Post a Comment On: China Matters

I’ve resisted weighing in on l’affaire Shambaugh—David Shambaugh’s blunt WSJ op-ed declaring that “the endgame of Chinese communist rule has now begun” thanks to Xi Jinping’s predilection for tight control instead of political reform as a response to China’s looming troubles—because there’s really no useful response to his thesis except “Interesting prediction of the future…but predicting the future of China accurately is notoriously difficult.”
However, there is one point I think is worth raising, is How does U.S. government PRC policy reflect, contradict, or address Shambaugh’s views?
David Shambaugh, after all, is the most heavily credentialed China-watcher in the biz.  If he says the CCP is headed for collapse, how does that affect the agendas and policies of the Asian affairs cohort at the White House, NSC, State Department, etc.?  How can it not?
Haven’t seen any discussion of that yet, either on Twitter or scratching around at the paywalls of the beleaguered US media stockades.
Which, to me, means that David Shambaugh has, in one sense, already won.
Back in 2010 I wrote, “Maybe It’s Time to Stop Listening toDavid Shambaugh”. Ha!
My thesis in 2010 was that Shambaugh was dealing rather imperfectly with the consequences of the failure of his preferred model for dealing with the PRC—engagement—by blaming the PRC for not living up to a rather crappy model.
Specifically, the model of engagement underpinned by “responsible stakeholderism”: the idea that the US was the paragon and guardian of a liberal international order and the road forward for the PRC would be to integrate itself into that order by means of suitable domestic and international liberalization, and by not pulling dick moves on human rights, nuclear non-proliferation, climate change, etc. 
By October 2010, after a series of dick moves--the acrimony of Copenhagen, the grinding, sordid yet ultimately successful effort to extract the PRC’s vote in favor of Iran sanctions at the UNSC, and the first Senkaku/rare earths flare up--it was clear that the PRC was not going to play Robin to America’s Batman.
Shambaugh abandoned his previous tentative optimism and characterized the 2010 CCP regime—figureheaded by the pasty-passive Hu Jintao, not today’s menacing Xi Jinping pandadragon, mind you-- as “truculent, narrow-minded, hypernationalist”.
This was good enough for the Western China commentariat, which attributed the hiccups in the global order to PRC transgressions and transgressiveness.  The US, by this telling, was passive and reactive in dealing with PRC aggression, system-gaming, and selfish behavior.
And I think this is still good enough for most people.  There is no discussion of US PRC policy or how Shambaugh’s views might affect it.  It’s almost as if we don’t have an active US PRC policy.  It’s almost as if the US, to unleash the social science buzzbomb, has “no agency” and is merely reacting to whatever crap the CCP panda flings out of its cage at the global order.
But, of course, not good enough for me.  My feeling was that all great powers and wannabe great powers are “truculent, narrow-minded, hypernationalist”, including the United States.

  Especially the United States, which by 2010 had blotted its own “responsible stakeholder” copybook with the Iraq War and the 2008 financial crisis.  My jaundiced opinion hasn’t improved with President Obama’s Libya, Syria, Ukraine, Venezuela, Honduras, Haiti, and IS contributions.
In 2009-2010, I saw a rather cynical effort by the United States and the State Department under Hillary Clinton to make up for lost geopolitical ground at the PRC’s expense, particularly in the Copenhagen Climate Conference fiasco of late 2009 (where the US negotiating position keyed on driving a wedge between the PRC and the developing world) and the cynical Clinton-Maehara tag team attack on the PRC maritime border vulnerabilities at ASEAN (apparently neither of these worthies was pleased that President Obama planned not to reaffirm coverage of the Senkakus in the US-Japan security treaty).
Perhaps in the future we’ll view events less through the lens of Shambaugh “PRC is a bad actor” truthiness and more through “what actually happened” factiness, but the China Matters perspective is still waaaaaaaaaaaay in the minority.
For me, the most telling example of the “aggressive PRC bad guy/reactive US good guy” narrative is the South China Sea.
