A fundamental question that is puzzling most serious and casual China observers is why Chairman Xi is taking China in a more authoritarian and nationalist direction. Explanations have ranged from the psychological of his childhood to the political view that it was a response to Trump’s toughening of US policy to China. While these issues may contribute to the end result the more obvious answer is more direct and more troubling. The bewilderment has been raised around revent moves in technology, explanations about Taiwan, and the general more authoritarian direction of China in recent years just to name a few.
Chairman Xi and his generation of CCP leaders came of age during the decline, collapse, chaos, and subsequent Putinizing of the USSR and then Russia. For the CCP and related entities, from universities to Party schools 1989 provided a near perfect case study. The collapse of the USSR and the subsequent evolution of Russia under Putin has provided a wealth of material for researchers to study and apply lessons learned to the CCP and China.
Before delving into this, I think it is important to note a couple of framing or foundational issues that help us understand the broader lessons. First, Xi has referred to the collapse of the USSR in similar terms to Putiin as the greatest tragedy of the 20th century. When they say this, they are not referring to the narrowly defined reduction in per capita GDP but more broadly as a quasi-empire, system of government, and state power. Many countries throughout Eastern and Central Europe are dealing with the broad reamifications of what happened in 1989 and in many ways global foreign policy deals with the same issues such as Russia hungrily eyeing Ukraine. In the west, we tend to think of these issues as ancient history but the primary adversaries continue to fight the battles we have forgotten.
Second, while Xi was cutting his teeth as a junior Party cadre in coastal regions of China in the early 80’s rising to Party Secretary of Fuzhou in 1990, this was an important period in determining his generations world view. In China analysis, 1989 is inextricably linked with Tiananmen Square massacre where in Europe and Russia 1989 is remembered as the fall of the Soviet Union. These are the events that would shape Xi and his generations world view about how to steer the CCP and China.
Third, politically I will take as a given that like almost all political parties everywhere, the CCP wishes to perpetuate its rule and will use all powers at its disposal to pursure that end. Independent of any events in 1989 or Xi, though he currently heads the CCP, political parties wish to perpetuate their rule and will study what works and does not work to pull the levers at their disposal to extend their rule. The CCP wants to extend its rule and studied these events to better understand the risks to its rule.
Fourth, I believe it is fair to say that Xi carries almost a Chinese sense of manifest destiny of being the leader that returns China to a rightful place of global primacy (a term I will return to shortly) or power. By global primacy I do not mean empire say like 19th century Britain but more akin to a historical Chinese tributary like model. China is often called the Middle Kingdom but this is really a mistranslation. Middle does not mean like the middle seat in a row but the central figure like the sun in a solar system around which everything else rotates. By power, it seems more accurate to say that Beijing seems the exercise of power via size or similar channels than evangelistically spreading a value system. Power matters to China because it understands that values are relatively weak ties but interests via specific resource allocation create much tighter if potentially transitory or transactional ties. Just as power comes from the barrel of a gun, China believes power comes from very hard asset measurable characteristics and the exercise of that power with its size placing it at the center of any discussion.
Digesting the events of the 1980’s and 1990’s, what Xi and his generation broadly learned from studying the collapse of the USSR was simple and guides virtually every move they make to this day:
Everything the USSR did in the 1980s and 1990 was wrong. Do the complete opposite. To put it another way: whatever Gorbachev would do, do and do the complete opposite.
Xi took from the collapse of the Soviet Union that any relaxing of government controls for a strong authoritarian system leads to unraveling as people demand more freedom and input into government.Commercial expansion merely gave them a taste of goods they missed and starting a business allowed authority outside the government to flower. Greater contact with non-domestic actors and media changed opinions that made citizens less willing to accept government propaganda. Policing, security, and intelligence services are not for limited purposes but to ensure broad social compliance and monitor enemies real and imagined. Where as Gorbachev is remembered for ushering in increased freedoms and relaxing controls on non-state enterprise, Xi views these activities as contributing to the greatest tragedy of the 20th century and are not only policies that should not be pursued but will pursue policies that do the exact opposite.
When we frame our understanding of Xi around what he is trying to avoid, a repeat of the collapse of the Soviet Union, all of a sudden the individual and specific policy moves make a lot more sense.
What is notable is we need to shift our focus on what problem is being solved. By that I mean policy action is taken with the intent to solve a specific problem. Many times people think they understand the problem being solved and while there are not infrequently overlapping problems, all too commonly we believe we understand the focus of the policy or policy maker when in reality we do not.
Let me give you a simple example. As Xi has cracked down on a variety of tech and more private businesses, analysts will frequently point out facts and statistics such as private vs. state owned enterprise debt or productivity wondering about or criticizing the policy changes. These are all perfectly valid points as a matter of statistics but they are focused on solving very different problems than the problem Xi is trying to solve.
If we take avoiding a system of governance collapse as the driving motivation for what Xi is going rather than seeking to address continually rising debt levels or differences in public and private productivity, his behavior makes sense. Foreign analysts talking about the importance of private enterprise to the Chinese market are not incorrect in their presentation of facts, they are wrong in understanding what problem Chinese leadership believes it is solving and how to solve it.
The tradeoff Xi and Chinese leadership continue to make is simple: they believe that policy problems such as economics or the environment are manageable and present no existential threat. Loosening government control presents a situation, they believe of rapidly becoming unmanageable and presenting a major existential threat. If we understand the tradeoff within the framework of risk trading, Xi and Chinese leadership believe the loosening government control presents a much riskier situation. Put another way, they are comparing common daily risks that will create problems to the the less common high relative loss risks. For instance, a plane takes off in bad weather knowing it will bounce a little is a common low risk event. The existential risk is the event of a plane crash because the pilot falls asleep that requires strict controls and constant vigilance.
The implication for all this thinking is actually pretty clear: expect events to continually get worse and the Xi regime continues to tighten controls, state involvement, and aggressive foreign policy. Too many believe that Xi and many Chinese leaders understand the necessity of private enterprise, there is more concern about relaxing controls believing the economy to be more a system of general input and output tables whereby growth can be engineered. This leaves growth and economics up to a managerial and statistician crowd within government bureaucracies. Put another way, Xi believes he can engineer growth but needs to manages political purity.
There is no going back to the halcyon days of Chinese openness and private enterprise. This is the new normal.