Modern Chinese history

Is China about to implode? Comment on Shambaugh's essay “The Coming Chinese Crackup”

Modern Chinese history

In an essay in the Wall Street Journal on 6 March 2015, David Shambaugh made a scathing criticism of the policies adopted by Xi Jingping. He included phrases such as “we are witnessing the final phase of communist rule” and “the endgame of Chinese communist rule has now begun”. Jenny Clegg, a SACU Vice-president rejects Shambaugh's negative views, limited understanding and confused analyses.

Over the last 18 months, China has been stepping out onto the world stage with increasing confidence. In October 2013, there was the announcement of the One Belt One Road project linking the Eurasian land-based and sea-based Silk Road initiatives. Then, following the launch of the BRICS Bank in July 2014, in which China played a key part, came the call for the Asia Infrastructure Investment Bank (AIIB) in October 2014. A month later China gained agreement from Asian leaders at the APEC summit for a Free Trade Area ofAt the same time, on the sidelines of the summit, China and Russia signed a long-awaited $400bn gas deal, a further major step for Sino-Russian relations. Earlier this year came the news that Jordan and Saudi Arabia were ready to join the AIIB despite pressure from the US. But the really significant development was the decision by the British Treasury to apply for membership, a shift in strategic direction that left the US fuming about Britain’s ‘constant accommodation’ of a rising China. the Asia-Pacific (FTAAP), Xi Jinping, President of China, evidently upstaging Obama and his Trans-Pacific Partnership proposal.

Close on Britain’s heels came Germany, France and Italy and within a few days, Australia was also talking of joining up, albeit with conditions, as was South Korea, leaving Japan alone to shore up the US hold-out.

Swimming against this tide of China optimism is veteran sinologist, Prof David Shambaugh who would, in effect, have us believe that these developments on China’s part are all front, a con trick, that in fact the “endgame of Chinese communist rule has now begun”. His recent essay The Coming Chinese Crackup, sets out to portray a country riddled with corruption, the economy on the way down, the rich preparing to bolt, taking their moneybags with them to safer havens. Meanwhile, he suggests, the Communist leadership’s ruthless measures to prevent the spread of Western values are pushing the country close to breaking point.

Next to the ‘China threat’ theory, the ‘China collapse’ theory is a favourite among Western pundits, rolled out again and again: at the end of the Cultural Revolution and Mao’s death; then after the introduction of the Open Door policy (which would soon dissolve the authoritarian political system); and further, following the suppression of the student demonstrations in June 1989 (which would only lead to further incidents), the death of Deng Xiaoping, the impact of the 1997-8 Asian financial crisis and so on. By now, shouldn't such cries of wolf have lost their credence?

China indeed faces huge challenges, its system riven with fault-lines: that is in the nature of development, and these challenges are by no means to be underestimated. No matter how successful the government’s overseas initiatives might be, it is internal stability that counts.

But as to Shambaugh’s particular negativity, it should be noted first that the economic slowdown to a ‘new normal’ is deliberate: a shift down from the unsustainable double digit growth would have started several years earlier had it not been for the need to counter the impact on China of the 2008-9 world financial crisis. Recent reports of the exodus of the ‘super rich’ can hardly be an economic threat, given China’s reserves of $3.8 trillion.

As to the reasons for these capital flows, the data does not explain. It could in fact be seen as consistent with the new official emphasis on outward investment which is to reach an ambitious $1.25 trillion over the next 10 years. Certainly there is a trend amongst the upper middle classes of ‘looking for better climes’ abroad, away from pollution as well as searching for educational opportunities for their children. But this does not necessarily mean that they are rejecting the Chinese system, any more than the million or so of Brits who have relocated to Spain seek to escape our democracy; they have gone to avoid our inclement weather.

The real point of political crisis for China, with widespread anxiety within and beyond the Party, came in 2012, when Bo Xilai, Politburo member and contender for Party leadership, was found guilty on charges of corruption. But this moment of uncertainty has now largely passed with Xi Jinping’s strong leadership. Shambaugh’s observations may reflect some attitudes among intellectuals not yet ready to give up learning from the West, and officials, reluctant to take initiatives lest they attract attention in the anti-corruption campaign, but his evidence is purely anecdotal and subjective. Of course no one can predict that the leadership will be able to steer the economy to a soft landing in the shorter term.

However, there are other dimensions of Xi’s programme which Shambaugh fails to take into account but which have been important in restoring a sense of stability and direction.

Reforms to the hukou system, for example, will have a big impact on city life, helping to reduce the urban-rural divide and increasing the confidence of the rural migrants. The anti-corruption campaign is very popular. Factionalisms indeed distort the efforts and it is generally understood that corruption cannot be eradicated in a single campaign. But the government’s new commitment to the rule of law takes the campaign far beyond a selective purge, indicating a serious intention to limit the emergence of a Chinese oligarchy as the economy liberalises further.

30 years ago, Deng Xiaoping gave priority to economic reforms, keeping political reform on the backburner. Now Xi is opening a new phase in China’s development, introducing measures which will transform China’s social structure and social system, and impact fundamentally on its polity in the longer run.

Deng Xiaoping ‘opening up reforms’ poster in Shenzhen (WF) Shambaugh’s primary concern with sections of the elite make his prognostications partial. His predictions of the end of Communist rule could well play into the hands of those in the US advocating the continuation of the policy of ‘hedging’ - engaging with China in a limited fashion whilst waiting it out for the inevitable internal regime change. But this option, as Hugh White, the Australian defense analyst notes, is becoming increasingly dangerous. Sino-US relations have reached a strategic turning point: the China challenge is not just some future prospect, it has become a reality. If the US continues to avoid fundamental change in theThe US should face up to the necessity for accommodation with China or risk an escalating rivalry. For the US to prolong the hedging gamble and continue the pursuit of primacy, is to increase the likelihood of conflict. To follow Shambaugh would be to slide further down this slippery slope. relationship, if it continues to block any substantial redistribution of power in Asia in China's favour, where will this lead?

© Copyright Society for Anglo-Chinese Understanding (SACU) 2015, reprinted from SACU's China Eye magazine Issue 46, 2015

The views expressed in this article are those of the author and do not necessarily represent the view of SACU.
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