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The Belt and Road Initiative: China’s future geostrategy

Giancarlo Elia Valori

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[yt_dropcap type=”square” font=”” size=”14″ color=”#000″ background=”#fff” ] A [/yt_dropcap]s is also the case with Chinese traditional philosophy, present, future and past always tend to coincide in one single choice in the Chinese strategic vision.In Xi Jinping’s initial proposals for the “Belt and Road Initiative” – or, to use the official terminology, the Silk Road Economic Belt and the 21st Century Maritime Silk Road, which were outlined by him on two occasions between September and October 2013 – he starts from two evaluations, namely a strategic evaluation and another one having an immediate interest.

The Maritime Silk Road was actually outlined for the first time by the Chinese President in a speech to the Indonesian Parliament in October 2013, while the Terrestrial Silk Road was first quoted by Xi Jinping in his State visits to Central Asia in September 2013.

The first long-term strategic idea is based on the design of a Greater Eurasia, hinged around Russia, China and the great countries of the Heartland, namely the “world island” as Sir Halford Mackinder called it.

The second most immediate evaluation is that the world has not yet emerged from the great economic crisis which began in 2008.

The Thunder and the River, namely the moment of immediate concreteness and the infinite flow of Time – just to use two concepts and images of Taoism.

But where does the Terrestrial Silk Road pass and which seas are connected by the Maritime Silk Road?

Six corridors have been designed in great detail and paying specific attention to local characteristics: firstly, the New Eurasian Land Bridge, from Western China to Western Russia, which in the future will connect the city of Lyanyungang, in the Jangsu Province, with the Dutch city of Rotterdam.

It is mainly a railway line, with a link between Bulgaria and Turkey, crossing inevitably the Iranian territory.

Secondly the China-Mongolia-Russia Corridor, from Northern China to Eastern Russia; thirdly the China-Central Asia-Western Asia Corridor, from the territory of the People’s Republic of China to Turkey. Fourthly the Corridor from Southern China to the Indochinese peninsula up to Singapore; fifthly the China-Pakistan Corridor where, in the Gwadar port recently purchased by China, there will be one of the links between the Terrestrial and the Maritime Silk Roads. Sixthly the Bangladesh-China-India-Myanmar Corridor and finally the very long Maritime Silk Road, from the Chinese coast to Singapore up to the Mediterranean.

At strategic and economic levels, the individual projects are manifold and significant. Russia, in particular, together with China, is focused on establishing economic and financial alliances allowing to reach a great geopolitical result, which is currently the same both for Russia and China: reduced EU and NATO pressure on its Western and Southern borders and the related expansion of the Eurasian area of influence, precisely the New Greater Eurasia, towards the Mediterranean and our own Eurasian Peninsula, namely Western Europe.

While the United States failed to reach the TTIP agreements with the EU, which negotiated that dossier jointly, with the two Silk Roads, Russia and China will make to the EU and the entire Mediterranean region a proposal they will not be able to refuse – otherwise the current economic recession will persist – a proposal also combined with North America’s and European Central Bank’s monetary expansion policies.

With the two Silk Roads, the United States will be cut down to size drastically.

In fact, Xi Jinping policy lines on the “Belt and Road Initiative” point to the implementation of the old Maoist project of the “Three Worlds”: the World of “global peripheries”, which will have only China as beacon and geopolitical and military representation; the First World which is marginalized also militarily and finally the Second World, the world of the old Soviet universe, that the collapse of “revisionist imperialism” – as Mao Zedong would have called it – has made a stable ally of the new Chinese geopolitics.

Moreover, as early as 2001, the Russian Federation already established a Eurasian Economic Community with Belarus, Kazakhstan, Kyrgyzstan and Tajikistan. In 2010 Belarus and Kazakhstan created a customs union and finally, in 2011, those same countries signed a Declaration on Eurasian Economic Integration and a new Treaty establishing the Eurasian Economic Commission.

Furthermore, in 2012, the decision was also taken to launch the Eurasian Economic Union.

The future integration process will be centred on the Shanghai Cooperation Organization (SCO), ASEAN and hence the two Chinese “Initiatives”.

The aim is to limit the world recession damage but, above all, to mitigate the effects of Western sanctions on the Russian Federation.

