Chinese Politics and Foreign Policy under Xi Jinping: The Future Political Trajectory 9780367470289, 9781003041481

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Table of contents :
Half Title
Series Page
Title Page
Copyright Page
Table of Contents
List of Figures
List of Tables
List of Contributors
List of Abbreviations
Introduction: Xi Jinping, the ‘Peking Order’ and China’s Post-COVID-19 Political Trajectory: A Primer
Part I: Xi Jinping and Communist Party of China in Retrospection
1 Xi Jinping Restores the Ideological Imperative So As to Boost His Own Power
2 Xi Jinping’s Reform and Rejuvenation of the United Front Work Department
3 Social Governance in China under Xi Jinping: Big Brother is Watching You!
4 The Difficulty of Being Xi Jinping
Part II: Xi Jinping’s Social Governance and China’s Commercial Party-State Affairs
5 State–Business Relations Under Xi Jinping: Steering the Private Sector and Private Entrepreneurs
6 The Evolution of China’s industrial Policy and ‘Made in China 2025’
7 Xi Jinping’s ‘China Dream’ and the Future Graph of Chinese Economy
8 Xi Jinping’s Financial Gamble: Will it Succeed?
Part III: Xi Jinping and China’s Security and Foreign Policy Posturing
9 China’s Foreign Policy Under Xi – Reappraisal of China’s Partnership Diplomacy
10 Xi Jinping, the US–China Rivalry and Beijing’s Post-COVID Manoeuvres
11 China–Southeast Asia Relations in the Era of Xi Jinping
12 Xi Jinping’s ‘Asia for Asians’, Major Power Diplomacy and India
13 Xi Jinping’s PLA and China’s Regional Security Ambitions
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Chinese Politics and Foreign Policy under Xi Jinping brings together an impressive collection of studies, each investigating a topic of crucial importance to the future of the PRC. The book also addresses important questions regarding China’s future in a post-COVID-19 world, both at home and abroad. As the Xi Jinping era continues to unfold, this timely and informative collection will be a valuable asset to causal readers, students and scholars, and members of the policy community alike. —Jeffrey Becker, Director, Indo-Pacific Security Affairs Program, China & Indo-Pacific Security Affairs Division, Centre for Naval Analysis, USA Important scholarship to understand Xi Jinping’s “new era”, his agenda to change China and its strategic position in the world, and how his personal leadership has made a difference on China’s domestic and international policies. —Mathieu Duchatel, Director of Asia Program, Institut Montaigne, Paris Since taking China’s leadership in the fall of 2012, Xi Jinping has significantly revised the Chinese political system and changed the direction of various policy domains. These developments have deviated from the direction set by Deng Xiaoping in the 1980s. What have changed and what are the implications of these changes are issues that have attracted worldwide attention. Dr. Arthur Ding and Dr. Jagannath Panda have assembled an excellent group of analysts to comprehensively examine these issues. This is a timely and comprehensive contribution to these topics. This volume should be an essential reading for those interested in politics and foreign policy of contemporary China. —Chien-wen Kou, Distinguished Professor, Department of Political Science and Graduate Institute of East Asian Studies, and Director of Institute of International Relations, National Chengchi University, Taipei Xi Jinping is increasingly compared to Mao Zedong, and there is every indication he has as much power as the PRC’s founding father. Deng Xiaoping, the leader most associated with opening up the PRC, famously said “it doesn’t matter if the cat is black or white, as long as it catches mice”. As this superb and timely volume shows, the PRC is now ruled by a leader who does care if the cat is black or white. This excellent volume edited by Arthur S. Ding and Jagannath P. Panda rightfully put Xi at the center of the changes – for better and for worse – that are taking place in the PRC and should be required reading for those seeking to understand the country’s current trajectory. —John Hemmings, Associate Professor, Daniel K. Inouye Asia-Pacific Center for Security Studies, Honolulu

Chinese Politics and Foreign Policy under Xi Jinping

This book focuses on China’s future under Xi Jinping’s authoritarian leadership by examining various facets of the political, economic, social and foreign policy trajectories of contemporary China. It assesses Xi Jinping’s power dynamic as the ‘core’ leader of the Communist Party of China (CPC) and analyses the impact of Xi’s signature domestic policies which demonstrate his political authority within the domestic sphere. Moreover, the book presents Xi’s pro-active, assertive and action-oriented outlook as a foundation for China’s diplomacy in the ‘new era’. Bringing together an international set of experts in the field who explore critical facets of China under Xi Jinping that deeply influence the regional as well as the global order, the book investigates the impact of Chinese initiatives such as the grand Belt and Road Initiative (BRI), the Asian Infrastructure Investment Bank (AIIB) and the BRICS New Development Bank (NDB). Importantly, the book illustrates US–China relations and outlines how this relationship will intensify in the post-COVID-19 era, which is poised to be one of the biggest challenges and turning points of the ‘Asian Century’. Offering a timely insight into China’s future and the trajectory of Xi Jinping’s consolidation of power, this book will be of interest to academics in the fields of China Studies, Asian and International Politics and International Relations. Arthur S. Ding is a Professor Emeritus of National Chenghi University (NCCU), Taiwan, and an adjunct professor at NCCU and Taiwan’s National Defense University. Jagannath P. Panda is a Research Fellow and Centre Head for East Asia at the Manohar Parrikar Institute for Defence Studies and Analyses (MP-IDSA), New Delhi, India. He is also the Series Editor of Routledge Studies on Think Asia. His recent books include The Korean Peninsula and Indo-Pacific Power Politics: Status Security at Stake (Routledge, 2020) and India-China Relations: Politics of Resources, Identity and Authority in a Multipolar World Order (Routledge, 2017).

Routledge Studies on Think Asia Edited by Jagannath P. Panda, Manohar Parrikar Institute for Defence Studies and Analyses, India

This series addresses the current strategic complexities of Asia and forecasts how these current complexities will shape Asia’s future. Bringing together empirical and conceptual analysis, the series examines critical aspects of Asian politics, with a particular focus on the current security and strategic complexities. The series includes academic studies from universities, research institutes and think-tanks and policy oriented studies. Focusing on security and strategic analysis on Asia’s current and future trajectory, this series welcomes submissions on relationship patterns (bilateral, trilateral and multilateral) in Indo-Pacific, regional and sub-regional institutions and mechanisms, corridors and connectivity, maritime security, infrastructure politics, trade and economic models and critical frontiers (boundaries, borders, bordering provinces) that are crucial to Asia’s future. 3 The Korean Peninsula and Indo-Pacific Power Politics Status Security at Stake Edited by Jagannath P. Panda 4 Conflict and Cooperation in the Indo-Pacific New Geopolitical Realities Edited by Ash Rossiter and Brendon J. Cannon 5 Chinese Politics and Foreign Policy under Xi Jinping The Future Political Trajectory Edited by Arthur S. Ding and Jagannath P. Panda 6 Identity, Culture, and Chinese Foreign Policy THAAD and China’s South Korea Policy Kangkyu Lee


Chinese Politics and Foreign Policy under Xi Jinping The Future Political Trajectory

Edited by Arthur S. Ding and Jagannath P. Panda

First published 2021 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN and by Routledge 52 Vanderbilt Avenue, New York, NY 10017 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2021 selection and editorial matter, Arthur S. Ding and Jagannath P. Panda; individual chapters, the contributors The right of Arthur S. Ding and Jagannath P. Panda to be identified as the authors of the editorial material, and of the authors for their individual chapters, has been asserted in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data A catalog record has been requested for this book ISBN: 978-0-367-47028-9 (hbk) ISBN: 978-1-003-04148-1 (ebk) Typeset in Times New Roman by codeMantra


List of figures List of tables List of contributors List of abbreviations Preface Acknowledgements Introduction: Xi Jinping, the ‘Peking Order’ and China’s post-COVID-19 political trajectory: a primer

ix xi xiii xix xxv xxix




Xi Jinping and communist party of China in retrospection


1 Xi Jinping restores the ideological imperative so as to boost his own power



2 Xi Jinping’s reform and rejuvenation of the United Front Work Department



3 Social governance in China under Xi Jinping: big brother is watching you!



4 The difficulty of being Xi Jinping AV I NA SH A . G ODB OL E


viii Contents PART II

Xi Jinping’s social governance and China’s commercial party-state affairs


5 State–business relations under Xi Jinping: steering the private sector and private entrepreneurs



6 The evolution of China’s industrial policy and ‘Made in China 2025’ 131 T OMO O M A RU K AWA

7 Xi Jinping’s ‘China Dream’ and the future graph of Chinese economy 150 S R I PA R NA PAT H A K

8 Xi Jinping’s financial gamble: will it succeed?




Xi Jinping and China’s security and foreign policy posturing


9 China’s foreign policy under Xi – reappraisal of China’s partnership diplomacy


M E NG - C H U N L I U, P O - KUA N W U A N D C H I A- H SUA N W U

10 Xi Jinping, the US–China rivalry and Beijing’s post-COVID manoeuvres



11 China–Southeast Asia relations in the era of Xi Jinping



12 Xi Jinping’s ‘Asia for Asians’, major power diplomacy and India



13 Xi Jinping’s PLA and China’s regional security ambitions






6.1 Market share of indigenous brand cars 138 6.2 The share of top 10 enterprises in total crude steel production 140 7.1 Chinese population living in poverty from 2012 to 2018 (unit: million) 153 7.2 Comparison of rural and urban household incomes in 2017 (unit: yuan) 157 7.3 Gross regional product, PRC, 2017 (unit: millions) 158 7.4 Percentage of people employed in various segments of China’s economy, 2017 (unit: 10,000 persons) 161 7.5 Employment in manufacturing, construction, importexport and wholesale, 2013–2017 (unit: 10,000 persons) 162 9.1 China’s strategic partners (number, by year) 193 9.2 Number of China’s partner countries in Asia (1996–2019) 195 9.3 Number of China’s partner countries in ASEAN (2004–2019) 195 9.4 Number of China’s partner countries in Latin America (1993–2019) 196 9.5 Number of China’s partner countries in Africa (2000–2019) 197 9.6 Number of China’s partner countries in Europe (1994–2019) 199 13.1 Chinese vessel incursions in Japan’s contiguous zone or territorial sea surrounding the Senkaku Islands 289


5.1 Membership of private entrepreneurs in PCs and PPCCS in per cent (1997–2014) 115 6.1 Reorganisation targets of iron and steel industry policies 140 6.2 The SEIs and Key Industries in MIC2025 141 6.3 Industrial robot sales volume (in units) 143 6.4 Enterprises that received investments from the National IC Industry Investment Fund 146 7.1 Chinese provinces with poverty headcount ratio higher than 3 per cent at the end of 2018 154 8.1 List of institutions funding the BRI 179 9.1 Determinant and expected outcomes 204 9.2 Survival analysis (2005–2012) 206 9.3 Survival analysis (2012–2019) 207 12.1 Selected organisations/institutions for China’s regional cooperation 263 12.2 China’s inroads into world markets and cultures under President Xi 264 13.1 PLA’s military drills and exercises in proximity to Taiwan (2013–2020) 281


Editor’s bio Arthur S. Ding  is a professor emeritus, National Chenghi University (NCCU), Taipei. He now is an adjunct professor at both the NCCU and Taiwan’s National Defense University. His research focuses on China security, including China’s security policy and China’s defense, party–­ military relations in China, as well as China’s defense industry. He can be reached at [email protected]. Jagannath P. Panda  is a research fellow and centre head for East Asia at the Manohar Parrikar Institute for Defence Studies and Analyses ­(MP-IDSA), New Delhi, India. He is an expert on India–China Relations, China, East Asia, Indo-Pacific security, Indian Foreign Policy and Korean peninsula. Dr. Panda is also the Series Editor for Routledge Studies on Think Asia. Most recently, he was a Japan Foundation and Korea Foundation fellow for the year 2018. Dr. Panda is in charge of East Asia Centre’s academic and administrative activities, including the Track-II and Track 1.5 dialogues with the Chinese, Japanese and Korean thinktanks/institutes. He is a recipient of V. K. Krishna Menon Memorial Gold Medal (2000) from the Indian Society of International Law & Diplomacy in New Delhi. Dr. Panda is the author of the book India-China Relations: Politics of Resources, Identity and Authority in a Multipolar World Order (Routledge: 2017). He is also the author of the book China’s Path to Power: Party, Military and the Politics of State Transition (2010). He can be reached at: [email protected]

Contributors Atmaja Gohain Baruah is pursuing PhD at the National University of Singapore in the Comparative Asian Studies Programme, focusing on exploring the connection between climate variability, ecological migration and inequality in India and China. She is a recipient of the President’s Graduate Fellowship at NUS and is currently undergoing her coursework.

xiv Contributors Apart from environmental governance in China, her research interests also lie in broader Sino-Indian relations, Chinese foreign policy, IndoPacific Security, environmental security in Asia and changing trajectories in the Indo-Pacific. She is an editorial assistant to the series editor for the Routledge Series on Think Asia and has publications both in national and international forums. Jean-Pierre Cabestan is a professor in the Department of Government and International Studies at Hong Kong Baptist University. He is also an associate researcher at the Asia Centre, Paris, and at the French Centre for Research on Contemporary China, Hong Kong. His main themes of research are Chinese politics and law, China’s foreign and security policies, China–Africa relations, China–Taiwan relations and Taiwanese politics. His most recent publications include Political Changes in Taiwan Under Ma Ying-jeou: Partisan Conflict, Policy Choices, External Constraints and Security Challenges (co-edited with Jacques deLisle), Abingdon, Oxon & New York: Routledge, 2014; Tanzania-China All-Weather Friendship in the Era of Multipolarity (with Jean-Raphaël Chaponnière), Saarbrücken: Lambert Academic Publishing, 2017; and China Tomorrow: Democracy or Dictatorship?, 2019. He has also published numerous articles and contributions in English on China’s political system and reform, Chinese law, the relations across the Taiwan Strait and Taiwanese politics. He received his PhD from the University of Paris 1 (Panthéon-Sorbonne). Avinash A. Godbole is an assistant professor of International Relations and Chinese Studies at O P Jindal Global University since February 2018. He is also a Visiting Faculty at Naval War College, Goa since June 2020. From March 2016 to January 2018, he was Research Fellow at the Indian Council of World Affairs, and he was previously a research assistant at Manohar Parrikar Institute for Defence Studies and Analyses (MP-IDSA). He was awarded Doctor of Philosophy at the School of International Studies, JNU. His doctoral thesis is on the Political Economy of China’s Environment. He was a Visiting Fox Fellow at the Macmillan Center at Yale in 2007–2008. His research interests are in the fields of Chinese Foreign Policy, Domestic Politics in China, China’s Asia strategy and India–China Relations. He has written extensively on these subjects in academic and media publications. He has participated in various track 2 events and has conducted various invited lectures on China. He is also a reviewer for Springer Asia, Routledge and for various journals on Foreign and Security Policy. Thomas Heberer is a senior professor of Chinese Politics & Society at the Institute of East Asian Studies, University Duisburg-Essen/Germany. His main fields of research are social disciplining, political representation, private entrepreneurship, developmental state, nationalities policies, corruption, rural and urban governance, neighbourhood communities, etc. (all related to China). Among his recent book publications are Disciplining of a Society: Social Disciplining and Civilizing Processes in Contemporary

