When, in 1972, Nixon pointed out to Mao Zedong that "the Chinese President changed the world", Mao just answered "no, only something on the outskirts of Beijing." In the mind of the Chinese President, a Taoist poet, that was the sense of the natural centrality of the "Middle Empire" compared to the First World (the United States and the USSR, namely "the barbarians of the North"), to the Second World (namely the  servants of either power) and to the Third World, the region that was bound to be represented and dominated by China.

 Currently, after the Long March of the “Four Modernizations” launched by Deng Xiaoping, China is the world's first economy and is becoming one of the first powers - and, in the future, it  will be the hegemonic military power at least in the Asian world.

 In the 1950s, however, an old map of the CPC’s Central Committee considered Japan, the Philippines, all the South Pacific islands, South and North Koreas and Vietnam as areas of Chinese hegemony.

  This project will not be implemented - if ever - with weapons, but with the economy and with strategic and cultural dominance, which will be protected by weapons.

 Hide a knife behind a smile is one of the Thirty-Six Stratagems used in politics and war.

 In China’s traditional culture, war is not "the continuation of politics by other means", but simply politics tout court.

 The splendid isolation of Mao’s China was fully realistic: the country was poor but, in spite of the failures of the "Big Leap Forward" of the 1950s and of the "Great Cultural and Proletarian Revolution" between 1966 and 1976, the per capita GDP denominated in power purchasing parity (PPP) doubled.

 Not falling  into the Cold War trap that Mao Zedong considered a "paper tiger" - which, in fact, was at the origin of the USSR's economic and military collapse - is the basis of this slow, but relentless economic and international status growth.

 But without the very strong traditional Chinese nationalism, combined with the Marxist-Leninist ideology, that Mao’s project  - which is currently being achieved with Xi Jinping - could not be implemented.

 From the rejection of the bipolar international order to the construction of a new multipolar order, with China at the core - this is the geopolitical pathway from Mao's slogan of 1949 "the Chinese people have stood up" to the 19th CPC Congress led by Xi Jinping.

 Furthermore, even under Deng Xiaoping and his successors, China has never accepted a role as "revisionist power", thus  maintaining the request for a new international order and even strengthening the polemic against the United States and Russia in favor of Third World’s rights.

 Nor should we forget the long coldness vis-à-vis the old post-World War II economic alliances, such as the World Bank and the Monetary Fund, seen as "instruments of American imperialism" and relics of a bipolar era that ended just when China - still following Mao’s cry on Tien An Men Square in 1949 - "stood up".

 In 2012, however, Xi Jinping did not inherit a "developing" China - just to use the compassionate jargon of international bankers.

 In 2012 Communist China had recorded two decades of double-digit GDP growth and was already the second global economy. It was also the world's largest exporting country and finally recorded a stable commercial surplus of over 4-5 trillion US dollars.

 Since the beginning of the Four Modernizations, China has been the largest trading partner for the whole Eastern Pacific region and has been pushing upwards - for years - the prices of raw material  it badly needed.

 Also the Chinese Armed Forces are closely following economic development.

 Currently China has already declared its Air Defense  Identification Zone (ADIZ) operational throughout the East China Sea, in view of full control of the Western part of that sea.

 A change of the US strategic equation in the Pacific entailing a  radical transformation of the US geopolitics: either still accepting China's investment and the much needed purchases of US Treasury bonds or the net decrease in financial trading and Communist China’s greater military and economic presence in the Pacific - with the related loss of hegemony.

 With a view to masking and concealing - in a world still linked to the Cold War - the growing phase of China's economy and military strategy (which are always two sides of the same coin) and not to alarming its neighbouring countries, Deng Xiaoping coined the "tao wang yang hui" (韬光养晦) policy line, namely hide your light under a bushel or conceal your strengths and bide your time - Taoist terminology relating to the tradition of Sun Tzu's "Art of War" and the Thirty-Six Stratagems.

  The sense is easily understandable.

