Dan Blumenthal

5 Is China a nightmare?

Is China a nightmare unfolding before our eyes? Dan Blumenthal, a China expert at the American Enterprise Institute, has put together a complex and thorough compilation of evidence in The China Nightmare. He covers both the external and the internal which present a conflicted picture that means China could be trouble. For itself, and for the world.

The main point is that China has issues so severe, they could threaten its future as a nation. That would be destabilizing enough, but what with its outreach to nations all across Asia and Africa, it could mean a major reshuffling of the deck. China is in the midst of a nearly global campaign to win friends and buy influence. Huge Chinese infrastructure projects are underway everywhere around the globe, it seems. It has finally obtained an overseas base - in Djibouti - giving its navy the start of the long range it has never had before. It is busy offering to build and manage port facilities everywhere it can. If China overextends itself and has to abandon its gigantic commitments, or if its internal problems cause it to look inwards even more, it could be a new world for everyone.

Thankfully, Blumenthal limits the history of China to the last 200, (ie. relevant) years. China has changed so much that what went on in its 3000 year history holds little influence over today’s nation-state. By chapter 7, he is ready to examine the current China’s internal weaknesses, and the book takes off. The issues are many, and they make out China to be far more fragile than it appears.

He calls China Marxist-Leninist, but all the evidence shows the country to be a garden-variety dictatorship and kleptocracy. The governing elite become fabulously rich, while demanding total loyalty, and purging and disappearing anyone who doesn’t toe the line. There are concentration camps for those who are not automatically on board, because of their race or religion. Nationalism is the order of the day. The Communist Party is the only party. To get anywhere in life, you must be a loyal member. Cookie-cutter dictatorship; nothing special here.

It has been very easy for Premier Xi to purge any official he pleases to eliminate, by simply claiming corruption. Government work pays so little that any official wearing a new custom-made suit must have obtained it corruptly, because it would cost more than year’s salary. At the same time, Xi and his family, just like his predecessors and their families, have magically become near billionaires, if that provides any clues.

Xi, like Donald Trump, has focused on undoing everything his predecessors struggled to change, to bring China into the forefront of world nations. He eliminated the succession process, so no one knows how a new premier (also commander in chief and party leader) will be chosen and no potential candidate would dare raise their profile while he lives. He has reined in private companies in favor of state owned enterprises. There are now about 200,000 of them, sucking up available resources and loans, pushing private enterprise nearly out of the picture. They have accumulated assets worth 230% of GDP, Blumenthal says, way out of proportion to their contribution to the economy, and so strangling it.

Rather than the entrepreneurial first mover and hot competitor that Premier Deng built, Blumenthal calls China “a full blown national security state without room for dissent, or intellectual, cultural or political pluralism.” The National Supervisory Commission can “detain anyone for investigation for up to six months without access to legal counsel.” Judges are instructed to consider the Party’s position before considering the law or the constitution. Or human rights.

Xi has built a social credit system in which everyone is spied on and rated for their good citizenship and loyalty to the party. It measures everyone, down to how often they cross a street against the light. Free speech has been intimidated out of existence, replaced by loud nationalism, an ugly form of patriotism based on the Communist Party, and its superhuman leader Xi, who is now quoted for everything, like Mao was in his day. Study of the thoughts of Chairman Xi are required reading and quoting for anyone who would like a career.

This is precisely how the COVID-19 plague escaped control. No one dared take any action before Premier Xi had spoken. The one doctor who blew the whistle was hauled into court and censured. He became the first doctor to die of it, and has become an underground martyr for science and freedom in China.

All this has led to a slowing of the economy, even worse than it would have been without a pandemic. The reduction in innovation and productivity also threatens China’s seeming unending generosity around the world, where it is building all manner of infrastructure for and in other countries. The strings it attaches have become too much for several nations, which have repudiated the deals, but there is always another country desperately in need. There is corruption associated with those projects, and the Chinese tend to insist on Chinese labor, cutting out the locals. After a while, it doesn’t seem like such a good deal.

The country is also no different than the USA was when it was bursting at the economic seams. The USA was infamous for the theft of intellectual property, to the point of kidnapping factory managers in England to run facilities in New England. Copyrights from the rest of the world were completely ignored, and anything could be copied for profit.

China has definitely been accruing processes it did not invent. But it has made it part of deals where it spends billions with foreign firms to build its trains and planes, mostly in China so it can see for itself how it is done, and including the knowledge that comes with it all. The USA has been a willing partner: “No country has purposely transferred as much knowledge to a potential great-power competitor as the US did to China,” Blumenthal says. (His italics)

The outbound framework is the One Belt One Road (OBOR) program, by which China wants to recreate the Marco Polo era trade routes to Europe, but with ships and trains and roads. It is a failing program, costing much more than planned, and there are too many players to pacify in this era of nation-states and their strict borders.