Contributors  xv China. Harvard University, Kennedy School, Ash Center Publication, Cambridge/Mass. 2020; Weapons of the Rich: Strategic Behavior of Private Entrepreneurs in Contemporary China (co-auth. G. Schubert) 2020; Developmental State China. Politics, Economics, Social Cohesion and Ideology (co-auth. A. Müller) 2020 (in German); 托马斯海贝勒中国研究文选 (Selected Works of Thomas Heberer in China Studies), 2017; 中共的治理 与适应:比较的视野 (Governance and Adaptation of the CCP: a Comparative Perspective) (co-ed. Yu Keping/B. Alpermann), 2nd edition 2016; The Politics of Community Building in Urban China (co-auth. C. Göbel) 2013 (Paperback). Willy Wo-lap Lam has been an adjunct professor at the Chinese University of Hong Kong (Centre for China Studies, History Department and the Master’s Program in Global Political Economy) since 2007. He is also a senior fellow at Jamestown Foundation, Washington D.C. With 40 years of experience writing and researching about China, Lam is a recognised expert on areas including the Chinese Communist Party, elite politics, Chinese foreign policy and foreign economic relations, as well as the country’s economic and political reform. The veteran Sinologist has published seven books on China, including Routledge Handbook of the Chinese Communist Party (Routledge, London, 2018); Chinese Politics in the Era of Xi Jinping (Routledge, London, 2015); Chinese Politics in the Hu Jintao Era (2006); and The Era of Jiang Zemin (1999). His new book, The Fight for China’s Future (Routledge, London), came out in July 2019. Dr Lam’s views on Chinese politics and foreign affairs are regularly cited by the New York Times, Financial Times, Wall Street Journal, The Globe and Mail, Bloomberg, the Associated Press and Agence France-Presse. Meng-Chun Liu is a research fellow and director of the First Research Division (on Chinese economy), Chung Hua Institution for Economic Research. He obtained his doctor degree from Monash University, Australia, and his research focuses on China’s S&T and high-tech industries, industrial organisation, international trade and investment, and Chinese economy studies. Tomoo Marukawa is a professor of Chinese economy at the Institute of Social Science, University of Tokyo. He has received Ohira Masayoshi Memorial Prize in 2003. His work focusses on Chinese economy and industries. He has published six books in Japan, including Contemporary Chinese Economy, and several others on Chinese industries. He has also published articles on China’s regional unemployment issues, sharing economy, Sino-Japanese economic relations, automobile and mobile phone industries in Economic Systems, Japanese Political Economy, Journal of East Asian Studies, Journal of Contemporary East Asia Studies, China: An International Journal, Asia Pacific Business Review, and Eurasian Geography and Economics. Priyanka Pandit  is a research fellow at the Indian Council of World Affairs, New Delhi. She holds a PhD in Chinese Studies from Jawaharlal Nehru University, New Delhi. Her research focusses on China’s political

xvi Contributors economy, its engagements with multilateral economic institutions and comparative politics. She was formerly a visiting fellow at the Chongyang Institute for Financial Studies in Renmin University, Beijing, and Research Institute for Indian Ocean Economies in Yunnan University of Finance and Economics, Kunming, where she pursued a year-long course in Mandarin. She was also part of the Delegation for “Seminar on Chinese Translation” organised by the Beijing International Chinese College, China, and “Youth Camp for Asia’s Future 2009” organised by the Korean Ministry of Health and Welfare, Seoul. She co-edited a volume on ‘China and BRICS: Setting up a Different Kitchen’ and her research has featured in international journals, magazines and newspapers. She can be reached at [email protected] & panditpriyanka5@gmail. com. Eerishika Pankaj  is an editorial assistant to the series editor for the Routledge Series on Think Asia and had previously been employed as a Research Associate in a Bengaluru based think-tank, the Synergia Foundation. Ms. Pankaj has also worked as a Research Intern with the Delhi Policy Group (DPG). With a major in International Studies during her undergraduation, she has a special focus on East Asia, conflict management and international relations. Her research interests lie in Chinese foreign and domestic policies, Asian security studies, pathologies of international organizations and human security studies in conflict zones. Sriparna Pathak,  an adjunct faculty in the Jindal School of International Affairs, was formerly a visiting faculty at the Centre for Southeast Asian Studies, Gauhati University in Assam, India. She has also been an Assistant Professor at Assam Don Bosco University, prior to which she was a consultant at the Policy Planning and Research Division at the Ministry of External Affairs, New Delhi. She is also a fellow at the South Asia Democratic Forum in Brussels, Belgium. Awarded a Doctorate degree from the Centre for East Asian Studies, Jawaharlal Nehru University (JNU) in 2015, she has also worked with the Observer Research Foundation in Kolkata and New Delhi, respectively, UNICEF India and the Centre for Armed Forces Historical Research, New Delhi. She has also been a journalist at the Indian Express, New Delhi, and the Avenue Mail, Jharkhand, respectively. She has also been a recipient of the joint scholarship awarded by the Ministry of Human Resources Development, India, and the China Scholarship Council, Government of the People’s Republic of China. She spent two years in China, actively researching various aspects of China’s domestic economy. Besides English, Hindi, Bengali and Assamese, she is also fluent in Mandarin. Her areas of interest are China’s domestic economy, trade and economic relations between India and China and China’s foreign policy and economic linkages with the world. She can be reached at [email protected] or @Sriparnapathak on Twitter.

Contributors  xvii Mrittika Guha Sarkar  is a research scholar at the Centre for East Asian Studies, School of International Studies, Jawaharlal Nehru University (JNU), New Delhi. Her research areas are India–China relations, geopolitics and strategic affairs of East Asia focusing on China, Japan and the Korean Peninsula. She writes for several journals, newspapers and magazines such as the Maritime Affairs, Eurasia Review, WION, Business Today, World Focus, Defense and Security Alert (DSA) and The Pioneer. She has been a Project Assistant for the East Asia Centre at the Manohar Parrikar Institute for Defence Studies and Analyses (MP-IDSA), New Delhi. She is also an editorial assistant for the Series Editor of the Routledge Studies on Think Asia. She can be reached at mrittika11@gmail. com. Gunter Schubert is a professor of Greater China Studies at the Institute of Asian and Oriental Studies’ Department of Chinese and Korean Studies, University of Tübingen. He is also the founder and director of the European Research Center on Contemporary Taiwan (ERCCT) at this university. His research covers local governance and policy implementation in the PRC, the reform of China’s private sector and state–business relations, cross-strait political economy and Taiwanese entrepreneurs operating in mainland China, and Taiwan domestic politics. Lately he does also focus on immigration policy in East Asia and a changing regional order in Asia under the impact of China’s rise. His latest publication, Weapons of the Rich. Strategic Action of Private Entrepreneurs in Contemporary China (2020), has been co-written with Thomas Heberer. Ian Storey is a senior fellow at the ISEAS-Yusof Ishak Institute. He specialises in Asian security issues with a focus on Southeast Asia. Ian is also the editor of the ISEAS academic journal Contemporary Southeast Asia. His research interests include Southeast Asia’s relations with the major powers and maritime security (especially the South China Sea dispute). He is the author of Southeast Asia and the Rise of China: The Search for Security and co-editor of The South China Sea: Navigating Strategic and Diplomatic Tensions. He was educated in the United Kingdom, Japan and Hong Kong, and prior to joining ISEAS he held academic positions in Hawaii and Australia. Drew Thompson  is a visiting senior research fellow at the Lee Kuan Yew School of Public Policy at the National University of Singapore. From 2011 to 2018, he was the Director for China, Taiwan and Mongolia in the Office of the Secretary of Defense, where he was responsible for supporting the Secretary and managing military-to-military relations. He was previously the director of China Studies and Starr senior fellow at the Center for the National Interest in Washington, D.C. Prior to joining the Center, he was the National Director of the China-MSD HIV/AIDS Partnership in Beijing, a 5-year, $30 million HIV/AIDS program established

xviii Contributors by Merck & Co. and the Chinese Ministry of Health. Mr. Thompson served previously as an assistant director to the Freeman Chair in China Studies at the Center for Strategic and International Studies (CSIS). He was also the president of a Washington, D.C. company that manufactured snack food in Qingdao, China. He lived in Shanghai from 1993 to 1998 where he was the General Manager of a U.S. freight forwarding and logistics firm, overseeing offices in Beijing, Shanghai and Nanjing. Chia-Hsuan Wu is an associate research fellow and deputy director of the First Research Division (on Chinese economy), Chung-Hua Institution for Economic Research. She received her PhD in agricultural economics from the National Taiwan University. Her research interests cover the agricultural economics, general equilibrium model (CGE) and the trade policy in China. She can be reached at [email protected]. Po-Kuan Wu is a research analyst of the First Research Division (on Chinese economy), Chung-Hua Institution for Economic Research. He received his doctoral degree on social and political sciences from the European University Institute (EUI), Italy. His research interests cover China’s external relations, the international political economy and international relations.


5G Fifth-Generation 6G Sixth-Generation 7G Seventh-Generation A2/AD Anti-Access/Area-Denial AAEC Afro-Asian Economic Council ACD Asia Cooperation Dialogue ACFIC All-China Federation of Industry and Commerce ACWF All-China Women’s Federation ADB Asian Development Bank ADIZ Air Defence Identification Zone AI Artificial Intelligence AIIB Asian Infrastructure Investment Bank AOIP ASEAN Outlook for the Indo-Pacific APEC Asia-Pacific Economic Cooperation APT ASEAN plus Three ARF ASEAN Regional Forum ARIA Asia Reassurance Initiative Act ASBMs Anti-Ship Ballistic Missiles ASEAN Association of Southeast Asian Nations Asia EDGE Asia Enhancing Development and Growth through Energy BCG Boston Consulting Group BCIM Bangladesh-China-India-Myanmar BDCA Border Defence Cooperation Agreement BIMSTEC Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation BIS Bank for International Settlements BRF Belt and Road Forum BRI Belt and Road Initiative BRICS Brazil, Russia, India, China and South Africa BUILD Act Better Utilisation of Investments Leading to Development Act


Command, Control, Communications, Computer, Intelligence, Surveillance, and Reconnaissance Cyberspace Administration of China Compound Annual Growth Rate Central Asia Regional Economic Cooperation China-Arab States Cooperation Forum China Banking Regulatory Commission China Coast Guard Chinese Communist Party Closed-Circuit Television Conference on Dialogue of Asian Civilizations China Development Bank Fund China-Central and Eastern Europe Fund Cooperation between China and Central and Eastern European Countries China-Eurasian Economic Cooperation Fund China-Community of Latin American and Caribbean States Export-Import Bank of China China Investment Corporation Conference on Interaction and Confidence Building Measures in Asia China Insurance Regulatory Commission Close-In Weapons Systems China-Japan-South Korea Central Leading Group on Finance and Economics Central Military Commission Comprehensive National Power Code of Conduct Coronavirus Disease 2019 Communist Party of China Chinese People’s Political Consultative Conference Communist Party of the Soviet Union Comprehensive and Progressive Agreement for TransPacific Partnership China Securities Regulatory Commission Communist Youth League International Development Finance Corporation ASEAN-China Declaration on the Conduct of Parties in the South China Sea Democratic Progressive Party East Asia Summit East Coast Rail Link East China Sea Exclusive Economic Zone


European Union Foreign Direct Investment Forum for East Asia and Latin America Cooperation Forum on China-Africa Cooperation Free and Open Indo-Pacific Freedom of Navigation Operations Financial Stability and Development Committee Group of Twenty General Agreement on Tariffs and Trade Gulf Cooperation Council Gross Domestic Product Greater Mekong Sub-region High Speed Rail Integrated Circuit International Civil Aviation Organization International Committee of the Red Cross International Monetary Fund International Criminal Police Organization Indian Ocean Region Indian Ocean Rim Association Initial Public Offerings Institute of Southeast Asian Studies (renamed ISEASYusof Ishak Institute) ITAN Infrastructure Transaction and Assistance Network ITLOS International Tribunal of the Law of the Sea KMT Kuomintang LAC Line of Actual Control LEMOA Logistics Exchange Memorandum of Agreement LLD doctor of law LMC Lancang-Mekong Cooperation LSG Leading Small Group MAC Taiwan’s Mainland Affairs Council MACs Military Area Commands MDBs Multilateral Development Banks MDGs Millennium Development Goals MEI Ministry of Electronics Industry MIC 2025 Made in China 2025 MoUs Memoranda of Understanding MPVs Multi-Purpose Vehicles MRBM Medium-Range Ballistic Missile MSR Maritime Silk Road NASDAQ National Association of Securities Dealers Automated Quotations NBER National Bureau of Economic Research NBS National Bureau of Statistics

xxii Abbreviations NDB New Development Bank NDRC National Development and Reform Commission NGOs Non-Governmental Organisations NMR Nanjing Military Region NPC National People’s Congress NPLs Non-Performing Loans NSS National Security Strategy OBOR One Belt One Road OOP Out of Pocket P-5 Permanent Five PBOC People’s Bank of China PBSC Politburo Standing Committee PCA Permanent Court of Arbitration PCs People’s Congresses PH Pakatan Harapan PLA People’s Liberation Army PLAAF People’s Liberation Army Air Force PLAN People’s Liberation Army Navy PMIs Purchasing Managers Indices PPCCs People’s Political Consultative Conferences PPP Purchasing-Power-Parity PRC People’s Republic of China Quad Quadrilateral Security Dialogue R&D Research and Development RCEP Regional Comprehensive Economic Partnership RCIF Russia-China Investment Bank S&D Special and Differential Treatment S&T Science and Technology SAARC South Asian Association for Regional Cooperation SAFE State Administration of Foreign Exchange SAR Special Administrative Region SCMP South China Morning Post SCO Shanghai Cooperation Organisation SCS Social Credit System SCS South China Sea SDNT Single Draft Negotiating Text SEIs Strategic Emerging Industries SEMI Semiconductor Equipment and Materials International SLD Shangri-La Dialogue SLOCs Sea Lines of Communication SOCBs State-Owned Commercial Banks SOEs State-Owned Enterprises SREB Silk Road Economic Belt SRF Silk Road Fund


nuclear-powered attack submarines Sport Utility Vehicles Top-Level Design Trans-Pacific Partnership Township and Village Enterprises United Front Work Department United Nations United Nations Convention on the Law of the Sea United Nations Conference on Trade and Development US Trade Representative Virtual Private Networks World Health Organization World Intellectual Property Organization Weapons of Mass Destruction World Trade Organization Xi Jinping Faction


Since his ascendancy to power in 2012–2013, Xi Jinping has established himself as the ‘core’ leader of the Communist Party of China (CPC), marking a significant shift in the power dynamics within the party. He has set himself apart from his immediate predecessors such as Hu Jintao and Jiang Zemin by relentlessly pursuing centralisation of power and his own cult of personality. The successful constitutional elimination of the two-term presidential limit has only consolidated his power to a new level, providing him the option to remain in power beyond 2023. Moreover, echoing Mao Zedong’s line of thinking, Xi has initiated structural reforms and reorganisation, as well as made adjustments to policy and public outreach – all of which have paved the way for Xi’s rise as a strongman over the past seven years. He has reiterated that strong leadership and a resilient central government are crucial to realise the ‘Chinese Dream’ (中国梦) of national rejuvenation and building a ‘moderately prosperous society’ by 2020–2021 – central tenets of the current CPC (both CCP and CPC are used interchangeably throughout the volume keeping in view the pattern of writings of the scholars on China) regime. Thus, the grand blueprint of the “Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era” unfolds a narrative which is all about strengthening and consolidating authority at three key levels – nation-wide, party-wise and Xi Jinping himself as the core leader. Thanks to propaganda which refers to him as lingxiu, a term of reverence that was used for Mao Zedong as well, Xi Jinping’s mark as a visionary, path-breaking leader, who has touched every aspect of a lay Chinese’s life. The impact of Xi’s signature domestic policies such as the large-scale anticorruption campaign that he initiated during his first term has reflected his political authority. This anti-corruption initiative was a result of the public criticism of elite corruption prevalent in the party. And Xi’s response to the public uproar enabled him to sustain the legitimacy of the CPC by acquiring popular support. Similarly, Xi’s bold commitment to alleviate poverty by 2020 and his appeal for green development have enhanced his popularity and power in the CPC as well as in the country.

xxvi Preface At the global level, legitimising the functioning of the CPC and upholding the Xi Jinping model of governance, which promises economic prosperity and a ‘Community of Shared Future for Humanity’, have become central to China’s diplomacy. The initiatives undertaken under Xi, such as the grand Belt and Road Initiative (BRI), the Asian Infrastructure Investment Bank and the BRICS New Development Bank, are key tools to achieve this vision. China’s BRI has far-reaching potential – it is aimed at expanding Chinese geopolitical and economic and influence beyond the boundaries of Asia to Africa and Europe. The Maritime Silk Road is actually making several inroads into the Indian Ocean, ranging from Myanmar and Thailand to Kenya and Djibouti. Chinese state-owned enterprises under Xi Jinping’s directives can be seen moving aggressively to acquire infrastructure projects in strategic locations all across Europe, especially under the 16+1 (now 17+1) format. The Chinese company, Huawei, is also vying for a seat at the 5G table with other high-technology companies. It is through these major schemes that Xi aims to elevate China to a predominant position in the international community and transform the existing US-led global order into a ‘Sino-centric’ one. Besides, Xi has undertaken reforms and restructuring in the People’s Liberation Army (PLA) not only to preserve national security but also to strengthen military diplomacy for advancing China’s international political goals. However, such initiatives are seen as aggressive moves to expand China’s global revisionist ambitions by the West and critics are not taking kindly to it. It is indeed setting off several alarm bells in the American and European security and strategic circles. Further, China has also been utilising its growing financial clout as a means to advance its national security goals. Beijing has, more often than not, used economic diplomacy as a negotiating strategy in sovereignty claims and territorial disputes to attain its core security objectives. Thus, China has been showcasing a more proactive and assertive approach under Xi Jinping, seeking to expand its geopolitical and strategic influence, regionally and globally. At the same time, China is currently facing national, regional and global challenges, too, which would likely shape its path to becoming a global power by the end of 2049. For example, the trade war between the United States and China has already impacted the latter’s economy adversely and put great pressure on the current Chinese leadership, challenging Xi Jinping’s vision of the Chinese Dream. Critics have also pointed out that China’s nationalism is colouring its foreign policy, including economic initiatives and military diplomacy. For example, the BRI is progressively being viewed as an extension of China’s efforts to undermine the existing world order, especially as its infrastructural projects harbour fears of debt diplomacy due to opaque interest policies. Moreover, in a quest towards acquiring strategic assets, China’s political,

