The Middle Red Empire: Now What?

(To Gino Lanzara)
25/10/22

The end of the CCP Congress leaves open the question that opens the brief dialogue between Butch Coolidge and Marsellus Wallace in Pulp Fiction: and now?

Let's put forward some hypotheses. Given that the party has not undergone any particular changes since its foundation, its merger with the state is such as to allow it to control the army, central and local bureaucracies, legislative bodies. The Constitution was changed, in order to consolidate the status of Xi who has become core of the Party1.

Li Keqiang, number two in the Beijing political hierarchy, and the chairman of the Chinese People's Political Consultative Conference, Wang Yang, were escorted to the door. Deputy Prime Minister Liu He, Xi's economic advisor, who negotiated the tariff dispute with the US, was also removed from the list issued by the Xinhua agency; after all, it is hardly surprising given the forced removal of former president Hu Jintao from the congress hall.

The media coverage of Congress concerns only Xi and his style of government; The Economist portrays him as an autocrat with one of the strongest political influences of his time. The inspiring principle of political renewal is based, in addition to competence, on exclusive fidelity and obedience to Xi, increasingly aimed at the personalization of power2.

In this context, Wang Huning is currently China's foremost political theorist, and exerts considerable ideological influence on Xi. Wang, he shaped the idea of ​​rejuvenation of the Chinese dream and is considered the exponent of neo-authoritarianism, with which he outlines a system in which political stability determines development; he is joined by the next premier, Li Qiang, party secretary in Shanghai during the period of unrest.

Characteristic of the Party remains the relevance of personal relationships, of family fidelity to ideology3. Xi's speech was not torrential, and was based on an abridged version of his Official Report to Congress; devoid of details insight, the exhibition limited itself to systematizing themes already treated and activities carried out: therefore no innovation, but the relaunch of Chinese dream of 2012.

To return to the greatness before the Opium War of 1839, China must rejuvenate with a modernization coinciding, in 2049, with the centenary of the Republic after having reached the intermediate milestone of the moderately prosperous society.

However, 2049 requires a further division by phases: the socialist modernization by 2035 and the subsequent realization of a great socialist and modern country. After the publication of the XIV five-year plan of 2021, the leap to 2035 assumes a leadership projection of Xi of at least another decade, in which to highlight development and modernization in terms of governance and national security, security understood in its military and economic meanings.

In the analyzes on the relation of Xi the most frequent terms are safety e development, that outclass the term reforms. Security goes hand in hand with military enhancement, to be completed by 2027, and which must allow overseas operations and defense of strategic interests, guaranteeing national sovereignty.

Reunification with Taiwan is a historical mission of the Party and does not exclude the military option. Moreover, the XX Congress sanctioned its opposition to the independence of Taipei, which would hopefully be defended by the USA. Xi Jinping does not like to improvise, risk is not part of the party philosophy, so he paid particular attention to the unpredictable black swans, capable of changing scenarios, and ai gray rhinos, the dangers known, but neglected and in sleep.

Xi therefore aims at greater internal social control by strengthening technological autarchy, a necessary tool for commercial primacy, especially now that the US is blocking negotiations in the semiconductor and microchip sector, confirming itself as antagonists to be defeated as well as the cause of dangerous storms such as the renewed export protectionist policy. That relations with Washington would be uncomfortable was already evident with the pivot to Asia obamian; the Trump administration has only deepened a fault that is destined to widen.

Whatever strategy the Americans want to adopt must be effective, in the long term, of a bipartisan nature, capable of satisfying several administrations of different tendencies. However, the most recent US performances cast doubt on America's political ability to mobilize to confront China in the same way as what the Truman administration has undertaken with the help of George Kennan with the Soviets.

Who will fight the battle? The State, which aims at cyber control of the internet and which animates an anti-corruption campaign that can affect any official, from the top to the district levels4.

In the face of the increase in Chinese global power, however, we must also consider the instability of the turbulent international context. The problem is that the Chinese objectives coincide with those of the American competitor; if it is true that Xi's image is that of a leader at the apex of the upward curve, it is equally true that in the face of an even firmer grip of power with a more pronounced assertive verve in foreign policy, Xi in avoiding blows from opposing political factions, could up the ante by making decisions of rare gravity, what could be the invasion of Taiwan.

Xi's revolution, in fact, led to the annihilation of Deng Xiaoping's administrative reforms aimed at separating bureaucracies from the CCP, avoiding political interference on technical decisions that had the only effect of weakening the executive. Xi in fact gave substance to the programmatic manifesto presented in 2012 by rigorously defining the Party's style of governance and making it more politically effective by deepening the implications of internal discipline.

Even before being party leader Xi is a nationalist, for which Chinese needs and interests are at the top of priorities; everything that has happened since 2017, from the commercial competition with the Americans, to the criticisms resulting from the repression in Xinijang and Hong Kong, to the management of the pandemic and to the accusations about its origin, has only fueled this drive.

