Platt Perspective on Business and Technology

China and its transition imperatives 37: rethinking China’s emerging trends in challenges faced and responses made, and in how each reinforces the other 6

Posted in macroeconomics by Timothy Platt on October 5, 2016

This is my 44th installment, counting supplemental additions, to an ongoing and even open-ended series on China. I have been writing for years now about China and its strengths and challenges. And I have focused in that and for more than a year now, on China’s downward economic spiral and what that might portend. And particularly in the last two installments of this narrative before now, I have couched this discussion in terms of a very specific if dire long-term prediction as to China’s long-term stability and even viability, if its one allowed political Party and the government that it effectively owns cannot change. See in particular Part 34, Part 35 and Part 36 to set this continuation posting into its immediately current perspective.

My goal for this posting is not to reiterate any long-term prediction already offered here. I have delved into that and how I have reached it, quite sufficiently over the past few months and certainly for now. My goal here is to look more deeply into China’s here and now, and on what it is doing that might have ongoing consequences, positive as well as negative. And if there is any one overarching theme to this, it is that:

• While China as a nation seeks to be as uniformly homogeneous as possible and certainly for political and government policy issues and their acceptance, it is becoming increasingly divided, and even among its highest Party and government echelon, and certainly as it has reached out to the world as it strives to become a global superpower.

Communist China: the People’s Republic of China has always been driven, and I add riven by the threat of competing factionalism, as contenders for leadership fight their way up the power structure ladder. And Communist China has always faced a treat of perceived threat from attempted diversity among its many and diverse peoples. That goes back to the beginning, when Mao Zedong first arose to power. And even his reign as supreme leader and de facto Chinese Communist demigod was repeatedly highlighted by both individual show trials and large scale waves of more general national repression that he instigated in order to more firmly retain power. I cite, by way of currently relevant example, his Great Cultural Revolution (文化大革命) of 1966 to 1976, and the millions who suffered or even died from that.

So at least potential for dissent and for divergence from centrally defined and demanded orthodoxy have always been possible, and there has always been at least an ongoing low-level effort to repress that too. But that threat of factionalism and dissent has always been more fundamentally internal to the country and to its system in place, than anything else. And that is fundamentally different than what is now emerging as a challenge to Mao’s current successor – and both as titular leader of Party and government, and as would-be Chinese Communist demigod and true heir to Mao’s mantle: Xi Jinping.

I could write here of China’s open conflicts over control of the South and East China Seas, and how they are attempting to claim hegemony over this vast region and its resources through threat of military action. I have already written and discussed that in this series, and I have already compared it to pre-World War II Japan’s attempt at militaristically enforced expansionism as that country sought to address its own then dire economic straits with its Greater East Asia Co-Prosperity Sphere. That is just one “big picture” thread to this narrative that I have already been noting and discussing here, and that I could update now for its more “current events” details. But I find myself thinking back to Xi’s role model, who he seeks to emulate in ways that none of Mao’s other Party leadership successors have ever been able to achieve. And I find myself thinking back to Mao’s Cultural Revolution; this year marks the 50th anniversary of its beginning and of the ten years of distress and terror that followed. And I turn with that in mind to consider a small-scale news story: a perhaps tiny appearing puzzle piece to what I am assembling here, that nevertheless holds tremendous meaning for me for its bellwether significance:

Fate Catches Up to a Cultural Revolution Museum in China.

This is a news piece about how Xi’s government has crushed a small and seemingly insignificant museum that was set up with private funds, in memorial to the million and more who died from the Cultural Revolution and its excesses. This site was very intentionally set up as a memorial, and one that explicitly did not challenge Chinese Communism or politics, but rather as a place to remember friends and family lost and gone. But as part of Xi’s turn to ultra-orthodoxy and its rigid enforcement, this shrine that has up to now been accepted and allowed has been covered over with cement and banners, proclaiming the same types of cartoonish mottos that in fact highlighted politically correct during the Cultural Revolution itself. Xi might not have explicitly ordered this particular, specific action himself, but he has very forcefully ordered and enforced a more general policy, and throughout China that would make this type of repression both possible and expected.

• China’s current, rigid orthodoxy-driven response to the economic challenges it faces, has as a matter of perhaps irony recapitulated at this site of remembrance, the same type of excesses that made the Cultural Revolution what it was. All who were viewed as not holding to true orthodoxy were suspect in those dark days, and all who were suspect were guilty and to be crushed.