Preface  xxvii economic and military clout is especially strong in smaller South Asian countries like Sri Lanka, Pakistan, Maldives, Nepal and Bangladesh. Besides Sri Lanka’s Hambantota port, Pakistan’s Gwadar port has also been leased till 2059 to China. Similarly, China’s forward-deployed military posture in the South China Sea, the East China Sea and across Taiwan Strait is being viewed through the lenses of national security, especially as Beijing defends its coercive military policy citing history and ideology. The growing scepticism regarding China’s intentions and initiatives could have major implications for the country. China has also been heavily criticised for its handling of the Hong Kong crisis by the citizens of Hong Kong and the international community. The backlash has resulted in growing demands for greater political accountability and universal suffrage in Hong Kong. This becomes more significant in view of the already growing demands for freedom of speech and expression in regions such as Xinjiang and Tibet, all of which has begun to put pressure on Xi Jinping. In this context, one black swan, the Coronavirus Disease 2019 (COVID2019), has appeared and proved as a challenge to Xi’s governance model domestically and externally. The demand for transparency and government accountability has taken the centre stage since the outbreak of COVID-19, which was first identified in Wuhan, Hubei province, China. The pandemic has highlighted the shortcomings of China’s communist model of connectivity, trade and people-to-people contact, especially as it is founded on suppression of information, news and people’s voices. Xi Jinping’s model of centralisation of power slowed down the decision-making process to effectively control the spread of the virus outside China. The global pandemic has, thus, severely questioned China’s approach towards the global governance regime. Besides, China’s not-so-early response to the spread of the virus and the silencing of whistle-blowers such as Li Wenliang have certainly invited massive international criticism. In addition, COVID-19 has further increased the hostility between the United States and China, complicating the already fractured relations between the two countries due to the trade war. The US leadership has accused China of its misgovernance, denting China’s image globally. The disease has affected millions and caused thousands of deaths worldwide; it has wrecked the global economy. China’s economy has also been affected drastically, and its aim of achieving complete prosperity in the near future has been delayed significantly. COVID-19 and China’s tarnishing global image could further hamper its initiatives such as the BRI infrastructural projects, “Made in China 2025” and 5G vision. The trade war pressure, potential remapping of the global supply chains that greatly benefited Chinese economy for at least a quarter of a century and the recent negative perceptions towards the Chinese governance model could prove as a turning point for Xi Jinping and his leadership in the post-COVID-19 era. However, China’s national goals and

xxviii Preface priorities under Xi Jinping, including economic and technological development and social welfare measures and security undertakings, might remain unchanged. Nonetheless, it would be interesting to see how Xi Jinping responds to the current challenges so as to fulfil his promise of developing the country into a global power. Jagannath P. Panda and Arthur S. Ding


A book of this nature would not have been possible without the collaborative effort of many individuals and institutions, who have encouraged and supported this academic exercise. The editors express their appreciation to the Taipei-based Mainland Affairs Council (MAC), which sponsored the conference titled “China under Strongman” on August 30, 2019, and another Taipei-based Chinese Council of Advanced Policy Studies (CAPS), which was contracted by MAC to organise this one-day conference. This book originates from this conference. The editors are grateful to all the scholars for their hard work and persistence in contributing to the book. Their sincere effort in prescribing to the theme and timely submission deserves much appreciation. However, it must be noted that the opinions, facts and figures cited in this book are of the individual authors and neither the MAC and CAPS nor the editors of this volume are responsible. The editors have offered an academic platform to all the contributors to express their perspectives freely. The editors extend their thanks to Ms. Mrittika Guha Sarkar, Mr. Aditya Jakki, Ms. Eerishika Pankaj and Ms. Atmaja Gohain Barhua for their research assistantship. Finally, a token of thanks goes to Ms. Nidhi Pant for her excellent editorial assistance.

Introduction Xi Jinping, the ‘Peking Order’ and China’s post-COVID-19 political trajectory: a primer Jagannath P. Panda and Arthur S. Ding The National Congress of the Communist Party of China (CPC) is the real ‘political heart’ of China’s statehood through which the party sets the direction of China’s rise (中国崛起) both domestically and internationally. Therefore, there is certainly a clear correlation between domestic developments in China and its external behaviour. And the 19th CPC National Congress was no different in that regard. However, if every Congress in the Chinese political chronicle has been ‘special’ in offering something new to the country’s political trajectory, then the 19th National Congress held on October 18–24, 2017, was one of the most special events in post-Mao China. The 19th National Congress was ‘special’ for several reasons: first, it marked the formal endorsement of Xi Jinping’s second term as the General Secretary of the CPC until 2022. Soon after, in March 2018, the National People’s Congress removed the two-term limit on the presidency too, effectively allowing Xi to remain in power for life.1 Xi’s second term seems to resemble that of Chairman Mao’s tenure, rather than Deng Xiaoping’s reform era.2 Deng, who along with his colleagues suffered serious political persecution by Mao during the Cultural Revolution period, attributed the ills of such a disaster to the concentration of power in a single leadership. For this reason, under Deng’s rule, the party chairman post was removed and, instead, that of the General Secretary was adopted. In addition, the rule of ‘collective leadership and division of labor’ (集体领导分工负责) in the Politburo Standing Committee (PBSC), CPC’s highest organ, was enacted.3 Under this rule, the General Secretary is only the first-among-equals within the PBSC.4 Further, state agencies were granted some room under the principle of separation of function between the party and the state (党政分工). Nevertheless, Xi has completely upended the reform process that had started in the 1980s. He has taken all key levels of power, including political, economic and diplomatic/national security, in his own hands, while the other six PBSC members have become his subordinates; amended China’s constitution and eliminated the presidential term limit; and encouraged his own personality cult.5 He has almost abolished the separation of function between the party and the state. Further, he has placed priority on StateOwned Enterprises (SOEs), while private enterprises, which have made

2  Jagannath P. Panda and Arthur S. Ding more contribution to China’s economic development, have been downgraded if not totally ignored.6 He has aggressively pushed his diplomatic agenda to exert China’s newly accumulated wealth and influence, tightened up the state’s control of society to an unprecedented level, extensively allowed modern technologies to build up a nationwide surveillance system and built concentration centres in Xinjiang in an attempt to transform Uygur religious and cultural beliefs.7 Second, the 19th National Congress made Xi the ‘custodian political figure’ of the CPC while inducting his ‘core’ (核心) political thoughts and ideas into the CPC constitution.8 By writing Xi Jinping’s name and ideas into the constitution alongside Mao, Deng and international historical stalwarts like Marx and Lenin, the party has granted him a special recognition that was not accorded to Xi’s two predecessors Jiang Zemin and Hu Jintao. The names of the two former presidents weren’t included even though they expounded important ideological principles that are acknowledged in the constitution: Jiang Zemin’s core idea of ‘three representatives’9 was based on empowering the CPC through economic production, thrusting on Chinese culture and building political consensus. Hu Jintao’s ‘Scientific Outlook on Development’10 was an equally powerful economic mantra aimed to change the Chinese discourse of development under the CPC from an ‘over-reliant’ to a progressive society with a thrust on ‘high-quality’ workforce through improved science and technology.11 The 19th Congress was thus ‘distinct’ in this regard, as Xi Jinping seems to have managed to develop a consensus among the political elites of China to induct his name as a reformer and path-maker for China. Legitimising Xi’s political ideology in this manner has not only marked a new beginning for the CPC but also made Xi a ‘generational leader’12 with a stature equivalent to that of Mao and Deng. Third, at the 19th Congress, Xi stressed on the concept of ‘Four Comprehensiveness’13 (四个全面性), popularly known as four Cs: comprehensively build a moderately prosperous society, comprehensively deepen reform, comprehensively implement the rule of law and comprehensively strengthen party discipline. (Xi publicly started talking about the four Cs during his visit to Jiangsu province in December 2014, where he appealed to the party workers and people of China to have faith in the CPC).14 These principles, which are regarded as a strategic arrangement (战略布局), may seem to be full of jargon, but they certainly hold relevance in China’s domestic political context, as they are closely linked to reforms – political, economic and legal – which China has been craving for long, thus in turn to the future of the CPC. Whether, or to what extent, these reforms will be implemented during Xi Jinping’s leadership is, however, a matter of debate. Politically, these are attached to Xi’s ‘Chinese Dream’15 (中国梦), which essentially aims to alleviate poverty in the country, as well as address the challenges emanating from environmental degradation and existing regional disparities primarily between urban and rural China. Besides, these

China’s post-COVID-19 political trajectory  3 ideas are meant to restore China’s historical glory as a powerful nation and rejuvenate the Chinese nation through the supremacy of the CPC in the twenty-first century. ‘Two 100-year goals’ (两个一百年) are core to Xi’s idea: (a) to build a moderately prosperous society for China by 2021 when the CPC celebrates its centennial anniversary; and (b) to establish a ‘strong, affluent and modern country’ by 2049 when the People’s Republic of China (PRC) celebrates its centenary.16 This was systematically planned by Xi in his first tenure as president in view of the rapidly waning acceptability of the CPC in Chinese society over the last decade. Massive corruption, intra-party rivalry and the party’s disinclination to accept transparency were some of the issues he intended to tackle. Fourth, the 19th National Congress displayed shades of the return of the CPC’s ‘command culture’.17 The issue is less about the style of party functioning, more about the style of the functioning of the leaders. As indicated earlier, the terms ‘chairmanship’ and ‘comradeship’ were frequently used during Mao’s period. Deng Xiaoping, however, after a few years of being the chairman, replaced the term with General Secretary in 1982. Since then, the latter has been the main political label in China. Still, the term chairman, too, has been used with Xi’s name symbolically in the recent past to augment his stature in the Chinese political spectrum. For instance, the People’s Liberation Army (PLA) addressed Xi as ‘chairman’ and ‘comrade’ during the 20th commemoration ceremony of Hong Kong’s handover to China.18 In this context, many critical questions are being raised: Has Xi, like Mao, become China’s strongman? To what extent has he consolidated his power? How has he shaped China’s various policies – what real changes has he brought about in China and why? What is the decision-making process leading to these changes? And last, but not the least, where is he leading China to?

Xi Jinping’s ‘Peking Order’ and COVID-1919 Legitimising the functioning of the CPC has been the biggest challenge for Beijing in the twenty-first century. Xi Jinping’s model of governance – namely, executing a ‘Chinese Dream’ for Chinese people through economic prosperity and enhancing a ‘Community of Shared Future’20 – has been the reference point for China’s international image and diplomacy.21 Highlighting the merits of the Chinese political system in building an equitable order for the developing world is core to Xi’s international outreach. His ultimate objective is to establish a ‘Peking Order’ under the leadership of the CPC,22 while the massive Belt and Road Initiative (BRI) is a key tool to achieve this vision.23 The attempt is to build a ‘Sino-centric’ world order, which the CPC under Xi Jinping’s leadership has been trying for some time. China aims to challenge gradually the Western notion of democracy and outmatch the supremacy of the United States in the existing global structure. The current

4  Jagannath P. Panda and Arthur S. Ding model not only promotes Xi Jinping as a ‘globalizer in chief’ but has also created a wall of regulations between China and the rest of the world, controlling the flow of capital, ideas and culture while ensuring the sustainability of the CPC domestically.24 Looking back, the credit for the establishment of the contemporary Chinese party-state is accorded to Chairman Mao, while Deng Xiaoping brought China to the global map with economic reforms by introducing an open-door foreign policy that followed a ‘low-profile’ posture internationally. As a tall political leader in China’s contemporary Communist history, Xi Jinping has introduced a model of ‘new era’ foreign policy in promoting the ‘China brand’ internationally, moving away from Deng Xiaoping’s ‘low-profile’ foreign policy. Taking leadership roles in various multilateral forums, creating new institutions and exhibiting military dominance on maritime and land territories have been the salient features of this new era foreign policy. At the Fourth Plenum of the 19th CPC in October 2019, Xi Jinping defined his ‘modernisation of national governance’,25 which is the ‘fifth modernisation programme’ since Deng Xiaoping introduced his four modernisation policies in 1979.26 While Deng Xiaoping’s programmes in agriculture, industry, science and technology and the military aimed to build a stronger China ‘nationally’, Xi Jinping’s programme of national governance is more ‘internationally oriented’ to showcase CPC’s global image as a new ‘political model’ and to promote a ‘Peking Order’ in Asia and beyond. Xi Jinping’s model has, however, found a worthy adversary in the Coronavirus Disease 2019 (COVID-19); ironically, the coronavirus may have originated in China (it was first identified in Wuhan, China, in December 2019). The global pandemic has affected millions and caused thousands of deaths worldwide, raising, for some, the question: Is this the ‘Community of shared future for mankind’ that Xi’s model of governance was actually promising to the rest of the world? Donald Trump has openly accused China by calling the novel coronavirus a ‘Chinese virus’, which has further dented Chinese image internationally.27 China will find it hard to dismiss criticisms of its poor governance structure and harsh national laws, especially in light of the leadership’s cover-up of Li Wenliang’s early warning about the new virus and his subsequent death.28 In a way, COVID-19 has highlighted the dangers of a Communist model that seeks trade, people-to-people contact and connectivity but is based on suppression of news, information and people’s voice. In fact, the Wuhan virus episode has exhibited how Xi Jinping’s model of centralisation of power has slowed down the decision-making process in the Chinese political system, leading to a paralysis in local level governance within China.29 Nonetheless, China’s public relations machinery, including its Central Propaganda Department, has already started working on a counter campaign to spin a positive narrative about itself vis-à-vis the COVID-19 crisis, though it would not be an easy endeavour this time around.30

China’s post-COVID-19 political trajectory  5 In a nutshell, COVID-19 has prompted three broader challenges for China: First, there is a loss of confidence on Chinese-sponsored schemes, which Beijing will find hard to overcome. Even after the spread of the novel coronavirus slows down, the world at large would still be wary of any immediate engagement with China. An anti-Chinese crusade might fast emerge in Europe and the United States, and the CPC’s model of governance and its approach towards the international community would be under severe scrutiny. More importantly, the pandemic has brought into focus the growing dependence on China of many Asian and developing economies. In short, the gap between China and the rest of the world has become bigger, signalling a serious setback to Xi’s model. Second, the democratic world is, more than ever, strongly contesting China’s cavalier behavioural approach towards other countries. For long, the CPC has been fighting a defensive ideological battle against democratic norms, liberal ideas and human rights. Though the CPC never directly engaged in a determined effort to spread its autocratic functioning outside China, the PLA has been expanding its strategic wings across the IndoPacific by building ports and military bases overseas. Xi’s model has promoted an assertive Chinese posture regarding territorial issues, be it in the South and East China Seas or in the boundary dispute with India. In the post-COVID-19 scenario, such Chinese assertiveness might be challenged. Third, China’s leadership role in global affairs has been brought into question, which it has handled, thus far, without a sense of responsibility and accountability. The Chinese president has been advocating a ‘new type of political party system’ to countries across the world, as an alternative to the Western model of democracy and freedom. This might not be easy anymore for China. While there will be little damage to its leadership stature in absolute terms since it is a Permanent Five (P-5) member in the United Nations Security Council, the comity of nations would expect Beijing to display better signs of solidarity and empathy on critical global governance issues in the future.31 Fourth, China’s economic clout comes from being the key to the global supply chain. It is also the largest consumer of petroleum and other minerals. Irrespective of whether it is an exporter or an importer, China is crucial to preventing the global economy from going into a slump – signs of which are already evident. Indeed, the crisis has forced many countries to think about relocating their manufacturing bases and factory outlets out of China. Trying to convince industries to stay in China will emerge as a greater challenge for the country.