The SCS brouhaha dates back to Hillary Clinton’s declaration that the US had a national interest in “freedom of navigation in the South China Sea” at the ASEAN foreign ministers’ conference in Hanoi in 2010.  I will spare my impatient readers a recap of how in my opinion the United States took a virtually intractable but low-level problem of conflicting claims over dozens of uninhabited rocks and atolls that should have been addressed with interminable bilateral can-kicking, and irresponsibly but successfully spun it into the geopolitical gold of a polarizing regional crisis that made the case for the US pivot to Asia.
But I will use the current spate of PRC island-building in the SCS to illustrate my point.
Unquestionably, the PRC is cabbage-wrapping, salami-slicing, and indeed salami-stuffing the area within the Nine-Dash-Line into China-dominated oblivion.
What I would term “Shambaughism” provides one explanation: the “truculent, narrow-minded, hypernationalist” PRC, unwilling to get with the peaceful global program, is giving full play to its aggressive inclinations by annexing most of the South China Sea.  
“Shambaughism” implies that the US is a passive observer of these unprovoked offenses, and also indicates a response in keeping with the US role as guarantor of Asian regional security and protector of the rules-based international order: the US has to react by upgrading deterrence through an expensive naval build-up, strengthened alliances with the Philippines and Vietnam, and by encouraging Japan and India to take an active interest in balking PRC activities in the region.
I will, in this context, admit that I feel that the feckless US policy in Ukraine—where it helped light the fuse of civil war but then had no effective answer when RF units and RF-supplied eastern Ukrainian forces handed Kyiv its own ass—encouraged the PRC to believe, probably correctly, that in the SCS as in Ukraine, the local power’s determination to advance its core interests in its “near beyond” would trump US willingness to escalate mischief to discommode an adversary thousands of miles away.
“China Matters fact-ism”, on the other hand, looks at the US as possessing “agency”, having since 2010 committed itself to a cynical policy of encouraging heightened tensions in the SCS with the idea that the PRC’s put-upon neighbors would be driven into the US security and economic camp.
And, for the recent, expensive spate of island-building, I find explanation in US encouragement of the Philippines in pursuing its arbitration suit before UNCLOS seeking to invalidate the Nine-Dash-Line, instead of engaging in interminable jaw-jaw with the PRC over island claims and, in particular, development of the precious Reed Bank hydrocarbon project that is very important to the Philippine government’s economic fortunes.
The PRC’s fast-tracked island-building program is, in my opinion, a high-profile “price-tag” operation, telling the US, the Philippines, and Vietnam that the arbitration outcome (which will quite possibly be unfavorable to the PRC, especially since the PRC has declined to mount a defense) will mean exactly Zero.
In fact, less than zero for the Philippines, since the PRC will be less inclined to compromise on South China Sea issues since the Philippines’ action moved the issue from bi-lateral debate to an international issue—one where the PRC has, through its preemptive island-building operation, demonstrated it is willing to live with the consequences of an unfavorable legal status and a “frozen conflict”.
“Shambaughism” in my opinion dictates escalation.  And I think we’ll get it.  
And of course, the more “Shambaughism” is entrenched—now with the “Not only is the PRC is bad international actor, the CCP is going to collapse soon” enhancement—the more escalation we’ll get.
“China Matters fact-ism” implies that the Philippines will wake up the day after the UNCLOS arbitration award thinking, “Nothing has changed except the PRC has totally entrenched itself in the SCS.  Remind me what I won here?  Time for some discreet rapprochement.”  I think we’ll get that, too.
But in the long term, I think we’ll see less Shambaughism.
Because…so I guess I should offer my views on The Future of the CCP after all.
It’s actually pretty simple.
In my opinion, the world is run by jerks in suits.  When regime change occurs, the new nation is still run by jerks in suits.  The PRC will be no exception.
I think Xi Jinping came to office in an atmosphere of crisis.  Economy slowing; straightforward Keynsianism of throwing money into the banking system yielding decreasing returns, inflationary pressures, higher debt burden; unsustainable revenue model for local governments; SOE & local government indebtedness; growing disconnect between government economic objectives and priorities of the business sector; corruption; increasingly vocal and networked dissatisfaction; chafing at PRC pretensions at the margins (Xinjiang, Tibet, Taiwan, Hong Kong); demographic issues; corruption; clear need to wean economy and employment from the easy but no longer valid export/infrastructure growth model to something more complicated; a general desire by the US, Japan, and much of the world to circumscribe the PRC’s freedom of action and its international opportunities. 
