Tag Archives: Xi Jinping

Xi And Trump Provide Temporary Relief

Chinese President Xi Jinping (R) meets with his U.S. counterpart Donald Trump in Buenos Aires, Argentina, Dec. 1, 2018.

CHINA HAS BOUGHT itself some time in its trade dispute with the United States, paying in farm goods, energy products and other industrial imports.

After a two and a half hour meeting over a steak dinner at the G20 summit in Buenos Aires, President Xi Jinping and US President Donald Trump called a time-out in the two countries’ tariff war. The United States agreed to suspend for 90 days the hike in tariffs to 25% from 10% on $200 billion of Chinese imports due to take effect on January 1 and not to introduce any new ones in return for purchases of unspecified but ‘substantial’ value of the above-mentioned goods.

Beijing and Washington will also step up talks on addressing broader structural issues the Trump administration has with China’s economy and body politic, although on those, Foreign Minister Wang Yi was somewhat ambiguous when he said these would cover ‘legitimate’ US concerns, leaving open a vast definitional loophole of what would count under that term.

It also looks as if Beijing has agreed to reverse its regulatory blocking of a proposed $44 billion takeover bid by Qualcomm, the US semiconductor manufacturer that is the world’s largest, for the Netherlands’ NXP Semiconductors that torpedoed the deal. However, Qualcomm has since said the proposed merger is dead.

Perhaps the most impactful part of the deal will be China’s agreement to designate Fentanyl as a controlled substance. The Chinese-made pain-killer is behind much of the opioid crisis in the United States, and one that disproportionately affectsTrump supporters.

In hailing the agreement as ‘incredible’, regardless of the fact that China had given up little if anything, Trump highlighted the positive impact it would have on US farmers, pointing up the most acute political pain point he is feeling at home from his tariffs.

But in truth, he is providing only temporary relief.

Ninety days is not much time to make any progress even on talks about talks on the intellectual property and market access issues. And all the time the threat of a re-escalation of the tensions will hang over discussions.

There might be some opportunity to revive (and rebrand) the agreement Xi struck with President Barack Obama that China would refrain from commercial cyber-espionage, which has, to all intents and purposes, collapsed. However, China will not abandon its ‘Made in China 2025’ industrial policy and will need to acquire foreign technology in support, by whatever means.

In short, the Buenos Aires agreement resolves none of the underlying issues of the economic let alone geopolitical rivalry between the two countries.

We are still in a position in which Trump is addicted to tariffs and Xi has no clear idea on how to treat him.

Update: Trump has tweeted that China has agreed to cut its 40% tariff on US car imports, which were anyway due to be reduced before the tit-for-tat tariffs started. Neither side had mentioned this in public while in Buenos Aires and China has yet to comment on the tweet.

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Washington Piles It On

IT IS BAD cop and bad cop, as far as the United States goes in the trade dispute with China.

Following US Vice President Mike Pence’s statements that not only would the United States not back down but might even double its tariffs on Chinese exports if Beijing did not mend its ways on alleged intellectual property theft and discriminatory technology licensing restrictions, US Trade Representative Robert Lighthizer has updated his department’s ‘Section 301’ findings to say that China continues to fail to alter its practices.

It was the original findings issued in March that triggered the initial US tariffs on $50 billion worth of Chinese goods, now expanded to $250 billion-worth.

It was also Lighthizer, before he joined the Trump administration, who had suggested that a case be brought against China under the World Trade Organisation’s Article 23, which would have much the same effect as throwing China out of the WTO as Kevin Hassett, chairman of the White House Council of Economic Advisers, has recently suggested should happen.

Is there a good cop waiting in the wings in the form of US President Donald Trump?

Expectations are rising in some quarters that a meeting between him President Xi Jinping at the G20 summit in Buenos Aires later this month will produce a ‘trade truce’.

Both sides could use a de-escalation of current tensions, but, equally, neither will back down on their fundamental positions.