Xi’s post-COVID economic contingency32 According to a recent report by the United Nations Conference on Trade and Development (UNCTAD), the world economy will go into recession, with the ‘likely exception’ of China in the post-COVID period.33 The assertion

6  Jagannath P. Panda and Arthur S. Ding though remains to be validated. On the contrary, China’s economy is likely to suffer in view of the declining trust levels in commercial interaction between China and the rest of the world, following a massive global outrage against Chinese goods. The return of foreign companies from China will also create difficulties in the Chinese supply-chain network, which also does not bode well for its economy. However, it must be conceded that the Chinese economy is no ordinary economy, and hence it might avoid facing severe consequences. Beijing has also long prepared to overcome such a crisis since Xi Jinping took over power in 2012–2013.34 That was the period when the Chinese economy started slowing down, due to underlying stress, and struggled to meet the double-digit growth rate that it used to enjoy at the beginning of this century – what Xi called the ‘new normal’. Nonetheless, it is difficult to predict the future trajectory of the Chinese economy. Following a lockdown across China, many saw a large-scale negative impact on its economy. No evidence, however, was provided to substantiate this claim, as very limited data was made available, such as the declining Purchasing Managers’ Indices (PMIs) based on surveys and plummeting automobile sales: In the first two months of 2020, fixed asset investments in China fell by almost 25 per cent as compared to 2019,35 and this decline included numbers from both private and public sectors. Notably, the COVID-19 impact registered its first decline of almost 13.5 per cent since 1990s in industrial production,36 with further large-scale reductions in sectors such as machinery, textiles and transportation. And, as compared to 2019, industrial exports fell by almost 19 per cent, which is consistent with reports regarding disruption in global manufacturing supply chains. Due to partial and complete lockdowns, Chinese citizens were prevented from engaging in discretionary shopping, which resulted in a sharp decline in domestic sectors of clothing, home products, furniture and building material. Further, over 5 million people lost their jobs in China in the months of January and February 2020 – urban employment rate rose to its highest ever of 6.2 per cent in February.37 The aforementioned data provide a hint of what can be expected in markets in the United States and Europe in the near future. However, new data coming from China are showing an improvement. The PMIs are evaluated on a monthly basis, and anything above 50 is considered to be positive. March 2020 figures by China’s National Bureau of Statistics (NBS) have shown Manufacturing PMI at 52 and Non-Manufacturing PMI at 52.3.38 The COVID-19 pandemic has led investment firms to cut down heavily on their expected growth forecasts; S&P Global Ratings has predicted global growth to be 0.4 per cent in 2020.39 This forecast is a reflection of slowdown in all emerging and developed markets – India suffering the most. In such a scenario, too, the Chinese economy will continue to survive with modest growth at 5 per cent.40 Even if one assumes that the manufacturing

China’s post-COVID-19 political trajectory  7 base will slow down in the post-COVID-19 period because of a lot of antipathy towards China, the services sector – one of the backbones of Chinese economy – will come to its rescue.41 Moreover, under Xi Jinping, China has explored new markets to export its goods and materials, which the BRI currently facilitates. Plus, foreign direct investment has been allowed to reach the interior parts of China, which has helped Chinese authorities to reduce the urban and rural divide. The new areas of economic engagement such as the emerging high-tech manufacturing industries, bio-tech, next generation of information technologies and new energy resources will also help make sure that China remains relevant to the global economy. Why China will not struggle is less to do with its economic growth, and more to do with the systemic structures set by the CPC which allow it to sustain its power. Chinese economy is controlled by the CPC, and the state institutions are its backbone. However, the SOEs, which are mostly involved in expediting commercial contacts with overseas companies and economies, have struggled to perform. Under Xi Jinping, the SOEs have been made accountable, in order to showcase to the public that all is being done to keep the economy in order and, in turn, to bolster the image of the CPC.42 In other words, China’s state transformation is heavily dependent upon internal institutional adjustments. The Chinese state authorities would like to ensure a steady economic growth since any outright economic reform will lead to political difficulties, affecting the CPC’s authoritarian functioning of not disclosing trade data, monetary policy figures and the real status of the Chinese currency in international market.

Xi Jinping’s Pax Sinica dream43 Beijing is not immune to foreign policy challenges in a complex global order. Historically, China has an excellent track record in overcoming domestic and global challenges, from social and political unrests domestically to land and maritime ambitions abroad, as compared to many rising powers.44 The means of responding to such challenges might not always be assuring or convincing for the outside world though, as often Beijing is known to apply oppressive measures to achieve its aims. Because of COVID-19 becoming a global pandemic, political reservations and strategic objections on China and Chinese-sponsored schemes around the world will continue to grow.45 Henceforth, even China’s ‘charmoffensive’ approach of reaching out to countries and international communities for project financing through its BRI schemes and building goodwill through ‘developmental partnerships’ will not be easy.46 Debates, as also conspiracy theories, about the origin of the coronavirus might also rage for some time, and many may choose to blame Beijing in view of its opaque governance system. Regardless of the trajectory of these debates, in the post-COVID-19 order, the gap between China, which is the biggest beneficiary of globalisation, and

8  Jagannath P. Panda and Arthur S. Ding countries and regions that have benefited from having strategic links with Beijing will widen. For China, this would, perhaps, emerge as the biggest unimaginable foreign policy challenge in the twenty-first century. How will Beijing respond to such a situation and what would be China’s future foreign policy graph in a post-COVID order? More importantly, what approach would Beijing pursue towards the United States and European countries including Italy, Germany and France, where COVID-19 has been raging, as also towards its neighbouring countries in Asia? Any forecast on Chinese foreign policy behaviour must start by examining COVID-19’s impact on globalisation. No doubt, the pandemic has challenged globalisation in a way no other crisis has ever before. However, globalisation’s sphere of influence will not be entirely disappearing in the post-COVID-19 order.47 And importantly it still might be an important tool for binding the world together; but it might promote a divided trajectory for the major powers with competing national interests. In a way, it will put China on the defensive, as its foreign policy overtures such as ‘Community of Shared Future for Humanity’ and ‘win-win’ strategy are not likely to work. In other words, countries around the world might find it difficult to overtly accept Xi Jinping’s ornamental rhetoric that is enshrined in China’s foreign policy campaign or the BRI.48 Hence, Beijing’s foreign policy may have a mixture of both assertive and non-assertive shades in the postCOVID-19 order. Interestingly, Xi’s foreign policy might partially return to rely on Deng Xiaoping’s ‘low-profile’ foreign policy stratagem in the near future. It is important to note that unlike the previous Chinese leaderships, Xi Jinping’s foreign policy has been quite active, assertive and action-oriented. His diplomacy became more and more ‘pro-active’ with China’s growing ambitions and multiplying strategic wealth in recent years. Renewed nationalism to reassert China’s maritime and land territories; growing self-confidence on its capability to act as a leader in global forums; and enhanced networks to strengthen China’s place in the Indo-Pacific order have been key to Chinese foreign policy under Xi. Though the larger global community views its foreign policy behaviour less positively, and rather warily, none of the powers except perhaps the United States, have followed a confrontational approach with China overtly. And, in the post-COVID-19 order, too, China’s relations with the United States will continue to be thorny. The Sino-US tensions will not ease down; nor will Donald Trump spare any moment to gain political mileage by attacking China for its irresponsible rise in global affairs in the run up to the 2020 US presidential election.49 In other words, for the US, pushing an anti-China narrative is no longer going to be a difficult enterprise while promoting the claim that an epidemic of this proportion could have been stopped if only China was an open, democratic and transparent nation without revisionist aims.50 The response from the Xi administration would be equally forceful since twenty-first century China is confident enough to respond to US intimidation strongly and is not wary of US supremacy. This was apparent when the Chinese foreign ministry, in

China’s post-COVID-19 political trajectory  9 response to US accusations, held the US military responsible for the spread of the coronavirus. Besides, Beijing is realistic in its assessment of the postCOVID-19 order: It believes that such a situation will neither bring China to its knees internationally nor entirely undermine the influence of the American power.51 In such circumstances, neither a complete ‘decoupling’ nor a hard fight with the United States are complete options for China. Therefore, China would continue to maintain a stronger posture towards the United States and the Sino-US ties will continue to remain strained. A similar Chinese approach would not be replicated towards Europe even though the larger European community will be critical about China, following the massive loss of life in Italy, France and Germany due to COVID-19. This is partly because Europe’s approach towards China, unlike the United States’, has never been aggressive. Europe’s reactions to China’s BRI projects as well as governance matters have never been severe enough even though at times the European Union (EU) has confronted China, mainly on economic and security considerations.52 Another reason is that China does not compete with the EU, but with the United States, for global prominence. A fight with the United States raises the stature of China globally, while a fight with the EU weakens China’s outreach in the region. Therefore, China would pursue a ‘low-profile’ foreign policy towards Europe and try to mend its ties by offering the struggling economies in the region Chinese financial assistance. After all, as must be kept in mind, the future of the BRI’s Silk Road Economic Belt (SREB) rests primarily on how China manages to extend its diplomacy to the larger European community. Hence, Chinese foreign policy towards Europe might witness a continuity with a new level of rapprochement that will be key to China’s outreach in the region.53 In Asia, Beijing might employ a mixture of both assertive and nonassertive approaches. A ‘low-profile’ approach on conflict zones such as South and East China Seas as well as towards boundary disputes with countries such as India cannot be entirely ruled out even though China will exhibit little concession or political flexibility on these issues. The reason for such an approach lies in Beijing’s economic expansion perspective, particularly in view of the Regional Comprehensive Economic Partnership (RCEP). Besides, rebuilding economic ties with Japan, South Korea and India, the three premier economies of Asia, becomes a strategic priority for China at a time when the trade tensions with the United States are likely to intensify further. Above all, it is important to reiterate that the overlying foreign policy objective of Beijing is to promote Pax Sinica, a stable peaceful economic order led by China.

Main highlights of this book This book originates from an international conference on ‘China under Strongman’ held on August 30, 2019, in Taipei. The conference, which was sponsored by Taiwan’s Mainland Affairs Council (MAC),54 discussed how Xi Jinping as a new strongman has shaped China, and what changes have

10  Jagannath P. Panda and Arthur S. Ding been made under him. In the fast-paced, constantly evolving geo-political order, this book has endeavored to cover major developments that shaped the pre-COVID period as well as those that took place during the initial months of the pandemic. The volume tries to answer two of the aforementioned complex issues: 1 What real changes has Xi Jinping brought about in China? 2 What difference have these changes made in the lives of ordinary Chinese people? Compared to other questions, these two questions are relatively easy to address, as many new policies and relevant programmes have been rolled out by Xi in the past several years, and there are voluminous public records of the same. It is, however, not this volume’s purpose to examine Xi’s power, including how he has become another strongman, how strong he is or whether he really is a strongman. Debates over this issue have been widely undertaken. This volume does not aim to discuss the conceptual issue of strongman on comparative basis either. There is no doubt that academically it is important to delve into conceptual and theoretical deliberation of the term strongman in comparative politics; however, this book attempts to provide a comprehensive picture of change.

Outline of the book The volume comprises 13 chapters divided into three sections, which follow the Introduction. The three sections cover changes in domestic politics, economy and diplomacy under Xi, arranged in that order. The book begins by examining domestic politics because, we believe, it lays out and shapes the foundation for changes in other areas – even as Karl Marx stipulates that economics is the base shaping the superstructure of political and legal institutions. Part I In Chapter 1, Willy Wo-lap Lam writes that Xi is obsessed with Mao Zedong’s idea of ideology taking the command over all sectors. This ideology is the imperative of CPC’s chuxin, the original aspirations of being a CPC member. For Xi, chuxin refers to serving the people, realising socialism with Chinese characteristics, boosting the power and efficacy of the party and consolidating the authority of the zhongyang or central party leadership. Xi even attributes the fall of the Soviet Union to the party’s failing grip on ideology. Therefore, under Xi, many of Mao’s ideas have revived. These include cult of personality; pursuits of ideology, thought and thought control; emphasis on autarkic self-sufficiency and on fighting imperialism in economic

China’s post-COVID-19 political trajectory  11 and foreign spheres; and ‘one voice chamber’ on the party and state’. In order to push the ‘one voice chamber’, many mechanisms have been mapped out to boost Xi’s status, including cult of personality, centralisation of authority in Xi’s hands, elimination of collective leadership within the PBSC, elimination of presidential term limit and refusal to appoint successors. In Chapter 2, Drew Thompson’s examination of Xi’s reform and elevation of the United Front Work Department (UFWD) provides further analysis of Xi’s perceptions prior to his ascendancy as the CPC chief, in addition to tracing the UFWD’s history. Xi was particularly concerned about the negative impact of three decades of economic reform in spite of the fact that it had empowered China to become the No. 2 economic power in the world. The core concern was the possible ending of the CPC’s monopoly in the context of rising civil disturbances and mass unrest in different social sectors, as well as lax discipline and corruption in the party. The author’s research points out the UFWD’s two-phase rejuvenation process by Xi. It resulted in an expanded UFWD, along with the incorporation of three government agencies – the Religious Affairs Bureau, the State Ethnic Affairs Bureau and the Office of Overseas Chinese Affairs – into the UFWD. The rejuvenation of the UFWD has played a significant role in leveraging China’s soft power, increasing its influence and asserting its preferences globally. This has led to a potential improvement in the CPC’s ability to gather intelligence on key constituencies of Chinese at home and abroad and enhance effectiveness in providing incentives so that threat to the CPC can be prevented, and CPC’s resilience can be enhanced. In Chapter 3, Jean-Pierre Cabestan explores the measures on society which mirror those adopted in domestic politics under Xi. Since late-2012, the CPC under Xi has decided to adopt a more holistic approach to control the society, underscoring its growing concern about the long-term stability of the regime. Xi calls this holistic approach ‘social governance’, which, on paper at least, ‘encourages and supports the participation of all sectors of the society’ and ‘establishes an open and orderly mechanism under which people can express their grievances’, in order to achieve ‘positive interaction between the government management on the one hand, and social self-management and residents self-management on the other’. However, the reality of social governance is quite the opposite. The party-state has, on the one hand, strengthened its leadership over China’s emerging civil society, particularly Non-Governmental Organisations (NGOs), with a goal of nipping in the bud any burgeoning of independent NGOs, let alone political protest or opposition. Taking advantage of the new digital surveillance technologies at its disposal, it has, on the other hand, intensified its control of citizens as well as the society as a whole. All kinds of digital surveillance-oriented approaches have been introduced, including censorship of social media, active propaganda of core socialist values and official narratives in all social media, social credit system and facial recognition.

12  Jagannath P. Panda and Arthur S. Ding In Chapter 4, Avinash Godbole sees a contradiction of development in China under Xi, while Xi’s policies intensify this contradiction. China has become the number two power economically, but Xi has buttressed the SOEs at the expense of the private sector; insecurity in the domestic front has risen rapidly in China; and spending on internal security has grown in large scale in the past several years. Godbole also wonders if the anti- corruption campaign may actually erode the CPC’s reputation and legitimacy while the party further asserts its control over Chinese society. The author points out that Xi’s policies create new contradictions: China wants to enjoy its democratic space globally but without having it at home; it wants to make a transition to knowledge-driven economy even as it imposes more control on the internet; it wants to make a transition to accountable and inclusive governance but without having a system that allows for open public debates. Part II The economic field is heavily impacted by Xi’s ideologically oriented policies, and Gunter Schubert and Thomas Heberer tackle this issue by examining state–business relations in Chapter 5. They argue that aided by the party-state system, Chinese authorities have undertaken every effort to maintain control over private businesses. But China’s growing private economy, ‘strengthened economic and, arguably, political clout of private entrepreneurs’, over time meant that private businesses had gained some influence before Xi took control of power. The above perception of private entrepreneurs’ influence is probably the parameter by which Xi asserts his control. The most obvious case is the roll-out of mixed reform by Xi, wherein the SOEs can merge with private-owned enterprises, or the state can make investments in the latter. This new programme pushed by Xi sounds like a variant measure of economic nationalisation, a measure adopted in 1956 by the Chinese Government in order to further push for political and economic socialism. In Chapter 6, Tomoo Marukawa examines China’s economy through the lenses of evolving industrial policies and delves into ‘Made in China 2025’ (MIC 2025), a landmark and ambitious project launched under Xi Jinping. He focuses on two elements: China’s desired content rate (domestic production ratio) and streamlining of dispersed industries. He finds that results of industrial policies were mixed at the most. For the automobile industry, the content rate rose to around 80 per cent, the number of producers were reduced, and major producers were formed, while no indigenous brand name producer has been nurtured. The steel industry is still plagued by overcapacity. The mobile phone industry probably is the better performing one with indigenous brand name producers. Some sectors under the MIC 2025 programme have had similar outcomes. For instance, the content rate of China’s industrial robot industry remains

China’s post-COVID-19 political trajectory  13 low, because sophisticated components and spare parts have to be imported and heavy subsidies by China’s central and local governments become negative incentive for indigenous development. For the Integrated Circuit (IC) industry, too, the outcomes are not satisfactory despite massive funding assistance by the Chinese Government; China still heavily relies on imported sophisticated IC chips. There is also a change of priorities in the economic field under Xi, and one that has been emphasised and pushed by him is poverty alleviation – comprehensively build a modestly prosperous society is one of the major elements of Xi Jinping’s Four Cs. Sriparna Pathak, in Chapter 7, focuses on poverty alleviation, along with several important indices, to gauge if the ‘Chinese Dream’ in the economic aspect has been fulfilled. The indices include inequality, unemployment and gross national happiness. There is no doubt that a big stride has been made to alleviate poverty in the past three decades, and Xi is determined to accomplish zero poverty during his term, but this target is overambitious. Improvement in inequality between rural and urban areas looks dim due to the Hukou system, which restricts those residing in rural areas from moving to urban areas. Even in urban areas, income gap between the top 10 per cent and the bottom 10 per cent population is widening. Overall the unemployment rate improved in the first three decades after the economic reform, but new unemployment problems have arisen in the past couple of years due to the trade war between China and the United States. As for happiness, China’s overall performance declined as job security, health care, education and welfare have become unstable and costly. The real problem is the huge gap between high expectations defined by the ‘Chinese Dream’ and reality of the possibilities on the ground. Xi has not ignored the financial aspect, and measures have been taken domestically and externally. In Chapter 8, this theme is examined by Priyanka Pandit, who adopts a poly-heuristic approach. The approach combines both cognitive elements, which looks at the belief system and personality traits of political leaders, and rational choice, which emphasises cost-effect analysis. The author finds contradictions between domestic and external financial measures. Domestically, Xi uses positive heuristics for processing information consistent with his ideological belief in the Mao Zedong thought and Chinese socialism, and its implication is that Xi does not weigh other dimensions to compensate on his political belief. Domestic financial reform by Xi such as the establishment of Financial Stability and Development Committee and China Banking and Insurance Regulatory Commission, both of which signify a tendency to pursue stability, reflects this feature. However, in the global/regional arena, Xi follows rational maximisation rules of decision-making without deviating much from his belief systems. The setting up of the Asian Infrastructure Investment Bank and the New Development Bank exemplifies Xi’s risk averse external approach given that China has gained immensely from its membership of established

