The United States and China are playing Eurasia’s 21st century Great Game from different but equally skewed maps. While the US map appears to be outdated, the Chinese map portrays a reality that is imagined.
If the skewed realities of both China and the United States have one thing in common, it is in strategist Parag Khanna’s mind the fact that neither realizes that the Great Game’s prize, a new world order, has already been determined.
“We are living – for the first time ever — in a truly multipolar and multicivilizational order in which North America, Europe and Asia each represents a major share of power,” Mr. Khanna says in his just published book, The Future is Asian.
While the United States sees the Great Game as an as yet open-ended battle for influence in Europe and Asia and looks at Russia as a European rather than a Eurasian power, China overestimates what its future position, aided by its US$1 trillion infrastructure and energy-driven Belt and Road initiative, is likely to be.
The skewed perceptions of both the United States and China create spaces for multiple other powers like Russia and various Middle Eastern states to carve out positions of their own.
China, nonetheless, alongside Russia has one advantage. In contrast, to the United States, it adopts the notion put forward by former Portuguese Europe minister Bruno Macias that the number of the world’s continents is shrinking from seven to six. Increasingly, Europe and Asia no longer see their common landmass as two separate continents and are gravitating towards what Mr. Macias calls a “supercontinent.”
Mr. Khanna implicitly acknowledges Mr. Macias’ notion by concluding that contrary to perceived Chinese expectations “ultimately, China’s position will be not of an Asian or global hegemon but rather of the eastern anchor of the Asian – and Eurasian – mega-system.”
China’s perceived other advantage, its economic and financial muscle, in the juggling for position on the new supercontinent is also proving to be its Achilles Heel.
The belief that the driver of the Belt and Road is geopolitics rather than economics is bolstered by predictions that none of China’s Indian Ocean port projects have much hope of financial success.
A Financial Times study last year concluded that 78 countries targeted by China for project development are among the world’s most risky economies. On a scale of one to seven, the highest level of country risk, Belt and Road countries ranked 5.2, a significantly higher risk than the 3.5 average for emerging markets. They had a median rating by Moody’s, the credit rating agency, that was the equivalent of non-investment junk investment grade.
The risk was reflected on the balance sheets of major Chinese state-owned companies that build, operate and invest in many Belt and Road projects. The study reported that China’s top internationally active construction and engineering contractors were almost four times more highly leveraged than their non-Chinese competitors.
In a bid to avert a financial crisis, the government has ordered state-owned companies to reduce their debt burden, in part by attributing greater importance to the viability of overseas projects.
The risk to China is not purely economic. It is also geopolitical and reputational. Increasingly, China is forced to focus short term less on the Great Game itself and more on countering the negative effect of a growing perception that China’s projection of the Belt and Road as a mutually beneficial proposition is more fantasy than fact.
A growing number of countries, like Pakistan, Malaysia, Myanmar and Nepal, question the benefits of Belt and Road projects and are resisting China’s often onerous commercial and funding terms.
Ironically, China’s immediate rivals in efforts to maintain its status and ensure that it does not lose hard-won ground are not the United States, India or Japan but its newly assertive, geopolitically ambitious friends in the Gulf, Saudi Arabia and the United Arab Emirates as well as Iran.
That is nowhere truer than in Pakistan, a Belt and Road crown jewel, where Saudi Arabia and the UAE have exploited to their advantage Chinese irritation with Pakistani demands to shift the emphasis of the China Pakistan Economic Corridor (CPEC) from infrastructure and energy to agriculture, job creation and the enabling of third-party investment, primarily from countries in the Gulf.
Chinese chagrin has been evident in China’s hesitancy to respond to Pakistani requests for help in averting a financial crisis.
Filling the gap, massive Saudi and UAE aid and investment to the tune of US$30 billion in balance of payment support, deferred oil import payments and investment in the troubled Pakistani province of Balochistan that borders Iran has helped the government of Imran Khan avoid asking the International Monetary Fund (IMF) cap in hand to bail it out.
China fears that Pakistan’s mounting dependence on Saudi Arabia and the UAE coupled with a US campaign intended to curb Iran’s regional projection potentially complicates the security of its massive US$45 billion plus investment that to a large extent targets Balochistan.
The United States and Saudi Arabia see Balochistan as a possible launching pad for possible efforts to destabilize the Islamic republic by stirring unrest among its Baloch population and other ethnic minorities.
Increased Saudi and UAE influence in Balochistan could, moreover, suck China into the escalating maelstrom of the two countries’ rivalry with Iran.
Ironically, Saudi and UAE investment has at the same time shielded China from potentially embarrassing disclosure of the financial terms of CPEC-related projects that the IMF was demanding as part of any bailout. Media reports said that Pakistan had informally told the IMF that it would be paying China US$40 billion over 20 years for US$26.5 billion in Chinese funding of CPEC-related projects.
The impact of Saudi Arabia and the UAE, like much of the rest of the Middle East, goes far beyond Balochistan. It also puts its mark elsewhere on the Eurasian supercontinent. In the words of analyst Galip Dalay, the Middle East or West Asia will, for better or for worse, shape each other.
“The contemporary Middle East is no longer the geopolitically US-centric space that the Europeans once knew. Europe can respond in several ways: proceed with its largely ad-hoc, incoherent and crisis-driven policies of recent years; continue to be incorporated into someone else’s game plan, as with the French-German involvement in the Russian-led Astana (peace) process for Syria; or craft a more coherent policy towards the region, with a strong emphasis on democratisation, reform, good governance, inclusion and reconciliation… If Europe doesn’t engage and invest in the transformation of the Middle East, regional developments will dramatically transform it, whether through radicalism, refugees, terrorism, xenophobia or populism. Interactions between Europe and the Middle East will be transformative, for better or for worse.,” Mr. Dalay said.