At best Beijing will be prepared to make no more than cosmetic concessions that Trump can brandish domestically as evidence that his tough line has worked, even if real change is limited.

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Xi Jinping Extends His Power

THE PARTY’S PROPOSAL to scrap the clause in the state constitution that limits the presidency to two five-year terms has caused more of a popular backlash, at least among those online, than the Party might have been expecting if the hurried after-the-fact propaganda blitz is any measure.

But then Party officials might have been blind to their biases. It is second nature to them that paramount power resides in Xi Jinping’s post of Party general secretary, not the presidency, regardless of where the rest of the world focuses its attention.

The constitution frames the president’s powers and duties expressly in terms of “in pursuance of the decisions of the National People’s Congress and its Standing Committee”, both firmly under the Party’s sway with the Party under the General Secretary’s. China’s presidency does not have the independent executive authority of, say, the president of the United States.

Xi has already consolidated that sort of authority to himself, and more. As Party general secretary and chairman of the Central Military Commission as well as president, he is head of the Party, military and state.

He has been designated the country’s core leader. His Thought is enshrined in the Party constitution, making a challenge to him a challenge to the Party, and since his ascendence to power in 2013, control over national security and the economy has fallen directly under him as head of the new bodies overseeing those two areas, the National Security Commission and the Central Leading Group for Comprehensively Deepening Reforms.

Neither the general secretary nor the chairman of the Central Military Commission is term-limited, so Xi would be able to continue in both roles, effectively running China, for as long as he wished or could keep the jobs.

Last year, Xi set himself up to continue as leader of the Party for another term by failing to appoint a clear successor at the five-yearly Party Congress. The latest proposal is merely a bit of bureaucratic tidying up as much as anything, putting the terms of the presidency in alignment with the other two posts in the ‘trinity’ that forms the apex of power.

Xi could have installed a figurehead president to succeed him without significantly diminishing his power, though it would have deprived him of the international spotlight that he appears to enjoy as the face of China and the international platform he needs to advance his vision of China in the world.

Not doing so also sends twin messages: internally, that he is no lame duck, and will not be for the foreseeable future; and externally, that China has strong and stable leadership, even if that cannot be said these days for many democracies.

We should also note that abolishing presidential term limits is not the only change being proposed. A more consequential one, to this Bystander’s mind, is writing the Party’s leading role into the constitution.

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A President At Court

Donald Trump seen in Washington, November 2011. Photo credit: Gage Skidmore. Licenced under Creative Commons

IT IS THE time US President Donald Trump spends in Beijing that will be the most critical part of his more-than-weeklong tour of five Asian countries that he started this weekend.

To the other four countries on his itinerary — Japan, South Korea, Vietnam and the Philippines — he will offer some measure of assurance that the United States’ traditional security guarantees to the region can be squared with his ‘America First’ economic nationalism.

Trump’s withdrawal from the Trans-Pacific Trade Partnership (TPP), a cornerstone of his predecessor Barack Obama’s ‘Asian pivot’, has been deeply felt with some concern across the region. Nowhere less so than in Japan, where Prime Minister Shinzo Abe had invested considerable political capital in TPP and must now still assume the role of the principal regional counterweight to China.

The Trump administration is increasingly referring to the region as the Indo-Pacific, not Asia-Pacific, to diminish the Asia part, which to most Americans implies Chinese. The two regions are not the same to a geologist or marine biologist,  but the co-option of the term by geopolitical strategists is blurring the distinction. However, it will take more than rebranding to assuage Asian allies’ anxieties.

In Beijing, the mood will be very different. Trump will be pampered and feted at the court of ‘the King of China’, to use Trump’s phrase. The US businessmen accompanying the US president will sign multi-billion dollar sales deals that will help to diminish China’s trade surplus with the United States, but in designated sectors, notably energy, of Beijing’s not the free-market’s choosing.