14  Jagannath P. Panda and Arthur S. Ding international financial institutes. She concludes that for Xi, most of the criticisms about external actions can trace their roots back to the domestic policies. Part III In Chapter 9, Meng-Chun Liu, Po-Kuan Wu and Chia-Hsuan Wu examine the relationship between economic condition and partnership diplomacy under Xi. Their study draws from data related to China’s economy, technologies and participation in international organisations during two time periods, namely 2005–2012 and 2012–2019, and employs multivariate parametric regression of survival analysis, and reports interesting findings: First, within the regional context, China has been prioritising partnership diplomacy with countries it has diplomatic and economic interests in. That is why the Association of Southeast Asian Nations (ASEAN) holds a special place in Chinese foreign policy. Second, as per its partnership building strategy, China has started developing ties with like-minded countries in specific regions. Third, China has shifted to building ties with advanced countries that have abundant economic as well as science and technology resources. In Chapter 10, Jagannath P. Panda and Eerishika Pankaj discuss the antagonistic ties between the United States and the PRC, which have shaped most of what the present-day international order looks like. At the same time, it is this very relation that also provides us the deepest insight into what the future holds for that very international order. The US naming China as a ‘revisionist’ power and Xi Jinping’s furtive focus on bringing into existence a ‘community of a shared future for mankind’ exacerbated by the ‘Chinese dream’ have become definitive lines demarcating differences between the two global powers. The authors focus on understanding the ties between the US and China from the lens of China’s most powerful leader since Mao himself, President Xi. With control that is absolute, an office term that will likely never end and a vision that covers the seas of the Indo-Pacific to the lands in Africa, Xi’s ascent to power in 2012 changed the trajectory of power parity in Asia and beyond. The chapter studies Xi’s relations with the US under the Obama administration, which marked a decisive shift in US policy towards Asia; Xi’s dealings with the Trump administration with a focus on heightened hostilities and the Indo-Pacific and US initiatives to counter Xi’s ambitious BRI; the future of US-China relations under Xi, analysed especially in light of the coronavirus pandemic, as the move from ‘post-Cold War’ to ‘post-coronavirus’ terminology is going to be one of the defining shifts marked under the guise of the ‘Asian Century’. Although ASEAN’s status ranks high in Xi’s foreign policy, ASEAN has been wary of China’s foreign policy under Xi. This is the main argument in Ian Storey’s analysis. In Chapter 11, he points out that before Xi came to power, China and ASEAN had deepened and broadened their relationship

China’s post-COVID-19 political trajectory  15 politically and economically, while concerns over China’s emergent power and assertive behaviour in the South China Sea had grown. Xi intensified this trend, as well as made the relationship between China and ASEAN qualitatively different from what it was prior to 2012 – the BRI and related programmes no doubt were partly responsible. On the other hand, Southeast Asia’s perception of China has worsened under Xi, as China is perceived to be more nationalistic, politically influential and more willing to flex its military muscles. Storey’s observations are reflected in a survey of elite Southeast Asian attitudes, published by the ISEAS-Yusof Ishak Institute in January 2020. The survey shows that while 79.2 per cent of respondents viewed China as the most influential economic power in Southeast Asia, 71.9 per cent were worried about the country’s growing economic influence. Geopolitically, 38.2 per cent of those surveyed believed that China is a revisionist power intent on turning Southeast Asia into its sphere of influence – only 7.1 per cent saw China as a status quo power and a mere 1.5 per cent as a benign power. Besides, 60.4 per cent had little or no confidence in China’s ability contribute to global peace, prosperity and governance. In Chapter 12, Atmaja G. Baruah examines Xi Jinping’s foreign policy through realist lenses, and questions whether there is any uniqueness to China’s foreign policy. Ostensibly, Baruah points out, Xi portrays China as a benign country that is accommodating of other countries’ interests and often takes the moral high ground. Discourse in this regard includes advocating for new major countries relations with elements such as nonconfrontation/non-conflict approach; respecting core national interests of all countries; building mutual strategic trust; promoting China-centred shared destiny of mankind through the BRI and related programmes; and developing China-oriented regional order excluding non-regional countries. In other words, China has been leveraging its growing power and capabilities to secure dominant status in Asia. In Chapter 13, Mrittika Guha Sarkar analyses military diplomacy under Xi and traces the modernisation of the PLA, which acts as a vital tool for advancing China’s political goals and preserving its national security. She further points out that Xi is prioritising China’s military diplomacy to attain the ‘Chinese Dream’ and national rejuvenation through the strategy of offshore and coercive diplomacy. The launch of the BRI in 2013, China’s attempts to attain complete reunification with Taiwan, its reclamation in the South and East China Seas and its sovereignty claims in Hong Kong all point to the same agenda. Xi’s vision of a ‘new era’ for the PLA, which calls for strengthened resilience, preparedness and combat capabilities, was also witnessed during its spat with the Indian Army in Doklam in 2017. The author asks: To what extent is PLA’s reform and restructuring linked to China’s overall foreign policy in terms of regional connotation as well as China’s neighbourhood strategy? In other words, she questions whether the restructuring of the PLA is associated with its outreach, namely (a) Beijing’s

16  Jagannath P. Panda and Arthur S. Ding regional outlook; (b) the politicking of the PLA over land and maritime territories; and (c) an intense economic outreach policy on connectivity and corridors via the BRI. Thus, the chapter traces the transformation of the PLA through reforms and restructuring under Xi Jinping and argues that it will have wider implications. It further links PLA’s transformation with China’s growing security and foreign policy threats and interests. In brief, the chapters in the book identify two trends under Xi: First, looking to the past, and the second, accumulating wealth and expanding China’s influence aggressively. Xi’s policies and measures actually are not new. In the first several years immediately after the PRC was established, Mao launched many political movements where his decisions were not challenged, the party agencies wielded tremendous power over the state’s counterparts and the society was tightly controlled by the state. To some extent, Xi’s policies and measures actually return to the past. There is no doubt that China’s economy has made tremendous progress in the past four decades, and new accomplishments have created new challenges. Nevertheless, Xi’s approach to tackle the new challenges is to resort to the past than to move along the progressive path. Now, the question is, why does Xi look to the past? Does the inertia of the past shape and constrain his choice? Or does his instinct to continue to dominate power drive him to make this choice? Or is this the only choice that he can have in the context of a Communist institution? Or do all of the stated factors together shape his decision? Another related question is: Can Xi’s choice really bring China new momentum? As Godbole points out that policies and measures adopted by Xi are quite contradictory to what he attempts to accomplish. As for the second trend, Xi’s ambition has been globally felt, and it is probably fair to argue that so far the result of his efforts has been mixed. In other words, on the one hand, the traditional order promoted by Western countries no longer dominates people’s mind. But, on the other hand, coalitions are being formed to compete with as well as to counter China. For example, through joint efforts, the United States and the EU were able to pressure China to make concessions on further opening China’s market, on forced technology transfer and on intellectual property rights. In the end, China’s rise will ultimately depend on how successful its economy is under Xi’s model of governance. China’s first 30 years’ experience post its formation as republic has proved that the practice of looking to the past will not be helpful for growth and innovation in the country. Xi’s choices will not only test this conclusion but also have a serious impact, positive or negative, on China’s global expansion capabilities.

Notes 1 James Doubek, ‘China Removes Presidential Term Limits, Enabling Xi Jinping to Rule Indefinitely’, NPR, March 11, 2018, at sections/thetwo-way/2018/03/11/592694991/china-removes-presidential-term-limitsenabling-xi-jinping-to-rule-indefinitely (accessed April 25, 2020); Wang Xiangwei,

China’s post-COVID-19 political trajectory  17



4 5

6 7



‘How Long Does China’s President Xi Jinping Plan to Hold Power?’ South China Morning Post, March 03, 2018, at article/2135206/how-long-does-chinas-president-xi-plan-hold-power-heres-magic (accessed April 22, 2020). Sudarshan Ramabadran, ‘Xi Jinping: More Mao Zedong than Deng Xiaoping’, The Economic Times, October 23, 2017, at https://economictimes.indiatimes. com/blogs/et-commentary/xi-jinping-more-mao-zedong-than-deng-xiaoping/ (accessed April 22, 2020); also read, Willy Wo-Lap Lam, ‘Xi Jinping Steers China Back to the Days of Mao Zedong’, China Brief, March 5, 2018, at https:// (accessed April 25, 2020). Please read, Alice L. Miller, ‘How Strong Is Xi Jinping?’ China Leadership Monitor, 43, March 13, 2014, at docs/clm43am.pdf (accessed April 22, 2020); Dimitar D. Gueorguiev, ‘Dictator’s Shadow: Chinese Elite Politics under Xi Jinping’, China Perspectives, 2018/1-2, June 2018, pp. 17–26. Willy Wo-Lap Lam, Chinese Politics in the Era of Xi Jinping: Renaissance, Reform, or Retrogression? Routledge, London, 2015, p. xii. For further arguments, please read, Joseph Fewsmith, ‘The 19th Party Congress: Rising in Xi Jinping’s New Age?’ China Leadership Monitor, 55, January 23, 2018, pp. 8–11, at clm55-jf-final.pdf (accessed April 22, 2020); Susan L. Shirk, ‘China in Xi’s ‘New Era’: The Return to Personalistic Rule’, Journal of Democracy, 29 (2), April 2018, pp. 22–36. Nicholas Lardy, ‘Xi Jinping’s Turn Away from the Market Puts Chinese Growth at Risk’, Financial Times, January 15, 2019, at af94-17f8-11e9-b191-175523b59d1d (accessed April 22, 2020). Chris Buckley  and  Paul Mozur, ‘How China Uses High-Tech Surveillance to Subdue Minorities’, The New York Times, May 22, 2019, at https://www.nytimes. com/2019/05/22/world/asia/china-surveillance-xinjiang.html (accessed April 22, 2020); Isobel Cockerell, ‘China’s Oppression of Xinjiang’s Uyghurs: A Visual History’, Coda, March 11, 2020, at (accessed April 25, 2020). ‘China Focus: Xi’s Thought Enshrined in CPC Constitution’, Xinhua, October 24, 2017, at (accessed April 22, 2020); Heike Holbig, ‘The 19th Party Congress: Its Place in History’, China Analysis: China’s ‘New Era’ with Xi Jinping Characteristics, European Council on Foreign Relations, December 2017, p. 3, at https://www. (accessed April 26, 2020). The Three Represents was a significant socio-economic theory enshrined in the CPC constitution at the 16th Party Congress in 2002. According to Chinese scholarship, the aim of implementation of the theory was to facilitate social, economic and cultural progress, which further represented the imperatives of the ‘development of China’s advanced productive forces’, ‘the orientation of the development of China’s advanced culture’ and ‘fundamental interests of the overwhelming majority of the people in China’. The Three Representative theory sought to augment party membership to include private entrepreneurs, redefine its societal role, remodel its core principles and institutionalise the CPC rule. Please read, Jia Hepeng, ‘The Three Represents Campaign: Reform the Party or Indoctrinate the Capitalists’, The Cato Journal, 24 (3), Fall 2004, pp. 261–275; ‘Important Thought of Three Represents written into CPC constitution’, China Daily, November 14, 2002, at content_241254.htm (accessed April 25, 2020).

18  Jagannath P. Panda and Arthur S. Ding


China’s post-COVID-19 political trajectory  19



18 19



century of humiliation China witnessed at the hands of imperialist powers. So, for Xi Jinping, the concept is a medium to rejuvenate the nation, and not to seek hegemony. However, as per Western perceptions, the Chinese Dream is a key medium to enhance China’s stature in the global affairs as a ‘rising superpower’, which could be determined through China’s increasingly assertive efforts to sustain power and control in regions such as Taiwan, Hong Kong, South China Sea and East China Sea. Please see, ‘Xi: Chinese Dream by No Means Hegemonistic’, Xinhua, November 22, 2019, at english/2019-11/22/c_138575924.htm (accessed April 22, 2020); Robert Lawrence Kuhn, ‘Xi Jinping’s Chinese Dream’, The New York Times, June 04, 2013, at html (accessed April 22, 2020); Jeffrey N. Wasserstrom, ‘The Elusive Chinese Dream’, The New York Times, December 26, 2014, at https://www.nytimes. com/2014/12/27/opinion/the-elusive-chinese-dream.html (accessed April 22, 2020). Zhang Jun, ‘How China Can Reach Its Centennial Goal’, Project Syndicate, October 14, 2019, at (accessed April 22, 2020). For more arguments, please read, Jagannath P. Panda, ‘With Xi at Helm Again, China May Become Strong But Less Transparent’, WION, October 25, 2017, at (accessed April 22, 2020). Ibid. This section draws on Jagannath Panda, ‘Five Reasons Why Xi’s ‘Peking Model’ Will Struggle Post-Covid-19’, PacNet Commentary, 19, April 7, 2020, at pdf (accessed on April 22, 2020). The term ‘Peking Order’ rather than “Beijing Model” have been used to avoid any confusion with “Beijing Consensus”. ‘Peking Order’ denotes to a more Sino-centric vision under the CPC which aims to put China at the centre of regional and global governance. Please read, Richard Javad Heydarian, ‘Xi Must Be Obeyed: The New Peking Order’, The Indo-Pacific: Trump, China, and the New Struggle for Global Mastery, Palgrave Macmillan, Singapore, 2020, pp. 93–119. The term ‘Community of Shared Future” has evolved over the years. Initially, it was conceptualised as ‘Community of Shared Destiny’, then modified to ‘Community of Shared Future’ and finally to ‘Community of Shared Future for Mankind’. Read, Charlotte Gao, ‘‘A Community of Shared Future’: One Short Phrase for UN, One Big Victory for China?’, The Diplomat, November 5, 2017, at https:// (accessed April 25, 2020); Zhao Xiaochun, ‘In Pursuit of a Community of Shared Future: China’s Global Activism in Perspective’, China Quarterly of International Strategic Studies, 4 (1), 2018, pp. 23–37; Peter Koenig, ‘China Is Building a Community with a Shared Future for Mankind’, Global Research, November 25, 2019, at china-building-community-shared-future-mankind/5695823 (accessed April 25, 2020); Jun Ding and Hongjin Cheng, ‘China’s Proposition to Build a Community of Shared Future for Mankind and the Middle East Governance’, Asian Journal of Middle Eastern and Islamic Studies, 11 (4), 2017, pp. 1–14, at https:// (accessed April 25, 2020). Yang Jiechi, ‘Study and Implement General Secretary Xi Jinping’s Thought on Diplomacy in a Deep-Going Way  and Keep Writing New Chapters of

20  Jagannath P. Panda and Arthur S. Ding

22 23 24 25





30 31

32 33

Major-Country Diplomacy with Distinctive Chinese Features’, Xinhua, July 19, 2017, at (accessed April 22, 2020). For more arguments, please read, Richard Javad Heydarian, ‘Xi Must Be Obeyed: The New Peking Order’, The Indo-Pacific: Trump, China, and the New Struggle for Global Mastery, Palgrave Macmillan, Singapore, 2020, pp. 93–119. For more arguments, please refer to Jagannath Panda, no. 19. Ibid. The Fourth Plenary Session of the 19th CPC Committee under Xi Jinping pledged to modernise national governance, while giving ideas and innovation the centre stage to improve the national governance system and governance capability in accordance with the principles of Socialism with Chinese Characteristics. For many observers, modernisation of national governance is a harbinger of ‘new era’ for China. Please read, Wang Xiaoguang and Liu Ying, ‘How to Modernize National Governance’, China Daily, November 05, 2019, at http://www.china (accessed April 25, 2020); Bradley A. Thayer and Lianchao Han, ‘China’s ‘Fifth Modernization’ Shows Its Intent to Lead the World’, The Hill, November 29, 2019, at https://thehill. com/opinion/international/471888-chinas-fifth-modernization-shows-itsintent-to-lead-the-world (accessed April 25, 2020). Bradley A. Thayer and Lianchao Han, ibid. Also read, Giancarlo Ella Valori, ‘The Origin of the Four Modernizations and the Current Strategy of President Xi Jinping’, Israel Defense, May 27, 2019, at node/38689 (accessed April 25, 2020). Sanjay Pulipaka and Paras Ratna, ‘COVID-19 and the Mirage of a China-Led International Order’, The Economic Times, March 28, 2020, at https://economic (accessed April 22, 2020). Javier C. Hernandez, ‘The Test a Deadly Coronavirus Outbreak Poses to China’s Leadership’, The New York Times, January 24, 2020, at https://www. (accessed April 22, 2020); Raymond Zhong, ‘As Virus Spreads, Anger Floods Chinese Social Media’, The New York Times, January 28, 2020, at https://www.nytimes. com/2020/01/27/technology/china-coronavirus-censorship-social-media.html (accessed April 22, 2020). Jagannath Panda, no. 19; Keith B. Richburg, ‘Covid-19 Will Permanently Alter China’s Relations with the World’, The Strategist, April 24, 2020, at https://www. (accessed April 22, 2020). Renee DiResta, ‘For China, the “USA Virus” Is a Geopolitical Ploy’, The ­Atlantic, April 11, 2020, at chinas-covid-19-conspiracy-theories/609772/. (accessed April 22, 2020). Elisabeth Braw, ‘Blindsided on the Supply Side’, Foreign Policy, March 04, 2020, at (accessed April 22, 2020); ‘Japan Sets Aside ¥243.5 Billion to Help Firms Shift Production out of China’, The Japan Times, April 09, 2020, at news/2020/04/09/business/japan-sets-aside-%C2%A5243-5-billion-help-firmsshift-production-china/#.XqJettMzZQI (accessed April 22, 2020). This section draws on Jagannath P. Panda, ‘China May Escape Recession’, The Sunday Guardian, April 18, 2020, at opinion/china-may-escape-recession (accessed April 22, 2020). ‘The Covid-19 Shock to Developing Countries: Towards a “Whatever It Takes” Programme for the Two-Thirds of the World’s Population Being Left Behind’, Trade and Development Report Update, United Nations Conference on Trade

