China is at a crossroads: Limits of its Party-led model are showing. Simply put, the international factors that aided China’s rise are eroding

by Brahma Chellaney

Four decades ago the Chinese Communist Party, under its new paramount leader Deng Xiaoping, decided to subordinate ideology to wealth creation, spawning a new aphorism, “To get rich is glorious.” The party’s central committee, disavowing Mao Zedong’s thought as dogma, embraced a principle that became Deng’s oft-quoted dictum, “Seek truth from facts.” 

Mao’s death earlier in 1976 had triggered a vicious and protracted power struggle. When the diminutive Deng – once described by Mao as a “needle inside a ball of cotton” – finally emerged victorious at the age of 74, he hardly looked like an agent of reform. But having been purged twice from the party during the Mao years, Deng seized the opportunity to usher in transformative change. 

Deng’s Four Modernisation program spurred China’s phenomenal economic rise. China’s economy today is 30 times larger than it was three decades ago. Indeed, in terms of purchasing power parity, China’s economy is already larger than America’s. 

Yet, four decades after it initiated reform, China finds itself at the crossroads, with its future trajectory anything but certain.

To be sure, when it celebrates later this year the 70th anniversary of its communist “revolution”, China can truly be proud of its remarkable achievements. An impoverished, backward nation in 1949, it has risen dramatically and now commands respect and awe in the world.

China is today the world’s largest, strongest and longest-surviving autocracy. This is a country increasingly oriented to the primacy of the Communist Party. But here’s the paradox: The more it globalises while seeking to simultaneously insulate itself from liberalising influences, the more vulnerable it is becoming to unforeseen political “shocks” at home.

Its overriding focus on domestic order explains one unusual but ominous fact: China’s budget for internal security – now officially at $196 billion – is larger than even its official military budget, which has grown rapidly to eclipse the defence spending of all other powers except the US.

China’s increasingly repressive internal machinery, aided by a creeping Orwellian surveillance system, has fostered an overt state strategy to culturally smother ethnic minorities in their traditional homelands, including through demographic change and harsh policing. This, in turn, has led to the detention of a million or more Muslims from Xinjiang in internment camps for “re-education”. Untrammelled repression, even if effective in achieving short-term objectives, could sow the seeds of violent insurgencies and upheavals.

More broadly, China’s rulers, by showing as little regard for the rights of smaller countries as they do for their own citizens’ rights, are driving instability in the vast Indo-Pacific region.

Nothing better illustrates China’s muscular foreign policy riding roughshod over international norms than its South China Sea grab. It was exactly five years ago that Beijing began pushing its borders far out into international waters by pressing its first dredger into service for building artificial islands. The islands, created on top of shallow reefs, have now been turned into forward military bases.

The island building anniversary is as important as the 40th anniversary of economic reform because it is a reminder that China never abandoned its heavy reliance on raw power since the Mao era. In fact, no sooner had Deng embarked on reshaping China’s economic trajectory than he set out to “teach a lesson” to Vietnam, in the style of Mao’s 1962 military attack on India. A decade later, Deng brutally crushed a student-led, pro-democracy movement at home by ordering a tank and machine gun assault at Tiananmen Square. According to a British government estimate, at least 10,000 people were massacred.

Yet, the US continued to aid China’s economic modernisation, as it had done since 1979, when President Jimmy Carter sent a memo to various US government departments instructing them to help in China’s economic rise. In the naive hope that a more prosperous China would liberalise economically and politically, that approach remained in effect until recent years.

But now a fundamental shift in America’s China policy is underway, as illustrated by the trade war and Washington’s newly unveiled “free and open Indo-Pacific” strategy. The tougher line towards China has also been highlighted by the enactment of two new US laws – the Reciprocal Access to Tibet Act in December and the Taiwan Travel Act in March.

The evolving paradigm shift, with its broad bipartisan support, is set to outlast Donald Trump’s presidency, underscoring new challenges for China at a time when its economy is already slowing and it has been compelled to tighten capital controls to prop up its fragile financial system and the yuan’s international value.

Simply put, the international factors that aided China’s rise are eroding. The changing international environment also holds important implications for China domestically, including the Communist Party monopoly on power. Xi Jinping, who in October 2017 ended the decades-old collective leadership system to crown himself China’s new emperor, now no longer looks invincible.

The juxtaposing of the twin anniversaries helps shine a spotlight on a fact obscured by China’s economic success: Deng’s refusal to truly liberalise China has imposed enduring costs on the country, which increasingly bends reality to the illusions that it propagates. The price being exacted for the failure to liberalise clouds China’s future, heightening uncertainty in Asia.