The economic superpower obeys only its own laws: a threat to the rest of the world.
Xi Jinping has undertaken a radical transformation of the model bequeathed by Deng Xiaoping. With growth leveling out, it is being redirected toward domestic demand; once again, society is being taken in hand ideologically and leadership over Asia is being claimed, as exemplified in the conquest of the China Sea by the construction of artificial islands in the archipelagos of the Spratley and Paracel islands. Xi Jinping intends to exploit the emergence of China and the crisis in Western democracies, at the cost of a worsening of internal and external tensions that is disquieting.
China’s Trente Glorieuses (i.e. its years of prosperity similar to those of France between 1945 and 1975) have been founded on the development of an internal market and its inclusion in international exchanges, accelerated by its admission to the WTO. China has thus become the main exporting nation ahead of the USA (14% compared to 9% of goods exported) and one of the most active investors in the world. At the same time, it refuses to respect the institutions and rules of the international system, giving absolute primacy to its desire for power.
There are increasing signs of China’s divergence from the law. On August 4th, the Chinese lawyer Zhou Shifeng, head of the Beijing law firm Fengui and a leading figure in human rights defense, was sentenced to seven years in prison for “subversion”. A few days earlier, Uber surrendered to Didi Chuxing who had been supported by the Chinese government. Losing over one billion dollars a year, Uber was forced to hand over its operations to its competitor. In exchange for his allegiance to the authorities, Didi Chuxing gets a de facto monopoly which gives him control over almost 90% of chauffered vehicle reservations in a market of 1.3 billion people. Uber thus joins Google and Amazon, ousted from the Chinese market by Baidu and Alibaba under pressure from Beijing.
At the same time, Xi Jinping has brought Hong Kong to heel. The agreements signed with the United Kingdom in 1997, which guaranteed autonomy for the territory for a period of 50 years and respect for civil rights, have been voided of any significance. The principle of “one nation, two systems” has been replaced by “one system, two economies”. Increasing numbers of company bosses and dissidents are being put under arrest. Hong Kong is becoming more and more marginalized, as is its port which has been eclipsed by Shanghai, Shenzhen, Ningbo and Xiamen.
On the international front, on 12th July, Beijing’s expansionist strategy in the China Sea was condemned with unusual severity by the permanent Court of Arbitration of The Hague after a complaint by the Philippines. The judges were unanimous in concluding that, not only were China’s claims unfounded, but also that the construction of artificial islands could not entail any entitlement to an exclusive economic area. The court condemned illegal restrictions on the Philippines’ fishing and energy operations and denounced irreversible damage to the environment. Beijing reacted to the sentence by threatening to set up a defense identification zone in the China Sea and by announcing the organization of naval maneuvers with Russia in this zone in September.
The deliberately aggressive stance of China is undoubtedly related to the weakening of the Communist party in face of the economic slow-down, social inequalities and a deterioration in the quality of life and the environment. However, its relations with the rest of the world are becoming dangerously one-sided. On the economic front, Beijing’s line consists in reserving the Chinese market for local companies by discriminating against foreign competitors, whilst benefiting from the Western financial crisis to increase its acquisition of assets with high added value. On the strategic front, China is spreading its power throughout the world, from the silk route to naval deployment on the high seas, whilst denying access to its sphere of influence by showing contempt for freedom of movement on the seas and in the air. It is also showing itself to be highly aggressive in cyberspace, notably by means of regiments created within the People’s Liberation Army, devoted to electronic warfare.
Pressure from China is not only worrying; it is also provoking resistance. The USA systematically refuses to give up essential infrastructures to Chinese interests and has taken protectionist measures to safeguard itself against steel dumping. This is in contrast to the irresponsibility of the French government which has not hesitated to dispose of Toulouse airport (head office of Airbus and site of its research department) to Chinese investors. Theresa May has just put off the decision to start work on the two EPR nuclear reactors at Hinckley Point because of risks to UK security due to the fact that the Chinese company CGN is financing a third of the program to the tune of 21.3 billion euros. Even the European Union is tending to emerge from its lethargy, realising that it cannot recognize China as a market economy as it would deprive itself of any recourse vis-à-vis Beijing at a time when whole chunks of European industry, from steel to solar panels, are being ruined by Chinese dumping.
Beijing’s expansionism has also unleashed an arms race in Asia. Japan has just published a new defense white paper which plans for massive investment in this field. South Korea and Japan have anti-missile systems in operation. Australia is strengthening its naval and submarine capacity. At the request of Hanoi, the USA has lifted its embargo on the sale of arms to Vietnam.
China is the world’s leading exporter and yet it rejects the rules of the game that govern the world system. It considers them pro-Western, even though they have fostered its development. China is not a market economy or a constitutional state, nor will it be in the forseeable future: in China a contract crystallizes a situation but does not engage the parties involved. Beijing only respects principles that give priority to the interests of the Empire and the Communist party. It does so even though this may hold back its conversion to an economy providing high value-added services and innovation, provoke an outflow of capital and a brain-drain, block the development of Asia (which, in 2015, became the leading economic zone ahead of Europe), or bring about the dislocation of the very configuration which enabled its economic take-off.
China has chosen a policy centered on power, and power is its only rule of law. It will be hard on any giants that raise their heads against it – notably the USA – and merciless with the weak – among whom France and Europe are at the top of the list. A word to the wise.
(Column published in Le Point, 11th August 2016)