Plenty of opportunities for the wheels to come off.  
Undoubtedly the CCP takes the USSR as the negative example, but I don’t think they worry so much about how Gorbachev made a meal out of party/economic/political reform and f*cked over the entire Soviet Union.  I think it looks at the procession of CPSU hacks from Brezhnev on who let matters coast and decline for decades until the problem landed in Gorby’s lap.
So Xi, in my opinion, is reviving the CCP as step one.  Not turning it into a democratic paradise of fresh ideas—they’re still communists ferchissakes—but clearing out the deadwood, crushing the opposition, eliminating dangerous factions and alternative power centers, and putting the healthy fear of corruption prosecutions in the minds of the remainder.  The objective is to make the CCP a loyal, responsive instrument that won’t break down or turn against the Center when things get rough.
And I expect things to get rough.  Oligarchs with their own ideas on how to run things and hooked on their financial and political privileges but are sucking up too much bank credit for the wrong economic sectors will have to be persuaded, conciliated, deterred, reined-in, or removed.  Local governments have to be restructured into genuine tax-farming organizations instead of financing their operations through bank loans and real estate shenanigans.  Employees and owners will take it in the neck if the CCP is to be serious about forcing a restructuring of the economy.
Nobody is going to be very happy.
So in addition to getting the flabby CCP ready for battle, Xi is cracking down on dissent, tightening control of the media, and upgrading the Great Firewall.   My personal opinion is that Tibet/Xinjiang policies are now pre-emptively harsh (on top of being reflexively brutal) so that the Party can keep a lid on the western part of the country in case Taiwan or Hong Kong blows up.  And, of course, it helps to present the picture of a nation under threat from external forces which, to be frank, is not just a useful political fantasy for the CCP.  
The key question will be whether Xi Jinping can sell the internal/external threat narrative, and the idea that the PRC is effectively addressing those threats.  I’d say yes on selling the narrative; as for whether Xi and the CCP are doing a reasonable job, it depends on how effective his remedies seem to perform and how equitably the pain is spread around.
The CCP will try to soften the thousands if not millions of blows by gingerly goosing the economy when things get too bad (right now I see the PRC desperately but not quite successfully fighting against the urge to go all-in on quantitative easing), and by delivering a few nice things: maybe an improved judicial process, most likely an environmental quality push that advances some of Xi’s economic restructuring/personnel and power management objectives while delivering some popular stuff like cleaner air and water to the PRC’s citizens. 
I should say I have my doubts that “Under the Dome”—the anti-pollution super-TED talk that conquered PRC social media—is symptom of a populist uprising against the CCP’s pollution-abetting ways.  I expect Xi expects and may have planned in advance to to channel that enthusiasm—and public resentment against local officials who operate, fund, and protect polluting industries that Xi wants to get rid of—in the service of his agenda.
All in all, PRC economic and social restructuring is a long process, and I think Xi’s still at step 1: cleaning up the party (and military).  When he’s secured the Party, then he’ll try to go after selected SOE and local government targets.  The rest of the job will probably still be unfinished when Xi packs it in, presumably in 2022 or so.
But his objective, I believe, will be to leave a party/state/economic structure that cannot easily be screwed up even by a Chinese Gorbachev.  If the CCP regime collapses, I believe the regime will degrade relatively gracefully—and the longer Xi is in power and can effectively advance his agenda, the more graceful that decline will be.
In particular, I believe a failure of governance at the Center will be answered by the devolution of actual power to the coastal provinces: Guangdong, Shanghai etc.  Without a strong Center to restrain them and by shedding the incubus of the poorer provinces, provincial heavyweights will pursue their own paths to political power and economic advantage—that may or may not involve appeasing the urban well-to-do with political liberalization or even the hollowing-out or sidelining of the CCP, locally and eventually at the national level.
But my prediction is that in the near, medium, and long term, China will be run by jerks in suits…just like the rest of the world.