Discussions about North Korea have potential to be contentious, but Trump may well find himself an uncharacteristically restrained guest as Xi holds to China’s ‘dual approach’ line and stresses the need to get all parties back to the negotiating table.

Most of all Beijing will project the visit of a meeting of two superpowers, who will jointly “map out a blueprint for the development of bilateral ties in a new era”, as Vice Foreign Minister Zheng Zequang puts it. China-America First, perhaps, but every photo opportunity will be carefully used to convey which of the two leaders is the great draftsman.

It is a formula that worked well for China when Xi visited Washington in January. On these trips, the optics are as, if not more important than the outcomes.

As soon as Trump has departed Beijing, Xi will head to the Asia-Pacific Economic Cooperation (APEC) summit in Danang in Vietnam. Trump, too, will be there, and the allies and adversaries on both sides will make their judgements about which of the two superpowers will figure most prominently in their lives.

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One Belt, One Road To Rule Them All

Belt and Road International Forum, Beijing, May 2017. Photo credit: The Russian Presidential Press and Information Office. Licensed under Creative Commons.IT IS NOT just General Secretary Xi Jinping’s ‘Thought’ that has been inscribed in the Party’s constitution. So, too, has his grand vision and signature policy, the Belt and Road Initiative, or OBOR for its original designation, One Belt One Road.

This will give political longevity to the ambitious scheme Xi announced in 2013 to transverse the Eurasia landmass and beyond with a network of roads, railways, ports, pipelines and other infrastructure projects carrying China’s surplus industrial and services capacity westwards and food and energy resources in the opposite direction. Opposing or obstructing it, just as with opposing or obstructing Xi, will henceforth equate with betraying the Party itself.

Few, if any infrastructure projects can boast either such prestige or protection. As Xi indicated at the Party Congress just concluded, OBOR will be central to China’s development until at least 2050, the date Xi has set by which China is to be a leading global power (neatly coinciding with the 100th anniversary of the founding of the People’s Republic on October 1, 1949).

So great is the ambition of this combination of commerce, construction and capital that it is impossible to put an accurate cost or timetable on it.

Bloomberg counts more than $500 million the China has so far spent or committed to OBOR. There is a $40 billion Silk Road Fund and much of the $100 billion Asian Infrastructure Investment Bank (AIIB) will be directed towards it. No doubt some of the $300 billion National Pension Fund will find its way to OBOR projects as will investment from state-owned banks and enterprises and dutifully patriotic private companies.

The US investment bank Morgan Stanley has suggested that $1.2 trillion will be spent on OBOR-related infrastructure over the next decade. However, so loosely is it defined and so ambitious its scope that you can just about put any price tag on it, as long as it is in the many trillions.

Beijing lists 68 countries as OBOR partners spanning Asia, Africa, the Middle East, Europe and Oceania. They already account for one-third of global GDP and trade, two-thirds of the population and one-quarter of global foreign direct investment. The management consultancy McKinsey & Co.reckons they will contribute 80% of global economic growth and add 3 billion to the global middle class by 2050. Any number is going to be large.

For all the trillions of dollars of hard infrastructure that will be built — and as we have noted before, if even only a fraction of what is being talked about gets completed, it will still be huge — OBOR is also a geopolitical project. Whether you see that as 21st-century merchant hegemony writ large or the world’s largest platform for regional collaboration and future engine of trade and investment growth, there can be little argument that it will potentially give Beijing vast sway over a large part of the world.

It is a part of the world with lots of risks, however, both geopolitical and financial. One measure of both is that state-owned insurer China Export & Credit Insurance Corp. said it has paid out $1.7 billion in claims since 2013 on $480 billion of exports and investments it has insured in OBOR countries. The sort of risks the insurer covers are things like government seizures, nationalisation and political violence.

