HOW NOT TO UNDERSTAND CHINA

On the 15th of April 2015, the Financial Times ran a remarkable full-page interview with the Chinese premier Li Keqiang (his “first interview with a western media organisation,” by the paper’s editor Lionel Barber and his colleagues David Pilling and Jamil Anderlini). That interview was emblematic of one version of the western misunderstanding of the People’s Republic.

This is the misunderstanding that overstates the regime’s economic achievements, resulting in uncritical admiration. The absence of critical antennae was on display at the beginning of the interview, where China was presented (needlessly for the logic of the interview) as “the world’s largest economy.” Observers of China know very well that its economic statistics are unreliable, yet the financial world tends to operate as if they are truthful. Why?

It is elementary: China is good for business; comforting then to see a big and expanding market there. But the misunderstanding sticks deeper. Twinned with an overstatement of economic prowess is an understatement of the regime’s political dictatorship. Neither financial journalists nor business operators are naïve: they know that the Chinese regime is oppressive and that many suffer for it. But they tend to see the oppression as no more than might be expected to maintain order in so big and complex a country as China and to give the regime’s dark side little weight in their overall assessment. That assessment is that with reform and opening up the People’s Republic has evolved into a more or less benevolent, or at least tolerable, autocracy that has delivered stability, economic growth and progress for most Chinese people.

China is of course now a very big economy, but economic growth, although dramatic, has been nowhere near what official statistics will have it. If you subtract exaggeration from the official numbers and take into consideration the weight of unproductive investments propped up by unsustainable debt, the best guesstimate is that the Chinese economy is about a third smaller than officially measured. Furthermore, the progress that has followed is not for most Chinese people but, in China’s extremes of inequality, for a minority.

Nor is the oppression mild and restrained. China is a society in which people of independent opinion cannot sleep at ease at night out of fear that someone will come knocking and take them away, and bring retribution down upon family, friends and contacts. Under Xi Jinping, all the screws of dictatorship have been relentlessly tightened.

While the financial world is bedazzled, the academic world is mostly be critical. This criticism is manifold and deep, but often revolves around some idea that China’s political economy is riven by internal “contradictions” and, mostly, that it is just a matter of time before it falls into decline, possibly collapse. The main contradiction, it is thought, is between capitalism in the economy and Leninism in the polity, resulting in, for example, inadequate economic reform, out-of-control local government debt, extractive corruption, capital flight and so on.

This, however, is another misunderstanding, resulting from a failure to see the Chinese regime as entirely unique and of its own kind, and of seeking to squeeze it into preconceived theoretical models of state logic. Those models tells us that with economic opening up must come political opening up and that the partnership of capitalism and Leninism cannot hold. That was “inevitable,” said then President Clinton, “just as inevitably the Berlin Wall fell.”

But this has not been the Chinese reality. On reform and opening up, Deng Xiaoping from the start said in clear language that it was to be economic but not political. In 1989, that was confirmed and consolidated. In The Perfect Dictatorship I have reviewed the socialist market economy, state-economy relations, and the matrix of power made up of the party, the military, the executive, the legislature, the police, the security services and the judiciary. I find many problems in the workings of this bureaucratic monster, but not in the nature of contradictions. Rather I find a system that on its own terms is logical and works extremely well. The economy is not miraculous, certainly by East Asian standards, but good enough. The state is fiscally solid, with adequate administrative capacity and awesome control capacity. Collapse is not in the making.

The reason Bill Clinton thought economic opening up was inevitable, was that he thought the emerging middle class would make itself a force for liberalisation. But in China, the middle class has instead aligned itself with the Communist Party. Many have though that hard dictatorship could not survive the internet, but in China the internet has been turned into another instrument of control from above. This may not fit with our models but that’s because our models do not fit China.

A dispassionate analysis of the Chinese system today is necessarily despondent. The regime’s priority is to preserve itself. It can rely steadily less on economic growth for legitimacy. It is steadily more dependent on repressive control. “Benevolence” and “contradictions” are flights of fancy. Dictatorship is the natural form of rule in this system, and the art of dictatorship has been perfected. At least for the duration of Xi Jinping’s tenure, hard dictatorship is what we’ll have. Those who observe and deal with China better get used to it.

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