Putin wants to quickly merge all strategic-economic integration initiatives into one single process, which would also optimize the anti-cyclical effects of all these initiatives and would provide the opportunity for a “Eurasian phase” of Russian politics – a phase that Vladimir Putin has already announced.

It is worth noting, however, that, by proposing the two integrated Silk Roads, China does not intend to establish binding political mechanisms or to recreate a series of military and strategic buffer zones around China.

Xi Jinping has been very clear about it.

In fact, China clearly wants a horizontal, non-vertical integration and it always clarifies that there is no hegemonic plan inherent in the Two Silk Roads.

Nor a political one in the strict sense of the term.

Quite the reverse. Indeed, the issue lies in putting an end to the US “hegemony”, not in creating others.

Moreover, macroeconomic data is already very interesting: considering the 2014 data, trade within the SCO region has increased by ten times.

It is worth recalling that in the SCO region (Russia, China, Afghanistan, Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, India, Iran, Mongolia and Pakistan) 3.92 billion people live (according to 2014-2015 data), namely 54,4% of world’s population, that generates an aggregate GDP accounting for 32.2% of the global gross domestic product.

It is also worth noting that the Economic Silk Road begins in Xinjiang (hence the importance and the mortal danger represented by the Uighur jihad) and reaches the Caspian Sea, the Baltic Sea, the Black Sea, Ukraine and Romania up to Europe and the Mediterranean.

The meeting of the Beijing Forum held in May was attended by over thirty Heads of State and Government, as well as experts from 110 countries, including the United States. Sixty-five countries are already directly involved in the operations, while, in recent days, many Latin American countries have adhered to the project.

South America no longer wants to have “open veins” – just to use the title of a famous book by Eduardo Galeano, Open Veins of Latin America: Five centuries of the Pillage of a Continent .

Xi Jinping has also promised additional 100 billion yuan (equivalent to 14.5 billion US dollars) of new investment in road infrastructure, while China will also provide 60 billion yuan (8.7 billion US dollars) to fund the countries and the international organizations which participate in the project by creating infrastructure.

Furthermore, with specific reference to the two Silk Roads, China has already pledged 250 billion yuan worth of loans by the China Development Bank, as well as additional 130 billion yuan of the Export-Import Bank of China, further two billion yuan in food aid and one billion US dollars for the South-South cooperation fund.

Hence the total sum amounts to 480 billion yuan, while since 2015 the Russian Federation has replaced Saudi Arabia as the first oil exporter to China, by settling payments with the two national currencies, thus avoiding recourse to the US dollar.

Over the last seven years, Russian oil exports to China have more than doubled, with 550,000 barrels per day, while the area in which the US dollar is used gets increasingly narrower: currently only in the Third World does the US currency still reign, but it is a phenomenon that is bound to last for a short lapse of time.

In a situation in which the US public debt amounts to 20 trillion dollars, the Federal Reserve tends to raise interest rates in a world of zero or even negative interest rates and public spending is expected to rise under Trump’s Presidency, the 1971 old wisecrack by John Connally, the former Head of the Federal Reserve, is still topical: “The dollar is our currency, but it is your problem”.

In recent times, the dollar value in word trade has increased by about 25%.

It is currently 40% higher than in 2011.

Goldman Sachs also claims that the dollar is largely overvalued as against the other major currencies.

And 60% of the global economy is still somehow linked to the US currency value.

Hence we are no longer faced with the “Triffin dilemma”, namely the mechanism whereby as long as the US dollar remains the global reserve currency, trade and production create an additional demand for dollars.

If that happened, however, there should be a constant deficit in the US balance of payments, thus putting pressure on that currency and making it progressively unnecessary for trade.

Now we are in a similar situation, even though Triffin made reference to a context still governed by the Bretton Woods Agreements.

Moreover, the entry of the Chinese currency into the World Bank’s Special Drawing Rights system in 2016 currently allows larger yuan fluctuations. Hence considering this yuan ability, in particular, a free yuan is an excellent way to further internationalize the Chinese economy.

The steps of this process have already been marked: in 2010, the World Bank President, Zoellnick, assumed a new global gold-based financial system – the one that Keynes called the “tribal residue” of the economy.

