"When Xi meets President Barack Obama in Washington in late September, he'll represent a country that wants to look as competitive and fierce as ever, but has to be feeling a crisis of confidence."
Editorial:
So much for China's century
Did you think China was making a beeline to world domination? Think again.
China in recent years has been seen — envied, feared — as a rising power, flexing its economic strength and geopolitical muscle. At times it has seemed that this is China's century, and we're just living in it.
Funny then, as Chinese President Xi Jinping prepares to visit the United States later this month, that for all its wealth and ambition, China looks stressed out and uncertain. Vulnerable, even.
It's once-gaudy economic expansion has slowed. The nation's leaders are struggling to cushion the hit as they deal with a national debt that tops $28 trillion. Xi is attempting to establish himself as China's most powerful political figure since Mao, but his tenure has highlighted a glaring weakness in Communist Party rule: uncontrolled corruption.
What does it say about your governing system that 270,000 people have been punished over the course of two years for bribery and other corrupt acts? It says you face an existential threat to your rule, according to Foreign Affairs magazine. More about that in a few paragraphs.
Anticipating the path of an ambitious nation — one still trying to elbow its way to greater influence — is tricky. In the 1980s everyone saw Japan's rise; no one predicted its extraordinary stumble. And so it is with China.
There is nothing in China's trajectory to suggest that the country with the world's second-largest economy and a commitment to asserting itself is going to crumble or acquiesce to role player in the Pacific. China is busy cyber-spying against the U.S., building island military outposts in the South China Sea, displaying high-tech weaponry in a parade to commemorate World War II.
But as roiling stock markets can attest, China's stumble, and uncertain future, have profound impact outside that nation.
China has enjoyed a stunning economic growth rate of about 10 percent a year, big enough to lift a nation of 1.3 billion from poverty and create a few hundred billionaires to boot. No one expected the 10 percent pace to last, but the sag in wealth production this year is shocking. Officially, the government target and actual growth rate are 7 percent, but analysts think it's quite a bit slower than that. Chinese government statistics are unreliable.
More troubling has been the leadership's management of the economic rise and sudden crisis. Leaders hyped China's economic performance and encouraged Chinese citizens to buy stocks, fueling a bubble that exploded this summer, causing worldwide damage. In the midst of it, China's central bank has bungled an effort to assert control by devaluing the currency.
When Chinese leaders weakened an overvalued, overmanaged yuan, investors doubled down on panic. Maybe, they thought, things are worse than they look. China's hardly known for transparency, which might have helped to create some calm.
Xi's credibility is on the line. He has defined himself as a corruption fighter, but appears to be losing the battle. Last month's Tianjin hazardous chemical explosion, which killed 150 people, was a grave sign. The chemical company appears to have cut corners and violated rules at every turn. Who owns the company? The son of the local police chief and an executive from a state-run chemical company. "Nobody wanted to stand in their way," a chemicals exporter told The New York Times.
Corruption in China is mind-boggling, and a direct result of Communist Party control of the government and the economy. There are many ways for enterprising officials to get a piece of the action. China scholar Roderick MacFarquhar, writing in The New York Review of Books, did a back-of-the-envelope calculation: assume 10 percent of the party rank-and-file are corrupt—and that's a conservative estimate—add their immediate cronies, and you have 40 million people who should be prosecuted.
The risks to Xi are clear: if he keeps going with his corruption campaign, threatened party officials could turn against him. If he pulls up short, the corrosion will continue. On the economic front, he has to reignite growth and win back investor confidence without piling on the debt. If the slowdown continues and millions of people begin slipping back toward poverty, social stability will be endangered.
When Xi meets President Barack Obama in Washington in late September, he'll represent a country that wants to look as competitive and fierce as ever, but has to be feeling a crisis of confidence.
Copyright © 2015, Chicago Tribune
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