China’s post-COVID-19 political trajectory  21

34 35 36


38 39



42 43

44 45 46 47


and Development, March 2020, at gds_tdr2019_covid2_en.pdf?user=1653 (accessed April 22, 2020). Please refer to, Jagannath P. Panda, no. 32. ‘China Fixed Asset Investment’, Trading Economics, at https://tradingeconomics. com/china/fixed-asset-investment (accessed April 22, 2020). Willem Roper, ‘Chinese Economy Hit Hard by Coronavirus Outbreak’, Statista, March 17, 2020, at (accessed April 23, 2020); Jenna Ross, ‘Covid-19 Crash: How China’s Economy May Offer a Glimpse of the Future’, Visual Capitalist, March 26, 2020, at (accessed April 23, 2020). Evelyn Cheng, ‘Roughly 5 Million People in China Lost Their Jobs in the First 2 Months of 2020’, CNBC, March 16, 2020, at china-economy-millions-lose-their-jobs-as-unemployment-spikes.html (accessed April 23, 2020). ‘Indicators’, National Data, National Bureau of Statistics of China, at http:// (accessed April 23, 2020). Paul F Gruenwald, ‘Economic Research: The Escalating Coronavirus Shock Is Pushing 2020 Global Growth toward Zero’, S&P Global Ratings, March 30, 2021, at (accessed April 23, 2020). Maya Balasubramanya, ‘S&P Lowers China’s 2020 GDP Growth Forecast to 5% amid Coronavirus Threat’, S&P Global Ratings, February 06, 2020, at https:// s-p-lowers-china-s-2020-gdp-growth-forecast-to-5-amid-coronavirus-threat56999701 (accessed April 23, 2020). Zhang Jun, ‘Covid-19 Will Not Reduce Global Reliance on China’, Project Syndicate, April 07, 2020, at china-global-economic-position-stronger-after-covid19-by-zhang-jun-2020-04 (accessed April 23, 2020). For more arguments, please read, Wendy Leutert, ‘Firm Control: Governing the State-Owned Economy under Xi Jinping’, China Perspectives, June 01, 2018, pp. 27–36. This section draws on Jagannath P. Panda, ‘Beijing Is at a Pax Sinica Moment Post Covid-19’, The Sunday Guardian, March 28, 2019, at https://www.sunday (accessed April 23, 2020). Brantly Womack, ‘International Crises and China’s Rise: Comparing the 2008 Global Financial Crisis and the 2017 Global Political Crisis’, The Chinese Journal of International Politics, 10 (4), Winter 2017, p. 397. Jagannath P. Panda, no. 43. Ibid. Thomas Wright, ‘Stretching the International Order to Its Breaking Point’, The Atlantic, April 04, 2020, at pandemic-lasts-18-months-will-change-geopolitics-good/609445/ (accessed April 23, 2020). Dipanjan Roy Chaudhury, ‘Covid-19 Pandemic Puts Brakes on Chinese Projects’, The Economic Times, April 06, 2020, at news/international/world-news/covid-19-pandemic-puts-brakes-on-chineseprojects/articleshow/75017723.cms (accessed April 23, 2020); Plamen Tonchev, ‘The Belt and Road after COVID-19’, The Diplomat, April 07, 2020, at https:// (accessed April 23, 2020).

22  Jagannath P. Panda and Arthur S. Ding

Part I

Xi Jinping and communist party of China in retrospection


Xi Jinping restores the ideological imperative so as to boost his own power Willy Wo-lap Lam

Introduction: Xi’s obsession with the chuxin and his Maoist restoration It was the summer of 2019. State President and Chinese Communist Party (CCP) General Secretary Xi Jinping was busy preparing for a military parade on October 1 to mark the 70th anniversary of the founding of the People’s Republic of China (PRC). Elaborate plans for marking the centenary of the establishment of the CCP in mid-2021 are already in the works. The Xi leadership wants to show off China’s latest intercontinental missiles, stealth jetfighters, aircraft carriers and space exploration hardware. Yet in the realm of thought and ideology, the 66-year-old Fifth-Generation ‘princeling’ has been doubling down on the imperative of the chuxin, or fulfilling the party’s ‘original aspirations’.1 The top-priority ideological edict for 2019 was: ‘Don’t forget your chuxin [original aspirations] and firmly remember your mission.’ This call to arms was prominently featured during President Xi’s inspection trip to Inner Mongolia in mid-July. Chuxin, one of Xi’s most used slogans, is a reference to the original goals of the CCP: they include serving the people, realising socialism with Chinese characteristics, boosting the power and efficacy of the party and consolidating the authority of the zhongyang or central party leadership. As Xi stated during his trip, ‘We must firmly bear in mind our chuxin and mission and implement a developmental platform of putting the people as the core [of party work].’ While the paramount leader waxed eloquent on ‘new developmental concepts’, he mainly dwelled on ‘the job of stabilizing growth, pushing forward restructuring [of the economy], buttressing the standard of living and preventing risks’. The CCP Chief noted that the country’s 70 years of achievement had ‘fully proven that we are right in going down the path of socialism with Chinese characteristics’. He also noted that the CCP has won the embrace and support of the people because our party has from beginning to end firmly guarded the chuxin and mission of seeking happiness for the Chinese people and aiming at the great renaissance of the Chinese nation.

26  Willy Wo-lap Lam He boasted that if the party’s 90 million members would safeguard their chuxin, and pledge unquestioned fealty to the leadership, the CCP ‘will remain impregnable and invincible’.2 This chapter looks at how Xi, who had barely finished junior-high school education, has successfully arrogated most of the powers in the party-state-military apparatus to himself by primarily appealing to values associated with the Maoist chuxin. While one major reason behind the inchoate ‘new Cold War’ between China and the US is apparently Washington’s fear of China’s fast-developing economic and technological might, Xi is pushing a ‘back to basics’ line in terms of ideology and statecraft. This means reviving Mao’s insistence that every party member remains a ‘cog’ in the socialist machinery – and that those who resist CCP-defined socialism must be subjected to brainwashing or even harsher punishments. The corollary, of course, is undying loyalty to the patriarchal paramount leader – and this is where Xi most worthily earns his sobriquet as the ‘Mao Zedong of the 21st Century’.3

Xi’s reassertion of the ideological imperative – and the Maoist one-voice chamber Xi’s reassertion of the ideological imperative can best be understood when examined against the institutional reforms introduced in the early 1980s under Deng Xiaoping’s Reform and Open-Door Policy. Having been a victim of Mao’s authoritarian order, Deng immediately after seizing power in late 1978 ordered that there would be no more personality cult – no Mao-like figure to enunciate sacrosanct instructions on things big and small. The general secretary of the party would be a ‘first amongst equals’ within the Politburo Standing Committee (PBSC), meaning that senior cadres have to a certain extent the right to voice their views even against those of the party’s No. 1 cadre.4 Regarding actual policies on political and economic issues, Deng and such of his early disciples as Hu Yaobang and Zhao Ziyang stayed away from ideological extremities and opted for the pragmatist road. As Hu indicated: ‘Practice is the sole criterion of truth.’ (This is against the ‘whateverism’ advocated by Mao successor Huo Guofeng, namely that whatever the late Chairman said and did was correct.)5 Hu’s eminently liberal line was in accordance with Deng’s dictum on buzhenglun, or not being bogged down by ideological controversies – for example, regarding whether a policy was ‘surnamed socialist’ or ‘surnamed capitalist’. As Deng reiterated, the main concern and task of the party had shifted to ‘economic construction’. Hair-splitting over ideological nuances – or the pursuit of ‘pure-upon-pure socialism’ – would hardly be given top priority in this new statecraft.6 Zhao Ziyang, an advocate of a number of Western economic concepts, saw no harm in adopting some of the policies of American economists such as Milton Friedman.7

Xi Jinping and the ideological imperative  27 The immense weight that the crypto-Maoist Xi gave to yishixingtai (thought and ideology) in the polity was laid out in an address to a national meeting on ideology and propaganda held on August 19, 2013. In his talk, Xi gave equal billing to economic work, on the one hand, and upholding politically correct yishixingtai, on the other: ‘The core task of the Party is economic construction.… Pursuits relating to yishixingtai are the Party’s extremely important task.’8 The ultraconservative Beijing Daily added, ‘The fate of the CCP depends on whether it can defend the battlefield of ideology and thought.’9 Xi’s ideology has a lot to do with that of the founding fathers of the CCP, especially Mao. In his now-famous December 2012 talk on the lessons to be drawn from the demise of the USSR, Xi noted that the Communist Party of the Soviet Union (CPSU) collapsed because of its failing grip on ideology: ‘A major factor [behind the CPSU’s downfall] is that their ideals and beliefs were shaken…. They have totally dismissed Soviet history, CPSU history, Lenin and Stalin…. Such all-the-way denigration has led to historical nihilism and the confusion of thoughts.’ In other words, nothing was sacred anymore.10 During an inspection trip to the revolutionary base of Xibaipo, Hebei Province, Xi again underscored the imperative of preserving the political legacy of leaders from Mao downwards. He vowed to ensure that ‘our party will never change its nature, [and] our red mountains and rivers must not be allowed to change color’.11 As this chapter discusses, there are many things in common between Xi and Mao, including ‘thought control’ or brainwashing its citizens on ideological issues; ziligengsheng or some degree of autarkic self-sufficiency in economic policy; and ‘fighting imperialism’ in foreign policy. Yet what Xi wanted most is the authority which Mao exercised successfully, of imposing a ‘one-voice chamber’ on the party and state.12 It was against this background that Xi lost no time in trying to reinstate the authority of Maoism via his controversial liangge buneng fouding lun or the ‘two non-negates theory’. According to the ‘two non-negates theory’, the party should not differentiate (post-1949 CCP) history into the pre-reform period and the post-reform period. Socialism with Chinese characteristics was initiated in the new historical period of reform and opening up, but it was also initiated on the foundation of the basic socialist system already set up [in 1949]… and on which more than twenty years of construction had taken place, he declared in a 2013 speech. Xi indicated that these two periods had ‘dialectical unity’: ‘They should not be arbitrarily cut off from each other – and one period should not be used to negate the other.’13 Xi’s message is that the ideological confusion which has wreaked havoc on the CCP originated from the excessive de-Maoification movement started by Deng and his liberal lieutenants in the 1980s.

28  Willy Wo-lap Lam Since 2012, Xi has postulated ultra-conservative ideas to ensure that orthodox, Maoist values should be preserved even as ‘dangerous’, Westernised ideas should be banished. Even more importantly, schools, newspapers, the internet – as well as what’s going on in the minds of all Chinese – are zhendi or ‘battlegrounds’ that ideological police must conquer and occupy: ‘If we do not occupy the zhendi, other people will do so.’14 Then came the notorious dictum that seven taboo areas must not be broached in schools and the media. The Central Document No. 9, which was disseminated by the CCP General Office in 2013, forbade cadres and intellectuals – and above all academics – from talking about seven ‘untouchable’ topics: universal values, media freedom, civil society, civil rights, aberrations in the party’s history, the ‘crony capitalist class’ and independence of the judiciary.15 While visiting Peking University in mid-2104, Xi noted that ‘the values of young people determine the values of the entire society of the future’: ‘We must ensure that youths have the right kind of values from the very beginning,’ he said. ‘It’s like getting the buttons right when wearing a garment. If the first button is tied correctly, so will the subsequent buttons.’16

Institutional guarantees of Xi’s supreme authority and his drive to impose ideological conformity Xi as ‘chairman of everything’ and the wangyi zhongyang ethos In yet another departure from a major Deng edict – separation of party and government – Xi has centralised policymaking powers in a number of toplevel central commissions (some of these used to be called ‘Central Leading Groups’ before 2018) at the apex of the party. With the exception of a few commissions or groups handling regional affairs – such as the Central Coordinating Group on Hong Kong and Macau Affairs – Xi is the chairman of all of these policy-setting organs.17 The most outrageous instance of this one-upmanship is Xi’s arrogating to himself the leadership of the Central Leading Group on Finance and Economics (CLGFE, subsequently called Central Finance and Economics Commission) soon after the 18th CCP Congress. In a tradition going back to Zhao Ziyang (who was prime minister from 1980 to 1987), the CLGFE had always been headed by the premier of the State Council.18 Having established his unassailable position in the inner sanctum of the party, Xi liberally gave himself superlative titles such as ‘leadership core of the party, highest military commander, the people’s leader, the country’s helmsman and the pathfinder of the people’.19 Xi has introduced a number of norms and conventions to minimise challenges to his supreme status as the avatar of Marxist–Maoist truths. While these norms and conventions cannot be said to contravene the CCP Constitution, they at least run counter to the tradition of dangneiminzhu (‘intra-party democracy’) that former president and general secretary Hu Jintao tried to establish in the

Xi Jinping and the ideological imperative  29 20

mid-2000s. The most obvious power-grabbing convention is that the six other members of the PBSC (not to mention members of the ordinary politburo) must periodically report to the general secretary. This was in early 2019 formally enshrined as the ‘CCP Regulations on requesting permission and reporting on major issues’.21 This practice, which is contrary to the status of the general secretary as ‘first among equals’, started actually in the mid-2010s. In other words, Xi is the undisputed ‘big boss’ in the PBSC and his politburo colleagues are his subordinates. Indeed, in the run-up to the 19th Party Congress in 2017, Xi began to be identified as the hexin or ‘core’ of the party. It must be noted that while Jiang Zemin (general secretary from 1989 to 2002) was known as the ‘core’ of the Third-Generation Leadership, Xi is referred to as ‘core’ period, meaning that he will stay the spiritual and policymaking leader of the entire party for an indefinite time frame.22 In his first five-year term, the party’s Organisation and Propaganda Departments introduced rules and regulations aimed at consolidating Xi’s patriarchal status. For example, cadres and party members are not allowed to wangyi zhongyang, which can be translated as ‘improperly criticising’ the central party authorities as personified by Xi.23 Other cadres were forbidden to break ‘political rules’. This is despite the fact that the term zhengzhi guiju can be found neither in the CCP Charter nor in the regulations laid down by the Central Commission for Disciplinary Inspection. According to Wang Yukai, a professor at the Beijing-based Chinese Academy of Governance, the concept of ‘political rules’ appeared vague and difficult to grasp: ‘It is unclear which kinds of actions can be subsumed under political rules or otherwise.’24 Other ideological and thought control-oriented slogans were introduced apparently in the service of just one person. Take for example, the imperative of the ‘fourfold consciousness’ or ‘four consciousnesses’, namely ‘political consciousness, consciousness of the overall situation, consciousness about the hexin, and consciousness about being in unison [with the hexin]’.25 Then there is the corollary slogan of ‘being in unison [with the core] in four areas’. This means cadres and party members must be in unison with the party central authorities; be in unison with the party’s theories, paths and objectives; be in unison with the spirit of the 18th Party Congress and the Third, Fourth and Fifth Plenums; and be in unison with different decisions regarding reform, development and stability, domestic, foreign and defense policies, and governing the party, the state and the army.26 No less hagiographic was the requirement, introduced in 2017, that CCP members must be involved in the ideological movement awkwardly known as ‘to study two things and to do one thing’. This is a reference to ‘studying the CCP Charter and party regulations, studying the series of talks, and becoming a qualified party member’. The ‘series of talks’ was a reference