In 2012, Iran accepted the yuan as means of payment for its oil.

In 2013 the Chinese Central Bank stated it no longer needed to accumulate reserves in foreign currencies. In 2014 gold could be bought on the Shanghai Stock Exchange with the yuan and in 2015 Russia accepted the yuan as means of payment for its oil supplies to China.

According to official statements, the Chinese Central Bank’s gold reserves have increased by almost 56% over the last three years.

Hence, if we consider all these data and statistics and we assess their strategic relevance, we can understand how and to what extent the Silk Road, as well as the Chinese and global Belt and Road Initiative will be the geopolitical, economic and financial paradigm of the near future.

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 “International World Group”, he is also the honorary president of Huawei Italy, economic adviser to the Chinese giant HNA Group. 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 “Honorable” of the Académie des Sciences de l’Institut de France. “

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East Asia

South Korea should go with the United States

Sun Moo Kim

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Now, previous success won’t guarantee same success in future in the age of the Fourth Industrial Revolution, We are expecting generation that ability to create new and missing things is more important than keeping existing assets.

The economic survival strategy also changes.

There is no longer continuous growth in this new era, even for a major growing corporation. For example, an automobile can be a mobile computer with value added on software and electronics. Every industry becomes IT related company, not only food and pharmaceuticals industry, but also construction and banking business as well. Now, a company own by person who counts the money in front of the vault and calculates the stock number can’t be survived. Although the South Korean economy has global competitiveness in mobile phone semiconductors and some industries, South Korea is facing huge challenges.

South Korean companies must challenge upcoming new business in order to servive. South Korea has strong engineering system. But even Germany which has world’s most powerful engineering system is having difficulties in developing new business areas. South Korea has no resources and can’t be self-sufficient. It is the fate of South Korea to look out for the world.

The US and China trade wars of two axis of the global economy are becoming reality.

As the United States imposed a $ 60 billion tariff in retaliation for China`s breach of intellectual property rights, the Chinese Department of Commerce immediately launched a counterattack by imposing a $3 billion tariff on 128 U.S. products.

Global stock markets plummeted dramatically and The WSJ reported that world was horrified by the terrible of uncontrolled commerce war. This trade war is a step in keeping the United States ” Economic security “on the rapid growth of China’s high-tech sector.

China, once called the “World Factory” by cheap labour put their hand to rebellion. To take an instance from smartphone, Huawei, Oppo, Vivo’s superiority in Apple designed by California and produced by China is striking. Oppo and Vivo are focused on advanced technologies, not only low-price.

China is moving from ‘Made in China’ to ‘Created in China’ through the ‘China Manufacturing 2025’ plan for the manufacturing powerhouse. By the manufacturing 2025 project has an ambition to boost China’s competitiveness to surpass the US, Germany, and Japan levels and to become the world’s No.1 in 2049.

According to Financial Times that the Trump government emphasized “economic security is the security of the country,” that is meaning the United States to take aim at the Chinese manufacturing 2025.

It is not so simple in terms of South Korea reality.

In South Korea, China and USA are first and second market highly dependent on exports of Korea that counts 25 percent of China and 12 percent of US market.

If the market shrinks due to the friction between the U.S. and China, South Korea could be caught in the middle of the market and not be able to choose either

But The true global leader in today is the United States and Unites States is really strong.

South Korea should go with the United States.

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East Asia

Power Projection of China

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A coin has always two faces, an analyst is ought to analyze the both sides.

China is considered as flag holder of soft power with a global agenda of peaceful rise. At moment, the world is facing a new emerging global order by the rise of multiple actors in the international arena. Now there are two school of thoughts who are proposing contradictory views like one wing regarded it as optimistic Sino rise who believes that China’s rise is peaceful. Its foreign policy is viewed as one of the most harmonious policy ever structured. They believe in the mutual cooperation and peaceful coexistence. Rise of China is an optimistic opportunity which is justified by different aspects. As African states were facing a massive number of problems at all levels, many super powers came and ruled the world but they didn’t bothered the prosperity of third world countries.