   Deng's Taoist policy line implied some successive rules: 1) avoid leading or forming faction in any international conflict and stay neutral in all circumstances; 2) do not try to lead an opinion in international politics; do not try to represent any interest group and stay away from any sphere of influence; 3) avoid any trouble, controversy or antagonism in world politics; be humble, but try not be humiliated and even accept minor humiliation if you have to; 4) concentrate on economic development, 5) focus on establishing a friendly relationship with all countries in the world, irrespective of the ideology of the countries you deal with.

 Indeed, Xi Jinping is fully heir to this policy line and, in the early years of his leadership, he focused on carefully hiding his light under a bushel and remaining in the "dark", namely what does not concern or is not immediately seen by the "Western devils", as Europeans were called during the Boxer Rebellion in 1900 - a fight that was later mythicized precisely by the Red Guards.

 The rapid development of the economy, from Deng to Xi Jinping, has led to inevitable imbalances in Chinese society: 12 million migrants moving from rural to urban areas every year, with almost all rural migrants heading for the coast from Fujian up to Laoning.

 Other major unavoidable problems are the decrease of the population replacement rate, which leads to severe shortcomings in the search for new workforce; widespread corruption, another predictable phenomenon in a fast-growing command economy and finally the average age increase.

 Currently the average Chinese aging rate is the highest in recent world history.

 In 2050 the cost of pensions could rise up to 44% of the current one.

 As some Western sources say, currently China's public debt is approximately 60% of GDP, while some other Western observers even maintain that the Chinese debt is equal to 110%.

 China’s official sources maintain it is equal to 46.5% and has been stable for two years.

 Probably the truth lies somewhere in between, although considering the Chinese scarce willingness to resort to the debt lever.

 Hence Xi Jinping wants to face all these new situations in the CPC tradition.

 A "strong and prosperous China", in the tradition of Sun Yat Sen, the father of nationalism and constant point of reference for Chinese Communists, as well as Xi's continuity with the reforms which - as maintained by the CPC Third Plenum of 2013 - view the "market as the decisive engine for economic development".

 Xi Jinping also wants to create a strong and stable internal market to counterbalance the First World’s financial and economic crises.

 Xi Jinping's main economic challenge lies in doing with the domestic market what has been done so far in China with exports, while maintaining a good level of exports.

  Not to mention pollution, which can block both domestic production - especially in the agricultural sector, by stopping exports - and foreign investment.

 Xi wants to upgrade the exporting companies in order to make them adapt to international quality standards and improve their  price level. The Chinese leader also wants to build an effective and profitable internal market, albeit targeted to social and political stability.

 With specific reference to internal market reforms, one of the Thirty-Six Stratagems is particularly appropriate, namely "cross the sea without the emperor’s knowledge".

 The room for the market-world within future China’s internal market will be little and well-defined.

 The fight against corruption, which is the natural corollary of this strategy devised by Xi Jinping, was and is still massive and fast.

 It is also based on the old Plenum of 2013.

 It was in the 3rd Plenum of the 18th Central Committee of the CPC that the idea of ​shifting from a phase of fast capital accumulation to a phase of gradual internal redistribution emerged.

 Hence Xi Jinping is currently defending the Party from the slow erosion of the Chinese social system.

 Today the block of social and economic innovation lies in the hidden interests of Chinese State-owned enterprises and in their monopoly or monopsony markets.

 Since he rose to power, Xi has entrusted approximately 800,000 State and Party officials only with the task of fighting against corruption.

 A dual structure, namely the CPC leadership and the local units, controls the inspectors’ activity, and in the first half of 2017, over 210,000 State and Party officials have been investigated.

  Last year the total number of officials investigated was 415,000.

  As reported by Chinese internal sources, only in the first half of 2017, 38 national leaders and 1,200 prefecture officials have been judged corrupt by the central authorities.

 In August 2013, in the framework of a careful analysis of the Chinese oil system, Jiang Jiemin, the CEO of China National Petroleum Corporation, was removed from his post, followed by Xu Caiohu, the Vice-President of the Central Military Commission and later, in March 2014, by Liu Yuan, the son of Liu Shaoqi, while the illegal outflow of Chinese capital is approximately 60 billion US dollars a year.