30  Willy Wo-lap Lam mainly to the speeches given by Xi after he came to power at the 18th Party Congress.27 In mid-2018, just as Xi was caught in a bitter dispute with the Donald Trump administration over issues including trade, technology and geopolitical contention, National People’s Congress (NPC) Chairman Li Zhanshu, a long-standing Xi confidante, raised yet another ideological imperative so as to boost the paramount leader’s near-absolutist powers. Li, also a PBSC member, urged all cadres and party members to do their utmost to ‘ensure that party central authorities, with comrade Xi Jinping as their core, will have the power to yichuidingyin [call the final shots] and to dingyuyizun [settle differences with utmost authority]’.28 The vesting of so much powers in just one person is more dictatorial than Lenin’s democratic centralism, which at least allows a modicum of debate among the party’s cadres before a policy is finally endorsed by the supreme leader.29 Personnel issues: the Xi Jinping faction makes waves Apart from exploiting the ideological imperative to consolidate his status as the ‘Mao Zedong of the 21st century’, Xi has also made good use of one of the Great Helmsman’s best-known dictums: ‘Power grows out of the barrel of a gun.’ Ideology can only go so far in inculcating obedience to the patriarch if the latter does not maintain a dominant faction within the partystate-military apparatus. When Xi first ascended to the topmost position of general secretary and Central Military Commission (CMC) chairman at the 18th Party Congress, two rival factions dominated the political landscape: the Shanghai Faction led by former President Jiang Zemin and the Communist Youth League (CYL) Clique headed by ex-President Hu Jintao. It was a testimony to Xi’s extraordinary political skills that by the 19th Party Congress in 2017, the Xi Jinping Faction (XJPF) had emerged as the dominant faction with the Shanghai Faction and the CYL Clique very much marginalised. The XJPF consists of the following subsets: (a) Xi’s underlings and cronies from the time when the princeling worked in regional posts in Fujian, Zhejiang and Shanghai from 1985 to 2007; (b) cadres associated with Xi’s home province of Shaanxi; and (c) cadres who went to the same high school and university as Xi.30 It is significant that despite his opposition to the Deng doctrine of the separation of party and government, senior State Council aides who enjoy Xi’s trust after the 19th Party Congress – for example, Vice-Premier Liu He, Chairman of the National Development and Reform Commission He Lifeng, and Commerce Minister Zhong Shan – are bona fide XJPF potentates.31 Xi has used as an excuse the thorough restructuring of the commandand-control apparatus of the People’s Liberation Army (PLA) in December 2015 and January 2016 to install members of the ‘Xi Family Army’ into top echelons of the army, including CMC members. Many of

Xi Jinping and the ideological imperative  31 these officers – who had served in the now-defunct Nanjing Military Region (NMR), which had oversight over Fujian, Zhejiang and Shanghai – knew Xi personally when the latter was serving in Fujian from 1985 to 2002, Zhejiang from 2002 to 2007 and briefly in Shanghai in 2007. For example, the current Head of the Political Work Department General Miao Hua, Commander of the Land Forces General Han Weiguo and the Commander and Political Commissar of the People’s Armed Police, respectively, General Wang Ning and General Zhu Shengling, are all alumni of the former 31st Group Army, which was an NMR unit based in Xiamen, Fujian.32 Xi’s refusal to appoint successors Xi’s refusal to share power is inextricably linked to the issue of leadership succession. Since the president revised the PRC Constitution in March 2018 to abrogate limits on terms of office for the head of state, there has been intense speculation that the princeling intends to stay in power at least until the 22nd Party Congress in 2032, when he will be 79 years old.33 In accordance with the generation-by-generation succession protocol established in the 1980s by Great Architect of Reform Deng Xiaoping, former President Jiang Zemin (born 1926) – the ‘Third-Generation core’ – ceded power to Fourth-Generation leader Hu Jintao (1942) at the 16th Party Congress in 2002. After serving two terms of five years, the latter handed over the reins of power to Fifth-Generation (5G) representative Xi Jinping at the 18th Party Congress in 2012. If Xi were following the CCP’s recent conventions, he as well as his current PBSC colleagues, all of whom hail from the 1950s, would at the 20th Party Congress in 2022 be succeeded by Sixth- Generation (6G) cadres who were born in the 1960s. However, if Xi were to remain party boss until 2032, a rising star born in 1960 would be 72 years old – and therefore four years past the unofficial PBSC retirement age of 68. Thus, 6G movers and shakers already in the current 25-member politburo – for example, Vice-Premier Hu Chunhua (born 1963) and Chongqing Party boss Chen Min’er (1960) – seem to be out of the running to succeed Xi.34 It is true that Xi had after the 19th Party Congress begun to groom Seventh-Generation (7G) cadres, or those born in the 1970s. In the last quarter of 2018, a dozen-odd of these 40-something officials were promoted to key regional positions with vice-ministerial rank. Foremost among them are Liu Jie and Shi Guanghui, both members of the Standing Committee of the Communist Party Committee of Guizhou, and Zhuge Yujie, member of the Standing Committee of the Shanghai Party Committee. Other 7G rising stars included the vice-governor or equivalent of Guangxi, Sichuan, Fujian, Shandong and Jiangsu, respectively, Yang Jinbo, Li Yunze, Guo Ningning, Liu Qiang and Fei Gaoyun.35 At a national conference on party organisation held in July 2018, President Xi pointed out that ‘based on near-term requirements and long-term strategic needs, [leaders] in all regions and departments should nurture a

32  Willy Wo-lap Lam specific quantity of superior young officials’. The paramount leader’s instructions were issued after a politburo meeting held a week earlier, which was devoted to ‘discovering, propagating and elevating high-quality young officials’ for the new era of socialism with Chinese characteristics.36 Since the 22nd Party Congress is still 13 years away – and because 7G officials currently only occupy vice-ministerial level posts – it is too soon to speculate as to who will have the political skills and staying power to take over as the next CCP general secretary. The lack of a clear-cut successor scenario, in turn, would make it easier for Xi to impose his views, including what his critics call his dynastic ideology, on party members.

Xi’s ‘poverty of philosophy’ and signs of discontent against Xi-style ideology Has Xi anything new to offer apart from stoking the flames of nationalism and emphasising ‘party dictatorship’? Xi has a gift for coining high-sounding slogans about the ‘Chinese dream’ – and the supreme role of China in helping to realise the ‘common destiny’ of all mankind. ‘Bringing about the great rejuvenation of the Chinese nation is the greatest dream of the Chinese nation in recent times,’ he said soon after taking power.37 The Chinese dream, Xi indicated, meant ‘the construction of a moderately well-off society, building up a prosperous, strong, democratic, civilized and harmonious modern socialist country’. ‘We should also work with the rest of the world to realize the dream of a world of enduring peace and common prosperity, and to make new and bigger contributions to the peace and progress of humanity,’ he added.38 In other words, the Chinese Dream would mean China would again assume the lofty status of the Middle Kingdom – and a superpower that will rival the powers of the US – in a matter of one to two decades. But what are the concrete benefits that the Chinese dream has brought for ordinary Chinese and the rest of the world. Xi said, “The Chinese dream is, after all, the people’s dream…. We must achieve it by closely relying on the people and we must incessantly bring benefits to the people.” Yet the reality is that most Chinese live under tight party control in an AI-enabled police state apparatus, a ‘perfect dictatorship’ that not even George Orwell could have dreamt of.39 The international dimensions of the ‘Chinese dream’ is incorporated in the Belt and Road Initiative, which is geared towards attaining a ‘community of common destiny’. Yet although the series of intercontinental projects, which will incorporate $1 trillion of investment, has apparently benefited developing countries, Beijing has been accused of using ‘debt trap diplomacy’ to boost its influence over countries ranging from Sir Lanka and Malaysia to Djibouti and Vanuatu.40 At the Third Plenum of the 18th Committee in October 2013, Xi laid out multifaceted plans and policies for ‘comprehensively deepening reforms’

Xi Jinping and the ideological imperative  33 in the economic and social arena. The ‘Decision on Certain Major Issues Concerning Comprehensively Deepening Reform’, (hereafter the Deepening Reform Decision) which was the official statement of the plenum, listed some 60 areas of reform, which ranged from gradually abolishing the hukou (residence permit system) and the one-child policy to the creation of dozens of ‘free trade zones’, where multinationals would be subject to a more liberal interpretation of strictures such as currency controls.41 According to the Deepening Reform Decision, The reform of the economic structure is the salient point of comprehensively deepening reforms. The core question is to handle well the relationship between the government and the market, so that the market can play a decisive role in allocation of resources and in developing the functions of government.42 Yet the Xi leadership emphasised with equal force that throughout the comprehensive and multidimensional reforms, ‘the leadership of the party must be strengthened and improved.’ The Deepening Reform Decision stated, ‘We must fully develop the core function of the party in taking control of the whole situation and coordinating different sectors.’43 Compared to Premier Li Keqiang’s apparently genuine devotion to curtailing the role of the state in the economy, Xi is a firm believer in the party-state’s control of all business units. He has vowed to render the 100 yangqi – or State-Owned Enterprise (SOE) conglomerates that have been given monopolistic powers over key sectors ranging from oil and gas to banking and telecommunications – ‘stronger, bigger and better’.44 The conservative princeling has in particular ruled against ‘subversive mistakes’ in reform. He was referring to pro-market policies that would jeopardise the socialist nature of the party-state.45 When challenged by the Trump administration to adopt legally binding measures to open up the economy to foreign enterprises, Xi has threatened to re-adopt Mao’s ziligengsheng strategy – and even to once again embark on a new ‘Long March’ to protect the prerogatives of the socialist economy.46 Another test of Xi’s ability to formulate progressive ideology is his lifelong rhetorical commitment to some form of ‘rule by law with Chinese characteristics’, or yifazhiguo (running the country according to law). Soon after taking office, Xi, who has a doctor of law (LLD) degree from Tsinghua University, paid homage to the inviolability of the constitution and the laws: ‘No individual or organization is above the constitution. Anyone who acts against the constitution or the law will be held accountable.’47 In October 2014, the Xi leadership devoted for the first time an entire Central Committee plenum to constitutional, legal and judicial issues. The Fourth Plenum of the 18th Central Committee passed the ‘Decision on Certain Major Issues Concerning Comprehensively Advancing Rule of Law’ (hereafter the Rule of Law Decision). The party and state apparatus pledged

34  Willy Wo-lap Lam to establish a system serving ‘the socialist rule of law with Chinese characteristics’ and to build a country under ‘socialist rule of law’ principles.48 Xi vowed that ‘law-based governance’ would protect people’s rights and interests, and that it would allow them to supervise civil servants’ exercise of power. A key thrust of this legal initiative was to give judges more independence and to prevent local cadres from unduly influencing over court rulings. According to the Rule of Law Decision, officials would be given demerits or held accountable if they are found interfering in judicial cases: ‘Officials will be criticized in public notices if they influence judicial activities or meddle in a particular case.’49 Yet the Rule of Law Decision also made it crystal clear that the country should fully support the CCP’s leading role in its quest for rule of law, citing stern party leadership as ‘the most fundamental guarantee’ of the process. It noted that ‘the CCP’s leadership is consistent with the socialist rule of law’ and that ‘the realization of rule of law required CCP leadership’. It also highlighted that since the Constitution has enshrined the principle of the party’s leadership over all aspects of the polity, the party should take the lead in promoting the rule of law; adding that ‘only if the CCP rules the country in line with the law will people’s rights as the master of the nation be realized and the state and social affairs be handled in line with the law’.50 It is significant that judges beginning with the President of the Supreme People’s Court Zhou Qiang have reiterated that ‘judicial cadres’ are required to follow the full instructions of the party leadership.51 In fact, under the time-honoured arrangements within the CCP’s internal-security apparatus, the police, state security personnel, prosecutors and judges all report to the Central Political-Legal Commission, which in turn reports to the Central National Security Commission chaired by Xi Jinping.52 Another example of supposedly grandiose reform initiatives being little more than a front for encouraging ‘party dictatorship’ and boosting Xi’s power was the publication of the ‘Decision on Some Major Issues Concerning How to Uphold and Improve the System of Socialism with Chinese Characteristics and to Advance the Modernization of China’s Governance System and Capacity for Governance’ (henceforth the Fourth Plenum Decision). The Fourth Plenum Decision was a communique issued at the Fourth Plenum of the Central Committee held in October 2019. It stated that by 2049, China would ‘fully realize the modernization of the state governance system and governance capacity’. By that time, the document indicated, the whole society would ‘boost systemic governance, governance according to the law, coordinated governance, [and] yuantouzhili [governance at source]’ so that China’s ‘institutional superiority’ would be even better transformed into state governance capacity.53 However, the communique of the Fourth Plenum paid no attention to ‘responsive institutions or systems’ that emphasise the supervisory or at least participatory role of the people. This is despite the communique having indicated that modernisation of the governance system must incorporate

Xi Jinping and the ideological imperative  35 ‘thought liberation, seeking truth from facts, and upholding reform and innovation’. Its main thrust was ‘upholding and improving the institutions and systems of party leadership… so that party leadership will be applied to all arenas, all aspects and all sectors of state governance’. In fact, the Fourth Plenum Decision gave the impression that the institutions and systems to be modernised are all geared towards boosting party authority: ‘We must improve and resolutely uphold different institutions that safeguard the authority of the central [party authorities] and its concentrated and unified leadership. We must perfect the system of the party’s overall leadership.’ That the role of ordinary party members or citizens is minimal can be seen from the document’s insistence on the ‘major institutional guarantee of [the party’s] self-purification, self-perfection, self-reform and self-enhancement’.54 If the goal of the modernisation of the governance system is the enhancement of one-party dictatorship – and leadership must be exercised in a ‘concentrated and unified’ fashion – then most of the decision-making powers will accrue to party chief Xi Jinping, the acknowledged ‘lifelong hexin or core’ of the party who is expected to rule as general secretary until the 22nd Party Congress in 2032. Indeed, the Fourth Plenum Decision emphasised that modernisation of institutions must dovetail with the goal of ‘the fourfold consciousness’, or ‘political consciousness, consciousness of the entire situation [of the country], consciousness about [obeying the] hexin, and consciousness about seeing in unison with the hexin’. Another goal cited by the Fourth Plenum Decision is that party members must ‘resolutely uphold Xi Jinjing’s hexin status in the party… and resolutely safeguard the authority as well as the concentrated and united leadership of the party central authorities’.55 But if institutional reform means safeguarding the unquestioned authority of a hexin, this is much more akin to Mao-style rule of man rather than modernised institutional administration. Factional opposition to Xi’s one-upmanship Owing to his aggressive power grab – particularly his successful sidelining of party cliques that are not his own – Xi has made considerably more enemies than his predecessors, ex-Presidents Jiang Zemin and Hu Jintao. This has been exacerbated by his penchant to use the anti-corruption weapon as a political tool to take out his enemies. Given his solid control over the army and police, however, few of his many political foes dare to counter-attack.56 That Xi’s position is less than impregnable, however, is illustrated by the fact that for a period of about six weeks in mid-2018, forces within the party – helped by the intelligentsia – had mounted a challenge to Xi’s authority. The pretext was the Xi leadership’s failure to effectively retaliate against Trump’s tariffs as well as Washington’s efforts to thwart China’s high-tech programme and to launch a ‘witch-hunt’ against US-based Chinese ‘spies’. Xi’s critics also doubled down on the supreme leader’s abrogation of term

36  Willy Wo-lap Lam limits for the state presidency in March 2018, which could in theory render Xi ‘Emperor for Life’.57 At least a moratorium was imposed on the relentless personality cult that had been built around Xi since the 19th Party Congress, which conferred upon the dictator Maoist titles such as ‘illustrious core of the leadership’. In July 2018, various cities mothballed portraits and display photos of Xi. The Shaanxi Academy of Social Sciences suddenly ended its research into ‘The Great Wisdom of Liang Jiahe’, a reference to Xi’s innovative ideas and exploits while serving as a student in the Liangjiahe Village during the Cultural Revolution. Xinhua News Agency on July 11 ran an article criticising Hua Guofeng – Mao’s designated successor who was in power for only two years – for cultivating a cult of personality. This was seen as an indirect way of slamming Xi, whose personality cult had rivalled that of Chairman Mao. In a rare departure from routine, there was no reporting about Xi on the front page of the People’s Daily on July 9 – and similarly for three days in June.58 It is a well-established custom within the party that whenever the No. 1 needs extra support, he masterminds a ritualistic biaotai or public declaration of fealty among central and regional leaders in both the civilian and military sectors. Xi confidant Li Zhanshu in July 2018 urged all cadres and party members to do their utmost to ‘ensure that party central authorities with comrade Xi Jinping as their core will have the power to yichuidingyin [call the final shots] and to dingyuyizun [settle differences with utmost authority]’. After NPC boss Li raised the banner relating to yichuidingyin and dingyuyizun, most provincial or mayoral leaders felt uncomfortable about playing the biaotai game. Even well-known sycophants of Xi’s such as the party secretaries of Tianjin and Beijing, Li Hongzhong and Cai Qi, respectively, have not said anything to burnish Xi’s authority.59 Xi also failed to secure public protestations of fealty from members of the top brass.60 It is, however, not easy to identify Xi’s opponents within the party. Yet there is a common denominator which has pulled together anti-Xi forces in the party: the Fifth-Generation princeling’s betrayal of Deng Xiaoping’s reforms. Xi’s over-concentration of powers in his own hands runs against Deng’s insistence on collective leadership; Xi’s emphasis on the party’s tight control of key aspects of the economy has provided an excuse for the Trump administration to ‘punish’ China; and Xi’s renunciation on Deng’s ‘keep a low profile’ foreign-policy dictum has not only resulted in the country’s ‘strategic overdraft’ but provided collaboration to the ‘China threat’ theory – that Beijing is out to wrest world leadership off the hands of the US-led Western alliance. The most potent anti-Xi bloc within the CCP’s top echelons consisted of the descendants of Deng and allied leaders who masterminded the reform programmes in late 1978; they were frustrated by Xi’s rejection of Dengstyle reforms and his apparent re-embrace of Maoism. Take, for example,

