express dissent have to find more ingenious methods...

While the official festivities marking the 40th anniversary of China's reforms deliberately downplay Deng's contribution and highlight Xi's leadership, comments celebrating Deng are widely available on social media.

Most focus on Deng's warnings against challenging the United States' dominance and seeking leadership in the developing world. Implicit in these comments is the criticism that Xi's assertive foreign policy has worsened China's external environment and overextended its limited resources. In an essay posted on social media, the former chief economist of the China Agriculture Bank praised Deng's wisdom in improving ties with the U.S. The author recalled a well-known anecdote. When Deng paid his historic visit to the U.S. in 1979, an aide asked why he was eager to restore relations with Washington. Deng's response was, "All the countries with good relations with the U.S. have developed well these years." The author was obviously hinting that Xi has endangered Deng's diplomatic legacy with his confrontational approach.

Xi's domestic policy has also come under criticism couched in academic jargons. At a Nov. 1 conference celebrating a book by Wu Jinglian, an esteemed economist, several scholars openly voiced views challenging the party line. Wu, 88, pointed out that China's difficulties today are rooted in the lack of market reforms, rule of law, and democracy. Other participants called for restraining the state's power, decentralizing authority and protecting people's rights -- in clear contradiction with Xi's policy of centralizing power and tightening social control. In an essay published in late October by The National School of Development of Peking University, Zhang Weiying, another leading economist, declared that hyping the so-called "China model" -- the idea that state-capitalist development under autocracy is superior to liberal democratic capitalism -- is not only dangerous, but also responsible for the clash between China and the West."


Maybe China lovers will claim that all the high placed Chinese people (including officials and ex-officials) criticising Xi are really foreign agents and/or brainwashed by the foreign media.
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