China started invested in African region and assured the chances of prosperity over there. Due to this economic integration of China in Africa, a demise of Indian influence in that has been observed as well. Their economic cooperation is based on model of helping underdeveloped countries by initiating the projects like Belt and Road Initiative. They are extending the helping hand to developing countries by selling products at cheaper rates. They respect the ideologies of other countries, for example, China didn’t celebrated Pig year in Muslim countries. Regarding Pakistan, here the optimistic view is prevailed at higher context. Pakistan’s policy makers favor Chinese investment in Pakistan, as it will help Pakistan in economic prosperity. China helps Pakistan at almost all of the international forum. Friendship of china and Pakistan is the strongest one to be observed. Pakistan can learn a lot from them. The proper use of diplomacy, image building, projection of soft power and individualism in ideologies and beliefs. Long term planning strategies can be learned from them. China is all weather friend of Pakistan but self-skills are significant, as there is a famous Chinese saying, “to serve a guest by fish is a good way but to teach them how to catch fish is the best way to serve them.”

On the other hand, there are supporters of pessimistic Sino rise who believe that China’s rise is threat for globe. This pessimism is oftenly prevailed by western analysts. They think that rise of China can disturb the existing world order. For example, China is competing with American economy in the international market. Balance of power is coin of international politics, so other actors are emerging now. But the rise and demise of powers after a certain time period is one of the laws of nature. Specially America is feeling threatened by this emergence of China as a super power which can be seen through events like Huawei issue over 5G technology, its sensitization, trade war between china and America, claim of copyrights by America etc. increasing influence of China in majority of states is posing the seriousness of issue. Chinese model of Confucianism is spreading as it has started practices in South Korea as well which is predicted through their cultural stimulus.  Pessimistic school of thought deny the authenticity of foreign policy of China, they consider that it is a mere framework which has nothing to do with reality.In reality China’s behavior is like relations having towards Taiwan, South China Sea etc. Interest of states are very important which may differ from each other. Lensing through these views, this unpredictable situation leaves a humans mind into a chaos, whether the rise of China is peaceful or just a myth?

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East Asia

The origin of the Four Modernizations and President Xi Jinping’s current choices

Giancarlo Elia Valori

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On September 13, 1971 Lin Biao tried to flee to the USSR with all his family, aboard a Trident plane of civil aviation, which had left with little fuel and no active radio contact.

The crash of the aircraft in Mongolia, where both Lin and his whole family died, was caused by the order given directly by Mao to shoot down the plane.

 What had happened, obviously in political and not in personal terms?

 The answer is simple: Lin Biao was very strongly opposed to the new agreement between China and the United States and hence had organized a military coup. For Lin Biao all the room for US geopolitics was to be found in what the Third International’s forces traditionally defined as “imperialism”.

 For Mao Zedong, imperialism was vital for both the USSR and the USA- and considering that he was far from the continent that was the prize for which of the two won the Cold War, namely Europe-he refused to make too many differences between the two.

 As a man of Tao and Zen, Mao treated an evil with another evil.

  Mao Zedong, however, also knew that a new economic relationship with the United States was needed, after the long economic crisis and the factional instability within the Chinese regime. The Soviet Union could certainly not give it economic stability and hence the “Great Helmsman” turned to the distant enemy rather than to the near quasi-friend.

 Nothing can be understood about China, including current China, if geopolitical choices are separated from economic, financial and industrial ones which, however, are subjected to the strategic “policy line” defined by the Party – a policy  line that is cultural and always based on a very long term.

 On September 29, 1972 the diplomatic relationship with Japan were resumed, along with those with the United States. An evident overlapping of different geopolitical lines which, however – in the minds of the Chinese decision-makers -were similar also from the symbolic viewpoint.

 In 1973 Deng Xiaoping reappeared in public, upon direct order by Mao Zedong.

 Those were also the years of the late definitive success of the “policy line” of Zhou Enlai, who had successfully gone through the Great Cultural and Proletarian Revolution, which had partly overwhelmed him, and led the 10thCPC Congress.

 That was the compromise which held the Party together, after Lin Biao’s elimination. An unstable agreement between the reformist “Right” (Zhou had spoken of “four modernizations” many years before, exactly in 1965) and the Left, silenced by Mao, that had crossed the red line of the Cultural Revolution and the failed communization of rural areas.

 In those years, also the Party’s Left lacked mass management of the people and the Party and had to agree with the other factions, while Mao mediated and also created “third wheels”.