The Middle East is similarly crucial to the success of China’s Belt and Road with Iran and Turkey representing key nodes that further the rise of Eurasia through Chinese-funded rails that link the Atlantic coast of Europe to the People’s Republic.
The Middle East’s impact is one facet of a bigger game in which world and regional powers are competing for position in Mr. Khanna’s multipolar and multicivilizational order.
Robert Malley, a former Obama National Security Council official and head of the International Crisis Group argues that autocratic and authoritarian leaders are testing the limits of the Great Game as the power of Western nations erodes and embattled concepts of multilateralism no longer serve to constrain them.
“As the era of largely uncontested U.S. primacy fades, the international order has been thrown into turmoil. More leaders are tempted more often to test limits, jostle for power, and seek to bolster their influence—or diminish that of their rivals—by meddling in foreign conflicts… Having annexed parts of Georgia and Crimea and stoked separatist violence in Ukraine’s Donbass region, Russia is now throwing its weight around in the Sea of Azov, poisoning dissidents in the United Kingdom, and subverting Western democracies with cyberwarfare. China obstructs freedom of navigation in the South China Sea and arbitrarily detains Canadian citizens… Saudi Arabia has pushed the envelope with the war in Yemen, the kidnapping of a Lebanese prime minister, and the gruesome murder of dissident journalist Jamal Khashoggi in its consulate in Istanbul. Iran plots attacks against dissidents on European soil. Israel feels emboldened to undermine ever more systematically the foundations of a possible two-state solution” to the Israeli-Palestinian conflict, Mr. Malley said.
By implication, Mr. Malley was suggesting that efforts to push the envelope were enabled by the US’ failure to recognize that Europe and Asia were becoming one supercontinent.
That failure was mirrored in the U.S. National Security Strategy published in 2017 by the White House and a study by Rand Corporation in 2018 designed to conceptualize current geopolitics as an era of intensifying international competition.
Rather than recognizing an increasingly evident divergence of interests between the United States and Europe, the study suggested that the US would continue to have the opportunity, if it chooses, to lead a predominant coalition of value-sharing democracies and other largely status quo states to help preserve stability.”
The study appeared to downplay any divergence by reducing differences to “identity-fuelled nationalism” that aims to recapture (countries’) “rightful place” in world politics,” a reference to Russia, China, Iran and North Korea as well as European nations grappling with the rise of nationalist, populist and far-right forces and a Middle East that is shaping Europe through highly emotive issues such as migration, political violence and religious identity.
The US focus on Russia as a European rather than a regional power with global ambitions also means that it underestimates Moscow’s play in the Middle East despite its military intervention in Syria.
Russia national security scholar Stephen Blank argues that President Vladimir Putin’s strategy in the region is rooted in the thinking of Yevgeny Primakov, a Middle East expert and linguist and former spymaster, foreign minister and deputy prime minister, who like Mr. Khanna envisioned the emergence of a multi-polar, multi-civilizational world with Eurasia at its centre.
Mr. Primakov saw the Middle East as a key arena for countering the United States that would enable Russia, weakened by the demise of the Soviet Union and a subsequent economic crisis, to regain its status as a global and regional power and ensure that it would be one pole in a multi-polar world.
By identifying the region as a preferred battleground, Russia benefitted in the words of historian Niall Ferguson from the fact that its significant oil reserves made it “the only power that has no vested interest in stability in the Middle East.”
Mr. Blank argued that “in order to reassert Russia’s greatness, Primakov and Putin aimed ultimately at strategic denial, denying Washington sole possession of a dominant role in the Middle East from where US influence could expand to the Commonwealth of Independent States (CIS),” a regional grouping of post-Soviet nations.
They believed that if Russia succeeded it would force the United States to concede multi-polarity and grant Russia the recognition it deserves. That, in turn, would allow Mr. Putin to demonstrate to the Russian elite his ability to restore Russia to great power status.
Syria offered Russia the opportunity to display its military prowess without the United States challenging the move. At the same time, Russia leveraged its political and economic clout to forge an alliance with Turkey and partner with Iran. The approach constituted an effort to defang Turkish and Iranian influence in the Caucasus and Central Asia.
Similarly, Russia after brutally repressing religiously inspired Chechen rebels in the 1990s, was proving to be far defter than either China or the United States at promoting politically pacifist or apolitical Islam in a complex game of playing all sides against the middle.
Russian engagement runs the gamut from engaging with militants to cooperating with Muslim autocrats to encouraging condemnation of the kind of Islam adopted by partners such as Saudi Arabia.
Said Dmitri Trenin, director of the Carnegie Moscow Center and a former Russian military officer: “Russia is not the Soviet Union. It does not see the Middle East as a region that it can dominate. Displacing the United States from the leading position in the Middle East is way above Russia’s capacity, and keeping the region in its sphere of influence is way above Russia’s resources. Russia has certainly benefited from waning U.S. interest in the Middle East as, absent an active America, Russia can act with more confidence and ease.”
Describing Russia as “a lonely power,” Mr. Trenin went on to say that the difference between Russia and the Soviet Union was that the “Soviet Union was heavily engaged around the Middle East in spending money on an ideological and geopolitical project, the Russian Federation is active in the region trying to make money. The Soviet Union was about an idea. Russia’s idea is about Russia itself.”
In the Great Game’s jostling for position, Mr. Trump’s America First approach mirrors Mr. Trenin’s portrayal of Russian policy. That leaves China tied up in the contradictions of a policy that is packaged in assertions of lofty ideals but like the United States and Russia is in effect first and foremost about the pursuit of Chinese interests.
South Korea should go with the United States
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.
Power Projection of China
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?
The origin of the Four Modernizations and President Xi Jinping’s current choices
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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