Whom to swear allegiance to? To the Party or the Han nation? In addition to the communist ideology, we can see an identity ideal that brings with it bearers of defined interests, starting with red principles, passing through macroeconomics experts, to reach the military. Chinese Marxism, State Capitalism.

By the way, the economy. Economic data for the third quarter, expected by analysts who expected a decline in growth, they were not published during the Congress. The same outgoing premier Li Keqiang, delegate for economic communications, gave a generic programmatic speech, keeping away, like Xi, from providing more precise indications which later turned out to be down, with GDP growth lower than expected. In fact, the overtaking of the Dragon to the detriment of the American Eagle is increasingly postponed due to long-term economic trends determined both by the pandemic and by the rigid containment measures, and by the distortions caused by the real estate market. According to the most used valuation method, that is, looking at the total amount of GDP in dollars, it is clear that the Chinese one is still behind the American one: in 2021 it reached 17.700 trillion dollars compared to 23 thousand.5 stars and stripes.

The Chinese economic situation is becoming difficult for structural reasons: the real estate crisis will not be temporary and will lead to more lasting and extended negative effects; this makes it understandable why China is cutting interest rates as they rise everywhere to fight inflation. If China continues to practice lower interest rates, particularly towards the US, it will expose itself to the risk of capital flight. In short, the end of the Congress leads to an economic situation in which the recovery appears very uncertain.

The Chinese yuan also weakened6 because investors reacted to the risks associated with the appointment of Xi's loyalists to power, and were confirmed in their fears by the publication of the economic data prudently only after the triumphal closure of the works. Markets see the conquest of power with concentrated decision-making processes as a weakening of growth and a geopolitical destabilization, reinforced by the fact that Xi sees the private sector as a threat to its domination; for this reason party organizations have conquered private companies thanks to antitrust and anti-corruption regulations useful for the expropriation of asset entrepreneurial.

What to expect after the Russian invasion, and in the face of Chinese ambitions?  A new world order forged by the struggle for power. China can accept any cooperative aspect only on an equal footing with Washington which, if not feasible, would lead to the formation of a Eurasian, African and Latin American bloc.

Inside, Xi has pursued both expressions of dissent but also dissenting political debate, since any criticism is seen as a sign of inanity, incompatible with the rising idea of new Chinese era of his jarring with the difficulties of the rigid policy of dynamic zeroing of contagions and with the turbulence of external changes due to the crisis of globalization and unilateralism. In 10 years Xi has finished closing China on itself, has created geopolitical vectors such as the BRI or the Digital Silk Road, with a Marxist-Leninist political economic base and, as stated by former Australian Prime Minister Kevin Rudd, with a foreign policy nationalist and right-wing. Great absent, as often happens, the political EU.

Conclusions. Xi's extension to power is nothing new; Mao Tse-tung, as party president, stayed there for about 30 years, Deng was there as chairman of the military commission: it just changed the way.

In the international arena, however, China has made mistakes: with Russia, with Ukraine and with the USA, which were mistakenly given in irreversible decline.

Allies also wobble: Russia embroiled in an increasingly difficult military campaign, and Iran besieged by an internal revolt.

Power wears out even those who have it: the latest economic performances have not been brilliant, and pandering to the hawks who want the invasion of the Taiwanese quagmire can be dangerous.

Finally, the hermit Republic of Pyongyang, with its ballistic activism, will bring Xi to a crossroads heralding tensions with the UN and Washington, and with the regional countries ready to strike any failure.

If China needs the world, it is necessary to understand if the world needs Beijing's aggressive policy which, never before, is producing the need for openings and partners towards the West; but political-economic integration is no longer so obvious, given that Xi will hardly be able to hold two laws at the same time. As always, it is a balance problem that, in case of satisfaction of the wing pure and hard will result in a departure from supply chain.

Power is changing. Despite being the current holder for Xi it will not be easy to exercise it.

1 Xi also changed the procedures of the Standing Committee; for the first time its members must report to the party leader, the sole controller of their performances.

2 In fact, the cult of personality, banned by the constitution, has been restored. Since 2016 Xi has been referred to as central party leader. In 2017, a reporter from the state agency Xinhua referred to Xi with such epithets diligent worker for the happiness of the peoplethe chief architect of modernization in the new era. A collection of Xi's phrases was also proposed inviting the people to memorize them, like Mao's Little Red Book.

3 Before Xi, the president and secretary had in fact been a primus inter pares. During the 2017 National Congress the Communist Party voted to include it within its Constitution Xi Jinping's thinking on socialism with Chinese characteristics for a new era.

4 Data from The Diplomat shows that investigations were conducted on 2012 senior executives and 2021 district officials between December 393 and June 631.000. In 2016 The Guardian published news that the Panama Papers were reporting offshore accounts of Xi's family.

5 Second Bloomberg three scenarios can be assumed: 1) China will make the reforms; 2) a slower path driven by demographic reduction and international isolation; 3) a financial crisis.

6 Lowest level since 2007

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