  Create something from nothing – one of the Thirty-Six Stratagems of the Chinese Art of War.

 In 1973, just before the equilibrium between Zhou and the old CPC apparata broke again, Deng Xiaoping was fully rehabilitated and also became member of the Chinese regime’s deep axis, namely the Central Military Commission.

 In 1975 Deng was elected vice-President of the Central Committee and member of the Politburo Standing Committee.

 The connection between the reformists – if we can call them so – siding with Zhou Enlai, and the “centre” of the Party’s apparatus – that regained its roles and posts by ousting the Armed Forces -prevailed once again.

 Again in 1975, the National People’s Congress praised the “Four Modernizations” already proposed by Zhou and, in its final statement, hoped “that China would be turned into a modern and powerful Socialist country in the approximately twenty years before the end of the century”.

 Political transformation through the new economy, as well as preservation of the regime through political transformation itself.

 We could call it “the Tao of geoeconomics”. Acceleration of industrialization and modernization, but without creating the disaster of rural masses, who were objectively unable of providing the start-up capital for implementing any of the Four Modernizations. This was the real difference with the USSR of the 1930s.

 That capital had to be produced in innovative companies and be attracted from outside.

 At the time, however, the CPC was not yet firmly in the hands of any factions. In September 1975, the national Agriculture Conference saw the harsh clash between Deng Xiaoping and the old “Shanghai group” of the Cultural and Proletarian Revolution that, however, no longer controlled most of the Party.

 Zhou Enlai died in January 1976 and shortly afterwards, in Tiananmen Square, there were severe incidents, albeit with the constant presence of many wreaths reminding of Zhou.

 Later there were also strikes and unrest, until the capture and trial of the “Gang of Four” in Shanghai. It had inspired the “Cultural Revolution” and was then directly accused by Hua Guofen – the man appointed by Mao to lead the transition- of having prepared a coup.

 China’s transformation, however, began again from rural areas: at the second Agriculture Conference in Dazhai, in December 1976 – where various cases of corruption and “social polarization” were described and stigmatized- the discussion focused on the First Modernization, namely that of rural areas.

 When you regulate too much, a parallel and illegal market is created. This always happens.

 Obviously this also happens when total communization is applied to the economic cycle of rural areas.

 Certainly those were residues of Sovietism in the CPC’s  doctrine, but also of the a-dialectical implementation of Marxism-Leninism in historical and social contexts in which the analysis of the founder of “scientific Communism” had never focused.

 In fact, when you read the works and correspondence that Marx dedicated to the Russian agricultural issue, you note that the author of “Capital” foresaw a direct Socialist social transformation stemming from the maintenance of the social and community networks in traditional villages. It may seem strange, but it is so.

 This system operates only with a non-industrialized State that is scarcely widespread in the territory. Otherwise, the problem is that of capitalism in rural areas to generate the surplus of urban and industrial investments.

 Even in the Second Volume of “Capital”, Marx’s model is essentially this one.

 It is precisely on the agricultural issue that the stability and success of many Communist regimes isdefined and, not surprisingly, the first of Zhou’s and later Deng’s Four Modernizations was precisely that of agriculture.

 The topic characterized all Party’s organizations, but it was in late December 1978 that the Third Plenary Session of the 11th CPC Central Committee decided to decentralize the economy – another factor strongly different from the Leninist tradition – and even to liberalize it, in addition to a process of ideological revision, namely Gaige Kaifang that roughly means “reform and opening”.

 That was also related to the request for opening international trade based on the criterion of “mutual benefit” and equality between the various countries.

 Hence, also from the ideological viewpoint, Deng became the Supreme Leader of the Party – as well as of the State apparatus – and announced the Open Door policy.

 An extremely important fact was also the separation of the Bank of China from the People’s Bank of China, so as to serve as single State body for foreign exchanges.

 That was the start of the “Long March” towards the Four Modernizations, with an unusually united Party, and currently towards “Socialism with Chinese characteristics” , as well as – at geopolitical level -President Xi Jinping’s New Silk Road.

 In January 1980, the “four freedoms” – of work, people, goods and capital – were abolished.

 The new planning needed to manage all aspects of productive forces.