It is also a process that has little to do with the central shibboleth of Shambaughism: the need for political as well as economic reform to rescue the PRC from its looming national cul de sac.  Or as he put it in his op-ed:
Until and unless China relaxes its draconian political controls, it will never become an innovative society and a “knowledge economy”—a main goal of the Third Plenum reforms. The political system has become the primary impediment to China’s needed social and economic reforms.
But using political reform as a diagnosis of China’s ills, and its panacea, isn’t quite a logical and evidentiary slam dunk, in my opinion.  Letting 100 flowers bloom may not be the only or even the most practical way of handling the big challenges and risks that China is facing.
On the occasion of the National People’s Congress (cue “rubber stamp” sneering) in Beijing, the state news agency Xinhua ran a commentary that, I think, sums up the Xi Jinping view of political reform. 

  Once one gets over the reflexive What do them Commoonists know ‘bout Democrosee?? atavism, the perspective is worth considering, as is the question: When we look at the whole oligarch/1%/globalized/managed democracy/hyperdebt megillah, are the PRC & US actually diverging…or converging?  And in twenty years, when China is whatever the heck it is, will “Shambaughism” survive only as a dusty curiosity in the museum of IR ideas that didn’t quite cut it?
(China Daily, amusingly, ran an abridged version of the commentary that omitted the rip on Indian democracy that infuriated the Indian media, as well as mercifully leaving out the reference to the unnamed but clearly identifiable Democratic Republic of Congo):
A discussion on how historical events may have developed differently will not rewrite history. It does, however, offer an opportunity to consider–and better understand–the present, and how to forge a better future. 
The ongoing annual session of the National People's Congress (NPC) provides a suitable backdrop to reflect upon the country's 61-year-old fundamental political system, and to examine how this unique model of governance has transformed the ancient middle kingdom into the world's second largest economy.
Had the world's most populous nation been governed by a bipartisan system, what would have happened? 
Hindsight shows us that the Western political system, which is not inherently problematic and was designed to encourage "freedom," would have been incompatible to a country where efficiency has driven remarkable economic growth and social development.
Seemingly endless political bickering, inherent in the Western model, would have led to political dysfunction, which in turn would have brought catastrophic repercussions on a nation four times as big as the United States.
Political lobbying would dilute the unique strength and success of socialist China's "concentrating resources to do big things."
Should China have adopted a system that facilitated lobbying among interest groups, policies on domestic infrastructure to bills that had worldwide implication would be caught in a self perpetuating cycle of limitless debates. 
China is the world's leading emitter of C02, however, had financial oligarchies been allowed to run the nation like a profit-seeking conglomerate, a carbon emission deal–such as the climate accord reached between Beijing and Washington during the 2014 APEC meeting–would have been out of the question.
Even in comparison with the Republicans in the United States, filibusters in Chinese Congress would have made any health care or poverty reduction bill extremely difficult to pass.
Further, China's feat of becoming the first developing country to halve its population living in poverty would have never been accomplished. 
Half of the 1.3-billion population may have been recipients of foreign aid, making it a huge burden on the world. 
At best, China would have been another India, the world's biggest democracy by Western standards, where around 20% of the world's poorest live and whose democracy focuses on how power is divided. In 2014, India registered a per capital gross domestic product (GDP) equal to a mere quarter of China's GDP. 
Or, China could have become certain African democratic country that has struggled with civil wars, military junta, coup d'etats and the "curse of resources" for decades following the end of Western colonial rule in the 1960s.
Should China's mainstream political parties have been fiscally irresponsible and pursued interventionist policies globally, like in the United States, the People's Liberation Army would have received an inflated military budget–at the expense of development projects. 
This situation would have fed nationalist sentiment, and wars would be imminent. This would have only been good news for opportunists and arms dealers, who would have rushed to cash in on the unrest.
A system that allows plurality is fertile ground for election rigging, vote buying and the silencing of minorities. In a country as ethnically and geographically diverse as China, the fires of opposition would have been stoked and the nation divided.
That is why in his article "Why Socialism?," Albert Einstein said that in a capitalist society: "Legislative bodies are selected by political parties, largely financed or otherwise influenced by private capitalists. So the representatives of the people do not [...] protect the interests of the underprivileged."