China: No More Mr. Nice Guy

29 December 2021

China: No More Mr. Nice Guy
By Gwynne Dyer

More than 200 Hong Kong police raided and shut down one of the last pro-democracy news websites in Hong Kong on Wednesday, in the latest sign that the Beijing regime will no longer tolerate dissent of any kind. It was total overkill – a couple of cops with a court order would have sufficed – but they were ‘sending a message’ to other ‘malcontents’.

Chief Secretary for Administration John Lee defended the police operation (which also arrested current and former editors and board members in their homes) in fluent Orwellian Newspeak: “Anybody who attempts to use media work as a tool to pursue their political purpose contravenes the law. They are the evil elements that damage press freedom.”

It’s not just Hong Kong: all of China is closing down. The limited free speech and tolerance of dissent that prevailed for twenty years under President Xi Jinping’s predecessors, Jiang Zemin and Hu Jintao, have been systematically eroded, and Xi is now effectively president-for-life.

He even encourages a personality cult, something the Party had managed to avoid since the catastrophe of Chairman Mao Zedong. And there’s no velvet glove on the iron hand any more: uppity ethnic groups like the Tibetans and Uyghurs are just overwhelmed by imported majorities of Han Chinese, and those who complain get sent to concentration camps.

It’s the same abroad. ‘Wolf warrior’ diplomats berate the foreign countries they are stationed in for any criticism of China, and the crushing of Hong Kong’s liberties signals the abandonment of any notion of seducing Taiwan into unification under the banner of ‘one country, two systems’. When the time comes, it will be annexed by force.

But the question is: why now? Xi’s personality is authoritarian, to be sure, but that is pretty standard among the ‘princelings’ who grew up as part of the second and third generation Communist aristocracy. Yet for decades they supported term limits on the leadership because that protected them from being victimised by another Mao figure.

If they now accept Xi’s elevation to supreme and perpetual power, it cannot just be because they are afraid of him. He’s only one man. There also has to be some sense among others in the Party’s leadership that it will need a tough autocrat to ride out the coming storms and preserve its rule. So what storms might those be?

It has been evident for years that Beijing was cooking the books and overstating China’s economic growth rate.

It was obvious from previous examples where industrialising countries enjoyed high growth rates by exploiting cheap labour flooding into the cities from the countryside that this was a once-only bonus. The 10% growth never lasts more than one generation; then it falls back to the ‘normal’ 2-3%. Recent examples are Japan (1955-85) and South Korea (1960-90).

Maybe the Chinese regime thought they were exempt because they were Communists, but they were ignoring the fact that the Soviets rode the exactly same economic roller-coaster (except that it was interrupted in the middle by the Second World War). Or maybe they just forgot that they are really running a hybrid capitalist economy, not a Communist one.

Like it or not, China has had its 30 years of high-speed growth (1985-2015), and behind a facade of lies its real growth rate has already been falling for at least half a decade. In the last few quarters, indeed, China’s Gross Domestic Product has grown at half the rate of the American GDP.

That is partly due to a surge in US production while the economy recovers from the Covid lockdowns, but the published Chinese growth rates have been fictions for at least the past five years. Realistic estimates ,‘reverse-engineered’ from electricity consumption and other proxies, have been more like 3-4%, and growth is destined to fall further.

The Chinese birth rate has collapsed: each new age cohort entering the workforce will be much smaller than the one before, which will hit demand very hard. Moreover, the debt incurred by reckless over-investment in housing, roads and other infrastructure, just to keep the employment and growth statistics up, is already a major burden on the economy.

Two implications of this are long-term threats to Communist rule in China. The Party’s promise to overtake the US economy and make China the world’s dominant power will probably never come to pass, nor will its promise to raise Chinese living standards to a developed-world level. (Current GDP per capita is only $9,000.)

If the Communist Party can’t deliver on those two promises, what gives it the right to monopolise political power in China? It’s certainly not delivering on its old promise of equality either.

No wonder Xi Jinping is battening down the hatches politically, and no wonder the nomenklatura (to use the old Soviet word) are going along with it. Stagnation awaits.
To shorten to 700 words, omit paragraphs 10 and 12. (“Maybe…one”; and “That is…further”)

Gwynne Dyer’s new book is ‘The Shortest History of War’.