Right after the collapse of the Soviet Union, a wave of optimism pushed the West to believe that the last great communist tiger was ready to evolve into market economy and to become a global player. As a matter of fact, China was welcomed, after a long process of negotiation, into WTO in 2001.
These expectations have been definitely shattered this February after the National People’s Congress announced its intention to amend the Chinese constitution in order to abolish the two-term limit presidency and extend Xi Jinping’s rule indefinitely. This move represents a step towards dictatorship.
Now, it is blatant that Xi Jinping, rather than giving momentum to Chinese ambitions to become a liberal democracy, has driven the evolution of politics and economics into state control, repression and confrontation.
With no doubt, accepting China into the global economic order helped it becoming the world’s biggest exporter and the home to 12 of the 100 world’s most valuable companies. China has been growing consistently; Xi Jinping’s reforms have lifted millions of people out of poverty, reformed state-owned enterprises, put emphasis on environment protection and built strategic industries.
Ultimately, the president’s aim is to eclipse the United States as the world’s largest economy, but to do this he will need time. Anyways, the last great communist tiger is not a market economy and, with things going ahead in this way, it is unlikely to become one.
Being far from the free-market path, Xi Jinping has deeply involved the government in economic affairs, taking control of Chinese’s private companies and progressively monitoring business as an arm of state power, with many industries seen as strategic.
Indeed, Mr. Xi’s “Made in China 2025” plan is based on the idea of using subsidies and protections to make China a world leader in ten different industries – such as aviation, tech and energy. Moreover, even though China has become less brazen on industrial espionage, Western companies still complain about State-sponsored break in on their know-hows and intellectual properties.
Meanwhile, foreign businesses are profitable but miserable, because commerce always seems to be on China’s terms, in fact Xi Jinping is pushing for more market access for Chinese businesses and limiting opportunities for foreign companies in China. This is the major reason why Trump administration declared China a strategic competitor and is imposing tariffs on some Chinese imports and limiting Chinese technology investments in the United States.
On the foreign policy side, Mr. Xi is insisting on an aggressive strategy consisting in establishing military bases in the Western Pacific and Africa, modernizing the military and starting the one Belt and Road program, which promises to invest over $1tn in markets abroad. The purpose is to develop China’s precarious west and to create a Chinese-funded web of influence that includes basically any country willing to accept Chinese-based dispute-resolution.
Back by all these programs and goals, the Chinese government is definitely present in the economy and, as a consequence, Chinais not to be considered as a market economy yet. Indeed, Xi Jinping, since becoming president in 2013, has gathered power restlessly: he took control of the Communist Party, of the press and of the military forces, imposed his views on the educational system and hardened an already authoritarian system that controls social media and wields law enforcement to eradicate opposition. Furthermore, as part of his campaign against corruption, Mr. Xi expelled potential rivals, imprisoned free-thinking lawyers and banned criticism of the government among the online world. He is creating the aura of the surveillance state to monitor disapproval and malcontent.
Where is China heading to? What will be the impact of the new dictatorship to China’s stability? Will China still look attractive or will it be too risk as an investment? Will dictatorship support China’s economic growth or prevent it from becoming a global and liberal economy? There are many open questions that only time will answer.
Finally, President Xi Jinping will have to face many urgent issues: from the need to maintain high growth rates for the economy to the problem of a rapidly aging population and of considerable indebtedness level of stated-owned companies as well as private businesses. Whether he will succeed or not, it matters not only to China, but to the whole world.
Francesca Savi
These expectations have been definitely shattered this February after the National People’s Congress announced its intention to amend the Chinese constitution in order to abolish the two-term limit presidency and extend Xi Jinping’s rule indefinitely. This move represents a step towards dictatorship.
Now, it is blatant that Xi Jinping, rather than giving momentum to Chinese ambitions to become a liberal democracy, has driven the evolution of politics and economics into state control, repression and confrontation.
With no doubt, accepting China into the global economic order helped it becoming the world’s biggest exporter and the home to 12 of the 100 world’s most valuable companies. China has been growing consistently; Xi Jinping’s reforms have lifted millions of people out of poverty, reformed state-owned enterprises, put emphasis on environment protection and built strategic industries.
Ultimately, the president’s aim is to eclipse the United States as the world’s largest economy, but to do this he will need time. Anyways, the last great communist tiger is not a market economy and, with things going ahead in this way, it is unlikely to become one.
Being far from the free-market path, Xi Jinping has deeply involved the government in economic affairs, taking control of Chinese’s private companies and progressively monitoring business as an arm of state power, with many industries seen as strategic.
Indeed, Mr. Xi’s “Made in China 2025” plan is based on the idea of using subsidies and protections to make China a world leader in ten different industries – such as aviation, tech and energy. Moreover, even though China has become less brazen on industrial espionage, Western companies still complain about State-sponsored break in on their know-hows and intellectual properties.
Meanwhile, foreign businesses are profitable but miserable, because commerce always seems to be on China’s terms, in fact Xi Jinping is pushing for more market access for Chinese businesses and limiting opportunities for foreign companies in China. This is the major reason why Trump administration declared China a strategic competitor and is imposing tariffs on some Chinese imports and limiting Chinese technology investments in the United States.
On the foreign policy side, Mr. Xi is insisting on an aggressive strategy consisting in establishing military bases in the Western Pacific and Africa, modernizing the military and starting the one Belt and Road program, which promises to invest over $1tn in markets abroad. The purpose is to develop China’s precarious west and to create a Chinese-funded web of influence that includes basically any country willing to accept Chinese-based dispute-resolution.
Back by all these programs and goals, the Chinese government is definitely present in the economy and, as a consequence, Chinais not to be considered as a market economy yet. Indeed, Xi Jinping, since becoming president in 2013, has gathered power restlessly: he took control of the Communist Party, of the press and of the military forces, imposed his views on the educational system and hardened an already authoritarian system that controls social media and wields law enforcement to eradicate opposition. Furthermore, as part of his campaign against corruption, Mr. Xi expelled potential rivals, imprisoned free-thinking lawyers and banned criticism of the government among the online world. He is creating the aura of the surveillance state to monitor disapproval and malcontent.
Where is China heading to? What will be the impact of the new dictatorship to China’s stability? Will China still look attractive or will it be too risk as an investment? Will dictatorship support China’s economic growth or prevent it from becoming a global and liberal economy? There are many open questions that only time will answer.
Finally, President Xi Jinping will have to face many urgent issues: from the need to maintain high growth rates for the economy to the problem of a rapidly aging population and of considerable indebtedness level of stated-owned companies as well as private businesses. Whether he will succeed or not, it matters not only to China, but to the whole world.
Francesca Savi