More than half of China’s outward OBOR investment since 2013 has been in countries whose sovereign credit rating is below investment grade — ‘junk’ in the jargon. Of the 68 OBOR countries, only 27 of them are not rated as junk.

It is easy to assume that the Chinese state and its own and private (and dutifully patriotic) companies will be pouring a lot of good money after bad. However, many of the OBOR countries have trade and growth potential that can be released by infrastructure development, especially on the scale and interconnectedness envisaged. That would generate some of the growth necessary to provide some return on the investment.

It will also give China a huge sphere of influence far beyond its near abroad, in which today’s superpowers will be marginalised.

The ‘America First’ economic and political nationalism of the Trump administration, which has caused the stalling of the TransPacific Partnership (TPP) and disengaged the ‘Asian pivot’ of its predecessor Obama administration, has given Beijing an unexpected window of opportunity to advance OBOR and its alternative arrangements to those that have governed the international order in the era since World War II.

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No Change At The Top

Members of the Politburo standing committee elected October 2017

THE QUINQUENNIAL CONGRESS of the Chinese Communist Party has, by recent convention, set the course of the Party’s future leadership. The 19th, just concluded, is no exception. The future leadership of the Party is for the foreseeable future, general secretary Xi Jinping.

Two signs of Xi’s sway are, first, that his ‘Thought’ has been written into the Party’s constitution by name. That not only elevates him to the level of Mao Zedong but makes any challenge to his authority a challenge to the Party as a whole. Second, he has been able to avoid installing a Politburo Standing Committee — the seven men (and it is all men, as seen above) at the apex of Chinese affairs — that contains any obvious successor.

That may be his most important achievement of all at the Congress. It avoids him being seen as a lame duck during the second of his two five-year terms as president, and leaves him the most flexibility in putting in place whatever arrangements he wishes for when that five years are up.

His options then are:

  • to hand over the presidency to a loyalist who would perform the role as a ceremonial head of state (like a queen in a constitutional monarchy) while he exercises executive power from a post such as Party general secretary or head of the military commission (as Jiang Zemin did);
  • to ensure that a hand-picked successor takes over the presidency and general secretary positions while he exercises control for behind the scenes as ‘core leader’ (as Deng Xiaoping did as ‘paramount leader’). That successor would be promoted from the Politburo without the customary five-year preparation period of being on the standing committee, though, as that is meant to be a time for the successor to establish his authority, that would not be needed as the authority would stay with Xi anyway;
  • or he could baldly amend the national constitution to allow himself to continue as President for a third term.

In the meantime, Xi will embark on his second term with a Politburo standing committee that contains some allies but no fierce opponents, and all of an age at which they can have no expectation of taking the top job before they retire.

Five of the seven members of the previous standing committee have retired, leaving Xi and prime minister Li Keqiang as the only two carryovers. Among the newcomers, the two most important factions within the Party, Jiang’s Shanghai faction and the Communist Youth League of Xi’s predecessor Hu Jintao, have got places at that highest of high tables, notably Han Zheng for the Shanghai group and Wang Yang for the Youth League, which can also count Li. But both factions have been considerably weakened by Xi’s anti-corruption-cum-political-purge campaign.

To say that Xi has established his own faction may be over egging the pudding. If he is at the centre of one it is the amorphous group known as princelings, which has many cross-overs with other groupings.

However, jockeying for power is part of the warp and weft of China’s elite politics. Xi now has two firm allies. One is his former chief of staff and long-standing associate, Li Zhanshu, who will head the rubberstamp parliament, the National People’s Congress, in which role he would be critical if Xi did want to amend the natonal constitution to permit a third term as president. The other is the former head of the Party’s Organisation Department, Zhao Leji, who will head the Central Discipline Inspection Commission in succession to Wang Qishan, who led the anti-corruption operations that were instrumental in consolidating Xi’s power.

Yet, apart from supporting Xi, the overriding characteristics of the new standing committee, however, is experience and competence. These are people who know how to run a large operations as well as operate at the highest levels of the Party.

