China at the crossroads

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

Mao’s death earlier in 1976 had triggered a vicious and protracted power struggle. When the diminutive Deng — once described by Mao as a “needle inside a ball of cotton” — finally emerged victorious at the age of 74, he hardly looked like an agent of reform.

But having been purged twice from the party during the Mao years — including once for proclaiming during the 1960s that “it doesn’t matter whether a cat is black or white, as long as it catches mice” — Deng seized the opportunity to usher in transformative change.

The Four Modernizations program under Deng drastically transformed China, including spurring its phenomenal economic rise. China’s economy today is 30 times larger than it was three decades ago.

In 2010, China overtook Japan as the world’s second-largest economy behind the United States. If GDP is measured in terms of purchasing power parity, China’s economy is already larger than America’s, according to the International Monetary Fund and the World Bank.

Yet, four decades after it initiated reform and started opening up to foreign capital and influence, China finds itself at the crossroads, with its future trajectory anything but certain.

To be sure, when it celebrates in 2019 the 70th anniversary of its communist “revolution,” China can truly be proud of its remarkable achievements. An impoverished, backward nation in 1949, it has risen dramatically and now commands respect and awe around the globe.

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

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

China’s increasingly repressive internal machinery, aided by a creeping Orwellian surveillance system, has fostered an overt state strategy to culturally smother ethnic minorities in their traditional homelands, including through demographic change and harsh policing. This, in turn, has led to the detention of more than a million Muslims from Xinjiang in internment camps for “re-education.”

Emboldened by the muted international response, Beijing is now replicating its Xinjiang-style crackdown, including on Islamic practices, in other provinces with significant Muslim communities. Untrammeled repression, even if effective in achieving short-term objectives, could sow the seeds of violent insurgencies and upheavals.

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

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

The island-building anniversary is as important as the 40th anniversary of economic reform because it is a reminder that China never abandoned its heavy reliance on raw power since the blood-soaked Mao era.

In fact, no sooner had Deng embarked on reshaping China’s economic trajectory than he set out to “teach a lesson” to Vietnam. The February-March 1979 military attack occurred just days after Deng — the “nasty little man,” as Henry Kissinger once called him — became the first Chinese communist leader to visit Washington.

A decade later, Deng brutally crushed a student-led, pro-democracy movement at home. He ordered the tank and machine-gun assault that came to be known as the Tiananmen Square massacre, in which hundreds, perhaps thousands, of demonstrators and bystanders perished.

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

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

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

Simply put, the international factors that aided China’s rise are eroding. This means it will become more difficult for Beijing to continue abusing free trade rules or to hide behind the argument that it remains a developing economy and thus is entitled to favorable treatment, including on international rules and norms. Other countries’ mounting demands for more balanced and fairer trade threaten to chip away at China’s huge trade surpluses, which fund its development of artificial intelligence and other frontier technologies, its naval buildup and its expanding global footprint.

The changing international environment also holds important implications for China domestically, including the Communist Party monopoly on power. President Xi Jinping, who in 2017 ended the decades-old, party-led collective leadership system to crown himself China’s new emperor, now no longer looks invincible. He faces domestic criticism, however muted, for building a cult of personality around his one-man rule and for inviting international pushback by openly flaunting China’s ambitions.

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

Longtime Japan Times contributor Brahma Chellaney is a geostrategist and author.