I am in effect reframing here, a loosely organized thread of discussion that has run through my entire progression of China-related postings and series. Chinese Communism and the nation that it governs have always been rigidly brittle and fearful of the threat of change – any possible challenge or change to their political system. And orthodoxy and its effective demonstration have always been essential to success in China and for both great and small, publically visible and locally obscure.

To cite one more perhaps-insignificant puzzle piece here that supports that assertion, that I first noted in early 2012, Mao Zedong has one living, legitimate, legally acknowledged grandson: Mao Xinyu, who was graduated from college with an “earned” PhD in the study of his grandfather’s thoughts and who was brought into the People’s Liberation Army as a new young officer – as a Major General tasked with helping to burnish the Chinese Military’s claims to Party and political correctness and orthodoxy (see China in Transition 3 – putting a change of leadership in context – 1.) This and a host of similar small puzzle piece examples that I could also raise here, reflect an ongoing pattern that goes back to Communist China’s beginning: assiduously hewing to the Party line for security and safety, and for strength and advancement. But recent events have advanced the imperative of following that one true line to a new level, and one not seen since the days of the Tiananmen Square massacre of 1989, if not to the beginnings of Cultural Revolution itself.

That is an extreme assertion. True, the Cultural Revolution began more as a “business as usual” realignment towards orthodoxy than as a new and dramatically more extreme reign of terror. But still and certainly in hindsight, that is an extreme point to make given what followed. Will Xi and his government turn inward with the type of ferocity that his role model predecessor pursued, and for that full decade? Right now I only see that or anything like it as a possibility and hopefully not the more likely one – and certainly given the increased global visibility that China faces through the internet and social media and from its openly visible efforts to engage with the global community and economy. But lessons of the past can shed insight into the present, and certainly when even small and insignificant differences and potential differences from orthodoxy can bring on cement and banners, and even in addressing “threats” that are so minor and circumstantial as to defy reason.

Let me finish this series installment by turning from the past to the immediate present that it has created, and to China’s today, and certainly as of this writing. And I do so by returning to the first bullet point of this posting, and its second half:

• While China as a nation seeks to be as uniformly homogeneous as possible and certainly for political and government policy issues and their acceptance, it is becoming increasingly divided, and even among its highest Party and government echelon, and certainly as it has reached out to the world as it strives to become a global superpower.

I have been focusing on the first half of this statement and its implications and meaning up to here, but that leaves out real consideration of that last clause: “it (sic. China) is becoming increasingly divided, and even among its highest Party and government echelon, and certainly as it has reached out to the world as it strives to become a global superpower.”

• When China was largely isolated from the outside world, as held in Mao’s day, the only voices and potential voices, and powers and potential powers that its Party and government might face were from inside their country and from inside their one true Party. There was absolutely no private sector in China and all power resided in Party, and secondarily from that in government.
• Then, and particularly starting with Deng Xiaoping, China began to openly, publically, officially open up to the world. And that meant entering into global trade and in ways that were never even considered possible. And that has with time, and through incremental steps led to China having at least a semblance of a stock market and privately held businesses, some of which have become global business powerhouses. And while many of China’s growing community of billionaires have achieved that status in what for China would be the “old fashioned way” of making good while rising through the ranks politically, many have done so through more private sector business initiative too. And that detail strikes to the core of that clause and what it in fact actually means.
• China’s elite: its upper 1% and its upper 1% of that 1% for power and authority are no longer all to be found in Party and government leadership. The basic assumption of power residing entirely in their one Party as proffered in that bullet point has become false. And China now faces a transparency that its leadership finds untenable from its connections to the world, and the types of accountability that this compels. And at the same time it is facing the consequences of seeing power and even potentially significant sources of it residing in such alien hands – anathema for their very existence to the old anti-capitalist Maoist vision. China’s political leaders must all wonder at times what type of pact with the devil they signed when agreeing to pursue their dream of global relevance and even global leadership!

And the rigid repression and both in big and little ways, and in response to real challenge – and even to the minute continues. And so much is done and by all power centers and their leaders to both display and burnish the image of their orthodox loyalty.

As of now, I expect to come back to this series with another update posting in about a month, having written this one in October 3, 2016. Meanwhile, you can find this entire series and all of its postings at Macroeconomics and Business as postings 154 and loosely following for Parts 1-12 and for a supplemental posting: Part 12.5. And see Page 2 to that directory for subsequent main sequence and supplemental installments to this. You can also find other, China-related postings and series at those directory pages, and at Ubiquitous Computing and Communications – everywhere all the time too.

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