China’s ‘New Era’ under Xi Jinping: Progress or Jeopardy?

China’s ‘New Era’ under Xi Jinping: Progress or Jeopardy?

09 October 2018

Priyanka Mogul, Communications Officer

In October 2017, China’s 19th Party Congress adopted the ‘Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era’ – giving the Chinese leader a status unmatched except by Mao Zedong and Deng Xiaoping.

George Magnus, author of the new book, Red Flags: Why Xi’s China is in Jeopardy, joined the Asia House Bagri Foundation Literature Festival to discuss the implications of this “new era” for China. He was in conversation with Martin Jacques, author of the global bestseller When China Rules the World: The Rise of the Middle Kingdom and the End of the Western World, and Dr Yu Jie, Head of China Foresight at LSE.

With very differing views on the topic at hand, the panel was moderated by Dr Linda Yueh, economist and author of China’s Growth: The Making of an Economic Superpower. To kick off the discussion, she asked Magnus to talk about the title of his new book.

China in the Xi Jinping era

Referring to the “Red Flags” as “warning signs”, the former Chief Economist of UBS said that his book looks at the problems contemporary China faces, noting that “something quite dramatic has changed,” in China since 2012.

He notes that there have been three transformations in China since Xi Jinping came into power. First, China’s shift from being a customer to the world to becoming a “fiesty competitor”. Second, the problems which have emerged with China’s economy since its unprecedented rise, including the debt that the government has to deal with, and, third, the fact that demographics now point to China as being the fastest ageing country on earth.    

He added: “China has become much more vocal, much more assertive, a little bit more truculent. All of these changes give us a perspective on China, which is not the China that we grew up with. It has changed in some very material aspects.”

While Magnus acknowledged that the Chinese system has delivered “unprecedentedly fast economic growth” – unmatched by no other emerging country for that length of time – he emphasised the need to understand why this growth occurred and what the critical success factors were.

“We are all having this navel-gazing at the moment about what is the right mix in our society between state-led or state-nurtured development and prosperity and the markets. We’re looking at it from one point of view, post the financial crisis, but in China they’re looking at it from the other point of view – and it’s still not clear that the markets guys are going to win.

“It could be somebody else’s China that will make amends in a very material way. I’m just not confident that Xi Jinping’s China is going to be able to do that.”

On the other hand, Dr Jie was more positive about the Xi Jinping leadership, noting that while Theresa May has been talking about a “strong and stable” government, it is actually Xi Jinping who has enjoyed this so far. However, she pointed out that when it comes to assessing the status of China under the leader, it is “the accountability to its own people that matters” irrespective of the kind of political system in place.

“Any political system should have to answer over three elements – authority, liberty and wealth. In China’s case nowadays, we have authority and we have that certain level of wealth creation. But when it comes to liberty, that will be a really big question for Xi Jinping.”

While Jacques agreed that there is a need for China to shift its economic model, he does not share Magnus’s view that China is in jeopardy under Xi Jinping.

“Clearly it’s true that the Xi Jinping era, starting in 2012, marks some kind of shift,” said Jacques. “I don’t think you can classify him as a dictator, I don’t think he runs China single-handedly. I think the shift is a big historical shift, which is now that China feels strong enough to express itself in terms of its foreign policy and its international position.”

Dr Jie agreed with Jacques’ view on China’s expression in the international arena under Xi Jinping, noting that back in the late 1970s, everything China did went unnoticed by the rest of the world. However, today China finds itself in the spotlight over whatever it does.



The Western perspective on China

Jacques told the Asia House audience that Western politicians and intellectuals have found it “extremely difficult” to come to terms with China’s economic transformation and that they remain sceptical about the possibility of this economic growth being sustained.  

“The great majority of people have believed that because the political system was not like ours, a Western-style democracy, then it would eventually hit the wall. Generally, the Western opinion has got China wrong with extraordinary consistency.”

He emphasised that there is a need to stop viewing China through a western paradigm and understand that the country is “profoundly different” from Western society. He believes that to be able to make sense of China’s economic transformation, one first has to acknowledge that China is not a conventional nation state, but that it was a civilisation state that became a nation state – and that the two coexist and shape Chinese foreign policy.

“We face an enormous intellectual challenge in the West to understand China because we constantly try to measure China against ourselves. We expect China to do what we’ve done and China hasn’t done that, except in certain respects, and I don’t believe it will do.”

China and trade: Belt and Road initiative and the US

“Is [the Belt and Road] a Eurasian development project that’s setting up a new development model for the world, or is it something that is very China-centric in terms of who benefits?”, questioned Magnus.  

The panel put forward very different arguments on what the Belt and Road initiative means for the region. While Magnus believes that the project could leave other countries in debt, Jacques sees it as progress.

Magnus said that the initiative will benefit Western provinces, the sale of manufacturing to emerging and developing countries, as well as act as a source of releasing excess capacity. However, he added that these come with “financial problems”.

“The Belt and Road initiative is not without its flaws. It’s not just mistakes; it’s fundamental flaws and about saddling countries with large amounts of debt that they probably cannot pay back.”

However, Jacques argued that since China sees itself as a developing country, it understands the problems of development in a way that Western countries don’t. Looking at Africa, he noted that China had supported the continent in a way that Western countries never did.

“If China can make a single contribution to the transformation of particularly the developing countries in the Eurasian landmass, it will transform the world in an extremely positive way.”

Touching briefly on the US-China trade war, Magnus said that this isn’t just an ordinary trade war.

“This is an existential argument about technology and leadership, about military superiority, and about the rules and regulations of industrial policy. This trade spat is going to go on for the foreseeable future.” 

Weighing in on the topic, Martin added: “America made assumptions about it’s relationship with China; that it would always be the dominant player in the relationship, that China would – over time – become like the West, and that China would accept Western leadership indefinitely.

“Of course, on all of those fronts they got it wrong. America cannot imagine a world, cannot bring itself to think of a world in which its not number one.”

As a concluding remark, Dr Jie emphasised that China’s picture isn’t black and white: “I think we really require a nuanced reading for the return of the Middle Kingdom.”

Watch the full event here

There’s lots more coming up at this year’s Asia House Bagri Foundation Literature Festival – check out the full programme