Xi also knows the importance of snuffing out factional struggles. In Hu’s last term, Xi and Hu spared over how quickly the outgoing president would successively yield his Party, state and military offices as he attempted to cement his legacy and power behind the throne.

Below the standing committee, the 25-member Politburo is broadly pro-Xi. The same can be said for the 200-member Central Committee beneath them.

Perhaps most critically, Xi loyalists now control all the key provinces and provincial-level municipalities that matter — Beijing, Shanghai, Guangdong, Chongqing and Tianjin, for example, and those where the could be unrest, notably Xinjiang. The mountains may be high and the emperor far away, as the old proverb has it, but Xi has his loyalists in place to ensure there is no repeat of city bosses like the disgraced Bo Xilai and his recently purged successor Sun Zhengcai getting uppity.

Our man in Davos sent word of how he remembered seeing a somewhat hesitant Xi being unveiled to the world at a World Economic Forum meeting a decade or so back and contrasted that with the assured, commanding figure that was seen at the 19th Party Congress. This Bystander also remembers some words penned here about Xi back in 2012 just ahead of the 18th Party Congress that would bring him to power:

Cunning, calculating and ambitious Xi plays politics like a chameleon playing poker.

He has played a winning hand, and still holds most of the aces.

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Xi Sets Out What He Is Thinking

Screengrab from a live television broadcast of Xi Jinping presenting his work report to the 19th Party Congress in Beijing, October 18, 2017

MAO TRANSFORMED CHINA. Deng Xiaoping transformed China.

Xi Jinping?

Xi has placed his marker at the 19th Party Congress — ‘socialism with Chinese characteristics for a new era’. Significantly, state media are starting to report it appended to his name: ‘Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era’. Xi’s formal induction into the pantheon of Party ideology alongside Mao Zedong Thought and Deng Xiaoping Theory cannot be far behind.

Xi Jinping Thought comprises 14 bullets points that, in short, reiterate that the Party leads everything. However, the sense of marking an epoch is as palpable as it is deliberate.

Xi portrays his China as one that will have become a global leader with international influence, a modern economy, advanced culture and world-class armed forces.

This future will come in two 15-year phases, 2020-2035 and 2035-2050.

The first phase will focus on turning fast growth into high-quality development, the deliverance of a ‘moderately prosperous society’. The second will turn China, by then likely the world’s largest economy, into Beautiful China, some nirvana-like flowering of a great modern socialist country-cum-superpower, and to do so, conveniently, in time for the 2049 centenary of the revolution that brought Mao and the Party to power. (Poverty is to be eradicated by the centenary of the Party’s founding, 2021.)

The first phase involves moving ahead with the rebalancing of the economy towards consumption-led growth that has been haltingly underway for some time. The financial system will become more market-based, and state-owned enterprises will be turned into world-class, globally competitive firm. China will become more open to foreign investors. Rule by law will be enhanced. Greater environmental protections introduced. The modernization of the PLA will be completed by 2035, giving China a world-class military, for which read on par with or better than the United States’.

Diplomatically, China will pursue global development in partnership with other countries, though it will create an alternative (and Beijing-led) global order architecture to be the framework for that. Alongside that, it will seek to strengthen its cultural soft power. Meanwhile, internally the anti-corruption campaign will continue to ensure the Party does not rot from the inside. And loyalty to the party and central leadership group must be absolute.

If this sounds like a political laundry list drawn up by a committee that is because, at heart, it is. Nor does it contain any new initiatives. Though delivered by Xi as his ‘work report’ and bearing his indelible stamp, the three and a half hour speech and its underlying text is the result of a year of consensus building involving thousands of officials.

Its purpose is to show the Party’s rank and file the signposts to the long-term actions expected from them by the leadership in all policy areas. That leadership, though, is now firmly Xi’s. The next question is how long he will feel he needs to exercise it.

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