 Xi Jinping's hard line, namely "governing the nation according to law", follows the tradition of Shang Yang's legalist school of the 3rd century BC, as well as the ancient Taoist and State policy line followed by Shi Huangdi, the founder of the Qin dynasty and the first Emperor of a unified China and of the famous Terracotta Army.

 Shi Huangdi was one of Mao's favorite quotes: "Remember I am a thousand times fiercer than Shi Huangdi," he used to say to his aides.

  Furthermore, in keeping with a policy line set in a secret circular letter of the CPC Central Committee, Xi Jinping is promoting the struggle “against the seven problems”: the promotion of constitutional democracy; the propaganda of universal rights as Western-style "civil rights"; the promotion of citizens’ movements  destroying the Party's foundations; the dissemination of the neo-liberal ideology; the promotion of press freedom; the support for the traditional nihilism on New China and finally the ban on defining the current Chinese economic system as "State capitalism" or "new bureaucratic capitalism".

 At strategic security level, as leader not yet in power, Xi Jinping supported Putin for the launch of the Shanghai Cooperation Organization (SCO) and hence proposed a pan-Asian view of military security and economic development to the other Heartland countries.

 A vision that is currently based on the fast implementation of the Belt and Road Initiative, which will reach the Mediterranean and the core of Europe.

  Hence this is how Xi Jinping is approaching the 19th CPC Congress since its foundation in Shanghai in 1921 - a Congress that now gathers 2,338 delegates, while there were only fifty in Shanghai.

 The goals are now well-known.

To achieve the "Two Centennial Goal" successfully: firstly, the issue lies in completing the process of building a moderately well-off society and accelerating Socialist modernization so as to turn China into a "great modern Socialist nation".

 The two dates set are 2020, the centennial (one year before) of the CPC foundation, and 2049, namely the centennial of the People's Republic of China.

 The terminology often used by Xi, "a moderately well-off society" must not make us think of mediocre and modest goals.

 Conversely, it is a typically Confucian expression, where moderation implies wisdom and hence the balance between human passions and their reflecting on interpersonal relations.

 In Xi Jinping’s policy line, the practical measures envisaged by the leader to achieve these goals will be, first of all, improving the people’s living conditions -  but the masses’ best living conditions assume and imply Socialist democracy - then complying with  laws and finally ensuring security, safety and the protection of the environment.

 Besides modernizing domestic laws, Xi Jinping’s China will avoid the sale or sell-off of State-owned enterprises, which will maintain and increase their value, while their reform is implemented.

 Hence a market-based reform, but also controlled by the Party as to the mix of factors of production in the medium and long term.

 Again following the line of "hiding your light under a bushel", China will maintain its strategic profile which does not seek hegemony and - again in Xi’s words - will carry out military actions outside its territory.

 Hence, according to Xi Jinping, China will continue its policy of welcoming foreign capital and foreign companies - albeit more carefully. As meant by Xi between the lines, China will continue to pursue its project of becoming the global manufacturing hub.

  Nevertheless, most of the capital generated by the Four Modernizations will lead to such an internal social stability in China, which is  now unthinkable also in Western societies and to a rational rebalancing of China’s productive forces, which will have a strong domestic market while the export market will shrink due to the Western structural crisis.

Giancarlo Elia Valori

Advisory Board Co-chair Honoris Causa

Professor Giancarlo Elia Valori is an eminent Italian economist and businessman. He holds prestigious academic distinctions and national orders. Mr Valori has lectured on international affairs and economics at the world’s leading universities such as Peking University, the Hebrew University of Jerusalem and the Yeshiva University in New York.

He currently chairs "La Centrale Finanziaria Generale Spa", he is also the honorary president of Huawei Italy, economic adviser to the Chinese giant HNA Group and member of the Ayan-Holding Board.

In 1992 he was appointed Officier de la Légion d'Honneur de la République Francaise, with this motivation: "A man who can see across borders to understand the world” and in 2002 he received the title of "Honorable" of the Académie des Sciences de l'Institut de France

 

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