One of China’s most important exports is hypocrisy. It entreats its neighbors with dreams of peace and tranquility under its beneficent umbrella, while at the same time massing troops on their borders, and taking over their islands in the South China Sea. It claims the islands have always been Chinese, though maps clearly demonstrate that is not true. In one embarrassing moment, German Chancellor Merkel presented a gift to Premier Xi on her visit there. It was a rare antique map of China, clearly showing the islands not to be Chinese. The map quickly disappeared.

And then there is Taiwan, which does not want to undergo the same struggle as Hong Kong is experiencing under the freedoms that China affords it. This includes dictating laws, armed intervention, kidnapping and disappearing for those are insufficient fans.

China is battling Brunei, Malaysia, Vietnam, Indonesia and the Philippines on the South China Sea issue, putting army and navy facilities on their islands and bullying their vessels. But it refuses to negotiate a settlement with them. Instead, China will only stall with bilateral talks, using one of the oldest strategies in the book: divide and conquer. This is the China the US fears – the empire builder. It was all right for the USA to take over Hawaii, several Caribbean islands and the Philippines, but similar activity by China is a nightmare come true.

Blumenthal takes one chapter (7) to summarize the major (and usually little known) issues facing China. There are more, but these could cause it to tear apart:

-The expanse of its empire. Like any empire, China has trouble keeping everyone in line, and the bigger the empire, the more complicated the job. It would not take much for China to overextend itself, run out of resources to manage it, and face the loss of participants in the network. It’s a full time job, and China needs its resources elsewhere.

-Desire to become a maritime power. China has focused on the seas, with a navy as well as a naval police force of smaller vessels. It lacks global bases, which keeps them all in the area of China. For example, it has no friends in India, so it is trying to build ports supposedly for the Sri Lankans and the Pakistanis. This will give it ports to pull into in the Indian Ocean. The currently limited range is intolerable and hindering China’s position as a naval power wannabe.

-Stagnating economy. The phenomenal growth of state owned enterprises, combined with trade wars and a pandemic have caused the incredible growth machine to sputter. China was nowhere near the living standard of even Hong Kong or Taiwan, and if the improvements stop, there will be trouble. The country does not have effective, nationwide unemployment, healthcare or pension schemes in place, and it would not take much for people to take to the streets. So the leadership must keep the economy growing as it tries to outrun trouble.

-Potential elite split. The rich are busy offshoring their new wealth, and if the leadership hems them in too much, or if the economy tanks, the country could find itself without capital, experienced entrepreneurs and executives.

-Popular blowback against repression. While the leadership pounds nationalism into Chinese minds, the repression in infuriating. China is forever crushing dissent, religions, protests and underground movements. But the uprisings continue. At some point, the country could unify against the leadership. Especially if the economy fails.

-Aging society. China’s average age is growing faster than even the Japanese. Combined with the perversion of the one-child rule (now abandoned) that gives it an overwhelming majority of men (and single men at that), a destabilizing imbalance and an economy facing outward for export more than inward for the wellbeing of the Chinese could lead to more unrest and scandal. The country is unprepared to deal with a quarter of its population in retirement. Instead, it has passed a law making children financially and physically responsible for their parents.

-Debt. As the world has seen far too many times, at some point the pyramid of debt sinks under its own weight. China has continually thrown caution to the wind and money at state owned enterprises in an all-out effort to catch up to the west in unheard of time. Bogus projects have been overfunded, payoffs have inflated financial needs, and private firms now get just a sliver of the massive loan business.

-Succession. There is the very real possibility that the transition of power after Xi will be messy, causing China to look inward and settle into a new regime that could consume years of unrest if not civil war among the various ethnicities and philosophies vying for control. There is unending precedent and examples all over history and the current world for exactly this scenario. Xi has not learned this lesson.

So the question is, will all these internal and external strains cause the China bubble to burst on its own? Does the world have to arm itself against Chinese imperialism, or just stand by and watch it implode? Do countries have to go to war with it to keep it at bay, or will China simply be forced to withdraw? If the numbers show it is in an impossible socio-economic self-conflict, why get upset? If true, China must not be a true threat and everyone should let it run its course.

Even more frustrating is China’s goals in all this. Does it want to own the world? Does it want to impose the Communist Party everywhere? Does it want to be the world’s sole superpower? Is it the greatest evil in history? This is the nightmare for the world’s military forces, because nobody knows, and everyone has to be prepared. But for what?

Blumenthal thinks there is a positive outcome available. He says competition and rivalry do not mean the countries need be enemies. There are lots of ways they can coexist, cooperate, go their separate ways, and thrive, without war. He says the US and its allies should “get out of a defensive crouch and force China to devote more time and resources to defending its regime’s practices, its military and its global legitimacy.” Would that were that simple.

David Wineberg… (más)