  That was explained by a covert war of the Chinese economy against the penetration of foreign capital and joint ventures, which in fact were immediately regulated by specific legislation enacted the previous year.

 The great British operation of economic control over the South-Chinese coasts was resumed from Hong Kong, but the Chinese government eliminated the possibility of such an action by Great Britain (and by the USA, at least partly).

 Hence the Party’s unity had to be reflected in a new context and, to some extents, in the whole society, so as to prevent the liberalized Chinese economy from taking the Party and Socialism away. A new rationale for the CPC’s Leninist unity.

 The new Act on contract law was enacted in March 1981, and in 1982 also the new civil procedure law was enacted, which became effective on October 1, 1982.

 In September 1983, at the 12th CPC Congress, there were three groups within the Party: the nostalgic Maoists, a small and narrow majority for Deng Xiaoping; the Orthodox group that still wanted a nationally planned economy, as in USSR -hence probably the heirs to Lin Biao; finally the real reformists.

 Deng won with a clear, but not overwhelming majority.

 Hence, everyone was waiting for the Four Modernizations to fail, so as to go back to the old routine of the Plan.

 As also happened in the USSR, it was often fully imaginary compared to the actual reality of the things done and produced.

 It was in 1983, however, that the Third Front strategy was implemented, i.e. Mao’s directive – drawn up as early as 1962 – according to which the national strategic industries had to be moved from the coasts – militarily and politically difficult to defend – to the internal areas. Without said Mao’s directive, the New Silk Road could not be understood even currently.

Hence 14 open coastal cities that were declared so in 1984, but with a new law on profits that served as mainstay of Modernizations: companies were asked to pay a certain share of profits to the government, but they could withhold some profits if they matched and exceeded the requirements of the contract with the State.

 In 1985 a new regulation also involved government bonds. The seventh Five-Year Plan began, underlining a “scale” approach, in which the coastal areas – gradually freed from traditional strategic companies – were driving the economic development, which later spread like wildfire even in the internal areas.

 It was the Hong Kong model that Deng Xiaoping’s executives copied and adapted.

 For a short lapse of time, Chinese analysts and Party planners also looked to the Singapore model, with the (single) Party of Lee Kuan Yew.

 It isby no mere coincidence that Shenzen was close to the former British colony, and often the Chinese attracted and favoured the companies of the British area towards the new Chinese coastal areas also characterized by free-market economy.

 Advanced and high-tech services in coastal areas, and lower value-added, but still inevitable, productions in internal regions.

 A new dualism, where rural overpopulation had to be gradually absorbed by inland strategic companies.

 A double geopolitical status of inland areas which, in many cases, is repeated also in the current Belt and Road Initiative.

 In 1986, the “open-ended” contracts for the manpower working in State-owned companies came to an end.

 In October 1987,the 13th CPC Congress was held, in which – for the first time – there was talk about the “commodity economy”, i.e. a two-tier mechanism, in which the market is matched and also “corrected” by the old national planning.

 A sort of re-edition, for internal use, of the formula “one country, two systems” implemented by China with the agreements for Macao and Hong Kong.

 In 1988, however, the 7thNational People’s Congress officially legitimized the private initiative (not the mere ownership) and enabled private individuals to buy State-owned companies.

 The term “People’s ownership” was also deleted, while individuals and groups, even non-Chinese ones, could buy land with a system similar to that of the British real estate leasing.

 Profits, wherever made, had to be reinvested in the company that originated them, before requesting any financing from the People’s Bank.

 The Special Economic Zones, modelled again on the Hong Kong system, became five.

 Hence innovation on the coasts and strategic companies in the central regions – mainly public ones, which still remained almost completely public.

 In April 1989, Jiang Zemin rose to power.

 Student demonstrations also began in Tiananmen Square, where, year after year, the various anti-regime organizations gathered: Falun Gong, the networks of many illegal parties, unrecognized union organizations and many “spontaneous” groups.

 And some old “Red Guards”.

 Zhao Ziyang, the Party leader already defenestrated by Jiang Zemin, was in fact at the centre of “spontaneous” organizations.

 The various Autonomous Federations of Workers -spread by location and not by industry – were legally created.

 Gorbachev’s visit took place in May 1989.

  That was the key moment of a long series of doctrinal, practical, cultural and historical differences that – from the very beginning – divided the two great Eastern heirs to the Marxist-Leninist Third International.

 What really mattered to the Chinese leadership was that the Russian crisis did not overwhelm the Chinese Communists: that was the meaning of the declaration signed by Gorbachev, which regarded the “peaceful coexistence” of the two Communist regimes.

 The leader of the Soviet Party was made fun of – not even so elegantly – not because he had reformed the Soviet economic system – in a way, however, that the Chinese deemed wrong – but for one reason only: he had relinquished the Party’s role in the reformist process, which the CPSU had to lead and guide for China, from the very beginning.

An “economicist” mistake, as the CPC’s ideologues said – yet another proof of the Marxist roughness of the “Northern enemy”, as Deng Xiaoping called Russia.

 Sarcastic sniggers on the lips of Chinese leaders. Then Gorbachev explained again his perestrojka and glas’nost, but the Chinese leaders, whose power was based on Party’s bayonets, kept on not taking him seriously.

 Days before the arrival of the Soviet leader, at least one million people had gathered in Tiananmen Square.

 The problems that the Chinese leadership had to solve in a short lapse of time were radical: the “hard” wing that was previously a minority prevailed and managed to convince Jiang Zemin.

 The Party and its authority – the basis of any transformation, even the most radical one – were re-established without much talk. It was impossible to think about a heir to the “Long March” that dissolved the Party within “society”.

 On May 19, the CPC decided to follow the hard line and the military forces reached the areas near the Square, from the outskirts of Beijing.

 Few hours later, the Square was completely cleared, but that was done the hard way.

 Shortly afterwards, at the 4th CPC Plenum, Jiang Zemin –  also following the experience of Tiananmen Square – returned to one of his old theories and developed the “Three Represents” model, i.e. the idea that the CPC’s power was based on its “vast representation” of the Chinese productive forces, of the cultural and technological avant-gardes and of the wide strata of population.

 In other words, the Chinese society – and its economy, in particular – was reformed by bringing the elites together, part of whom were in Tiananmen Square, but also the large crowds still organized by the Party.

 A Confucian middle way that was particularly successful.

 Hence, Zhao Ziyang definitively lost the game within the Party that, however, was also inside the Tiananmen Square insurgency.

 Once the crisis was over, Deng Xiaoping left also the last very strong power in Jiang’s hands: the leadership of the Central Military Commission.

 Shortly afterwards – and there was nothing more symbolic than that event – the Stock Exchange of Shanghai reopened. A reopening that had been expected since the 1930s.

 Later also the Shenzhen Securities Exchange opened. In both of them, any securities – including those issued by the State – were traded, but there was only one deep logic: to acquire productive capital to generate strong and self-sustained development of the coasts and of the high value-added industries that had to compete on the world free market, without granting protection and aid that would go to the detriment of the deep productive structures of the internal regions.

 In 1992, Deng’s journey to Southern borders had a clear route, although the CPC’s leadership had always had some doubts about the “free economic zones”. The core of the issue was that the GDP had to be increased in the lapse of time between the 1990s and the beginning of the Third Millennium.

  It had to be rapidly increased from 6% to 10%.

 Without that “quantitative” assessment – just to use the old Communist jargon – there could be no “qualitative” transformation of Chinese society.

 Everything had to be done soon – well, but soon. That was the characteristic of Deng Xiaoping’s years – extraordinary years, in some respects.

 In a short lapse of time, the Party developed the concepts of “Socialism with Chinese characteristics” and of “market Socialism”, which are so important also in President Xi Jinping’s current policy line.

 There were also other changes that, in a few years, led to the current Socialism with Chinese characteristics, as advocated by President Xi Jinping. However, everything could be done from a legal view point began in those years.

 The transformation process of the Chinese economy is long, powerful and complex, but – unlike what is often said in the West – it is never a mere market mechanism or a naive adaptation of the Party or the State to the absolute Western rules of globalization.

 As early as the 1990s, China has decided to govern market globalization and not just being a part of it. It wants to lead the process so as to be – now that the end of the century about which Deng thought has long been over – the axis of globalization and the centre of the new global hegemonies.

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