Xi Jinping and the ideological imperative  37 an internal speech given by Deng Pufang, Deng’s eldest son, in September 2018. Referring to the past 40 years of reform, Deng said that while reforms begun by his father had met with attacks and difficulties, ‘the pace of historical progress won’t stop. The reforms won’t be shaken in a hundred years.’61 Princelings who do not see eye to eye with Xi have underscored the imperative of drawing the right lessons from the Cultural Revolution: this seemed an indirect casting of aspersions on Xi’s resuscitation of Maoist norms. For example, General Liu Yuan said at a ceremony marking the contributions of his father Liu Shaoqi that ‘our generation has personally gone through the Cultural Revolution – and it must never, never again happen. We must never commit such a mistake again’.62 Other critics of Xi included the offspring of the late party General Secretary Hu Yaobang, a liberal icon whose death on April 15, 1989, ignited the student demonstrations.63 Other victims of the paramount leader’s crypto-Maoist economic measures have also become vocal. The most vociferous protests have come from private firms, who feel that they are being squeezed by the exacerbation of the policy of guojinmintui (SOEs making advances while private firms are beating a retreat). It is understandable that at a time when China’s economy is threatened by what Beijing perceives to be unfair treatment by the US, General Secretary Xi might want to go back to his Maoist roots and sing the praises of autarky. During an August trip to northeastern Heilongjiang Province, Xi re-hoisted the famous Maoist flag of ziligengsheng, or selfreliance, which was a much-used slogan during the Cultural Revolution. While inspecting factories in the northeastern province, Xi reiterated that SOEs should remain the mainstay of the economy.64 Despite their awareness that President Xi is no friend of either market forces or the private sector, businesspeople and liberal economists demonstrated unusual boldness in defending the fruits of 40 years of reform. These anti-Xi views were aired during a September 2018 meeting of the China Economy Forum of 50, a progressive think tank whose founders included Xi protégé Liu He. Duan Yongji, president of Stone Group, one of China’s earliest private enterprises, said at the conclave that ‘non-state firms have played the role of the savior of the country’. ‘Yet we have only been given titles and emblems, but not provisions and ammunition,’ Duan added in apparent reference to the fact that private firms were taxed heavily while being discriminated against when applying for loans from state-controlled banks.65 Veteran economist Wu Jinglian noted at the meeting that the fate of reform depended on the development of the non-state sector. He argued that in the past 40 years, China’s economy had done best ‘when we are committed to the market and the rule of law’.66 The son of Hu Yaobang, Hu Deping, warned against a repetition of the erroneous experiment in the 1950s of gongsiheying, or ‘joint management of state and private companies’. ‘Some non-state firms are being forced to go down the road of gongsiheying,’ he said in September 2018. ‘It will be terrible if this [erroneous idea] were to become a trend.’67

38  Willy Wo-lap Lam

Conclusion: the vacuous ideology of a narcissistic ‘emperor’ By dint of his superb power play – which is buttressed by a world-class police-state apparatus – Xi has emerged as a latter-day emperor-like tyrant whose edicts have the equivalent authority of the law. However, much of Xi’s ideas and platforms is conservative in nature: preserving the perennial ruling party status of the CCP as well as his own power. As Xi put it so well in 2009 when he was vice president, The party’s ruling status is not inherent to the party, nor does it hold good once and for all. Possessing something in the past does not mean possessing it today, and possessing something today does not mean possessing it forever.68 By 2019, the CCP attained the feat of being in power for 70 years, one year more than the former Soviet Union (1922–1991). Yet aside from wielding power in an arrogant and non-democratic manner, Xi has abandoned ideas about political and institutional reforms advocated to various degrees by relatively liberal leaders including Deng Xiaoping, Hu Yaobang and Zhao Ziyang. Even Hu Jintao and Wen Jiabao, who are generally perceived as ‘weak’ leaders, at least demonstrated a modicum of respect for international values including limited regional elections and tolerance for the civil society.69 In 2019, Xi again lived up to his reputation of feeding the nation with nebulous pies in the sky by saying that party members, including leaders of various administrative strata, should treat Communism as their yuanda mubiao (ultimate grand goal): ‘It is wrong to say that Communism is ethereal and unreachable.’70 The problem, of course, is that even Karl Marx had very little to say about what Communism really was. And according to Deng Xiaoping, China would remain at the ‘preliminary stage of socialism’ for more than 100 years. Yet if Xi were really a model Maoist cadre always ‘at the service of the people’, he would have noticed that the China model of growth is being buffeted by powerful headwind. This is despite Xi’s claim, at the 19th Party Congress that the ‘Chinese path and Chinese wisdom’ could serve many nations, particularly developed ones, better than the Western model of laissez-faire economics coupled with universal suffrage.71 The CCP’s claim to legitimacy – boosting the people’s standard of living – is jeopardised by slowing growth. Even assuming that official statistics are credible, Chinese Gross Domestic Product (GDP) in the second quarter of 2019 grew yearon-year by only 6.2 per cent, the lowest in 27 years.72 The country is still dependent on government injections – particularly state input into infrastructure, real estate and related fields – to generate enough economic expansion so as to ward off massive social unrest. New growth poles such as high technology and consumer spending have yet to yield impressive results.

Xi Jinping and the ideological imperative  39 The Made in China 2025 programme has been badly hit by America’s boycott on such big-name Chinese tech multinationals as ZTE and Huawei. Consumption has been hurt by high household debt, which in late 2018 was a gargantuan 52 per cent of GDP.73 The number of ‘mass incidents’ such as demonstrations and protests was estimated to be over 150,000 in the early 2010s.74 In the final analysis, the opposition to Xi comes not only from cadres disgruntled by his lust for power and his penchant for imposing a Maoist one-voice chamber on medium to senior cadres. There are also fears that Xi-style ideology may not go very far in integrating the Chinese economy and the Chinese sociopolitical reality with 21st global norms. If the authority of the party were to be truncated even as social instability balloons, all cadres and party members stand to lose. And they find little comfort in Xi’s large-scale restitution of Maoist ideology – and his insistence that ideology is as important as economic construction. After all, if conservative ideology is resurrected on a large scale mostly to serve the personal ambition of a would-be life-long emperor, the already tattered mandate of heaven of the party could be dealt a body blow.

Notes 1 Cited in ‘A Compilation of Xi Jinping’s Major Expositions on “Don’t Forget the Initial Aspirations and Firmly Remember the Mission”’,, June 30, 2019, at (accessed February 27, 2020). 2 See ‘Xi Jinping Inspects Inner Mongolia and Passes Instructions on Starting the Thematic Education on “Don’t Forget the Initial Aspirations and Firmly Remember the Mission”’, Xinhua, July 16, 2019, at politics/2019-07/16/c_1124761316.htm (accessed February 27, 2020). 3 For a sampling of recent works on the ideology and statecraft of Xi Jinping, see, for example, Suisheng Zhao, ‘Xi Jinping’s Maoist Revival’, Journal of Democracy, 27 (3), July 2016, pp. 83–97; Willy Wo-lap Lam, ‘Xi Jinping’s Ideology and Statecraft’, Chinese Law and Government, 48 (6), 2016, pp. 409–417; Kerry Brown and Una Aleksandra Bērziņa-Čerenkova, ‘Ideology in the Era of Xi Jinping’, Journal of Chinese Political Science, 23 (3), September 2018, pp. 323–339; Michael A. Peters, ‘The Chinese Dream: Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era’, Educational Philosophy and Theory, 49 (14), 2017, pp. 1299–1304, at 1857.2017.1407578 (accessed February 27, 2020); Joseph Fewsmith, ‘The Challenges of Stability and Legitimacy’, in Robert S. Ross and Jo Inge Bekkevold (eds.), China in the Era of Xi Jinping, Georgetown University Press, Washington DC, 2016, pp. 92–116; and Jeffrey Bader, ‘How Xi Jinping Sees the World…and Why’, Asia Working Group Paper 2, Brookings Institution, February 2016, at bader.pdf (accessed February 27, 2020). 4 For a discussion of Deng’s institutional reforms such as a collective leadership where the general secretary is but ‘first amongst equals’, see, for example, Willy Wo-Lap Lam, Chinese Politics in the Era of Xi Jinping, Routledge, London, 2015, pp. xii–xiv

40  Willy Wo-lap Lam 5 For a discussion of Hu Yaobang’s theory on ‘practice is the sole criterion of truth’, see, for example, Michael Schoenhals, ‘The 1978 Truth Criterion Controversy’, China Quarterly, 126, June 1991, pp. 243–268. 6 For a discussion of Deng Xiaoping’s buzhenglun theory, see, for example, Weiwei Zhushan, ‘What Are the Implications of Deng Xiaoping’s “buzhenglun”?’ People’s Daily, April 24, 2013, at c241220-21265726.html (accessed February 27, 2020). 7 For a discussion of Friedman’s meeting with Zhao Ziyang, see, for example, Jilian Gewirtz, ‘The Little-Known Story of Milton Friedman in China’, Cato Policy Report, 39 (5), September/October 2017, at (accessed February 27, 2020). 8 Cited in ‘Xi Jinping Gives Important Address at National Conference on Ideological and Propaganda Work’, Xinhua, August 20, 2013, at (accessed February 27, 2020). For a discussion of the priority that Deng Xiaoping gave to economic construction, see, for example, ‘One Central Task, Two Fundamental Points’, People’s Daily, September 24, 2008, at t20080924_16904185_1.shtml (accessed February 27, 2020). See also Barry Naughton, ‘Deng Xiaoping: The Economist’, China Quarterly, 135, September 1993, pp. 491–514. 9 Cited in ‘The Fate of the CCP Depends on Whether It Can Defend the Battlefield of Ideology and Thought’, Beijing Daily, September 3, 2013, at http://news.east (accessed February 27, 2020). 10 Cited in ‘Xi Jinping Urges the CCP to Draw Lessons from the Downfall of the Soviet Party’, BBC Chinese Service, February 16, 2012, at zhongwen/simp/china/2013/02/130216_china_xi_warning.shtml (accessed February 27, 2020). See also ‘Xi Jinping’s Internal Speech Is Exposed: There Is Not a Single Macho Figure within the Soviet Party’,, March 7, 2013, 11 Cited in ‘Xi Jinping: Our Red Mountains and Rivers Must Not be Allowed to Change Color’, Chinese Law and Government, 48 (6), 2016, pp. 441–442. 12 For a discussion of how Xi has revived the ‘one voice chamber’ and other Maoist institutions, see, for example, Willy Wo-lap Lam, ‘Xi Jinping Uses “Traditional Culture” to Launch a New Cultural Revolution’,, November 2, 2016, at (accessed February 27, 2020). 13 Cited in Guo Junkui, ‘Xi Jinping’s “Two Non-Negates” Is a Scientific Theory for Realizing the ‘Chinese Dream’, People’s Daily, May 10, 2013, at http://cpc. (accessed February 27, 2020). See also ‘Experts Explain Xi Jinping’s ‘Theory of Two Non-Negates,’ Saying This Is a Sign That the Party Is Not Nervous about Being Criticized’, Guangming Daily, May 7, 2013, at 4793022.shtml (accessed February 27, 2020). 14 Cited in ‘We Must Boost Our Consciousness about Battlefields’, People’s Daily, November 9, 2013, at html (accessed February 27, 2020). 15 See Raymond Li, ‘Seven Subjects off Limits for Teaching, Chinese Universities Told’, South China Morning Post, May 10, 2013, at china/article/1234453/seven-subjects-limits-teaching-chinese-universities-told (accessed February 27, 2020). 16 Cited in ‘Xi Jinping: A Man’s Buttons Must Be Buckled Correctly from the Beginning’, Inner Mongolia Daily, June 8, 2017, at n1/2017/0608/c40531-29327157.html (accessed February 27, 2020).

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28 29






“Four Consciousnesses” so as to Establish the “Fourfold Self-Confidence”’, Tianjin Daily, August 5, 2017, at (accessed February 27, 2020). Cited in ‘The General Secretary Has Stressed Many Times the Deep Meaning of “The Consciousness of Being in Unison”’, People’s Daily, November 3, 2016, at (accessed February 27, 2020). Cited in ‘The Chinese Communist Party Central Committee Issues “Opinion on Implementing the Normalization and Institutionalization of the Studying and Inculcation of ‘Learning Two Things and Doing One Thing’” Xinhua, March 28, 2017, at (accessed February 27, 2020). Cited in ‘Li Zhanshu Chairs Collective Learning Session of the NPC Party Committee and Gives Talk’, Xinhua, July 17, 2018, at http://www.chinanews. com/gn/2018/07-17/8570416.shtml (accessed February 27, 2020). For a study of the tradition of ‘democratic centralism’ within the Chinese Communist Party, see, for example, Wang Chuanzhi, ‘Democratic Centralism: The Core Mechanism in China’s Political System’,, November 7, 2013, at (accessed February 27, 2020). See also Guan Yang, ‘China Footprint: How Democratic Centralism Works’,, September 17, 2017, at news/34676a4d35557a6333566d54/share_p.html (accessed February 27, 2020). For a study of the emergence of the Xi Jinping Faction and its relations with other cliques, see, for example, Bo Zhiyue, ‘Factional Politics in the Party-State Apparatus’, in Willy Wo-Lap Lam (ed.), Routledge Handbook of the Chinese Communist Party, Routledge, London, 2018, pp. 122–134. See also Bo Zhiyue, ‘China’s Fifth-Generation Leaders: Characteristics of the New Elite and Pathways to Leadership’, in Robert S. Rosss and Jo Inge Bekkevold (eds.), no. 3, pp. 3–31. For a discussion of Liu He and his relationship with Xi Jinping, see, for example, Tom Mitchell, ‘Liu He, the Man in Charge of China’s Economy’, Financial Times, March 23, 2018, at (accessed February 27, 2020). For a discussion of Xi’s protégés in the PLA, see, for example, Xiao Shan, ‘The Xi Family Army Has Seized Control of All Military Power before the 19th Party Congress’, Radio French International, October 14, 2017, at http://cn.rfi. fr/%E4%B8%AD%E5%9B%BD/20171014-19%E5%A4%A7%E5%89%8D%E4% B9%A0%E5%AE%B6%E5%86%9B%E6%8E%8C%E6%8E%A7%E4%BA%86 %E6%89%80%E6%9C%89%E5%86%9B%E6%9D%83%E5%86%9B%E5%A7% 94%E4%B8%8E5%E5%86%9B%E7%A7%8D (accessed February 27, 2020). See also ‘The Xi Family Army Has Grabbed Control of the Army in the Course of Reshuffles before the 19th Party Congress’, Liberty Times (Taipei), October 17, 2017, at (accessed February 27, 2020). Cited in Jun Mai, ‘Xi Jinping Is Changing the Constitution, But What’s His Endgame?’ South China Morning Post, March 11, 2018, at https://www.scmp. com/news/china/policies-politics/article/2136676/xi-jinping-changing-constitutionwhats-his-endgame (accessed February 27, 2020). See also Willy Wo-lap Lam, ‘Xi Jinping Forever’, Foreign Policy, April 1, 2015, at https://foreignpolicy. com/2015/04/01/xi-jinping-forever-china-president-term-limits/ (accessed February 27, 2020). For a discussion of the relative prospects of 6G and 7G cadres, see, for example, Choi Chi-yuk, ‘Will China’s Leadership Succession after Xi Jinping Skip a Generation?’ South China Morning Post, January 5, 2019, at https://www.scmp.

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36 37 38 39


41 42 43


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com/news/china/politics/article/2180788/will-chinas-leadership-successionafter-xi-jinping-skip (accessed February 27, 2020). Cited in Willy Wo-lap Lam, ‘China’s Seventh-Generation Leadership Emerges onto the Stage’, China Brief, April 9, 2019, at chinas-seventh-generation-leadership-emerges-onto-the-stage/ (accessed February 28, 2020). Cited in ‘Xi Jinping Talks on How to Nurture Young Cadres’, China News Service, July 10, 2018, at (accessed February 28, 2020). For an exposition of Xi’s views on the Chinese Dream, see, for example, ‘General Secretary Xi Jinping Explicates the “Chinese Dream”’, Chinese Law and Government, 48 (6), 2016, pp. 477–479. Ibid. Cited in Stein Ringen, The Perfect Dictatorship: China in the 21st Century, Hong Kong University Press, Hong Kong, 2016. For a discussion of Xi’s police-state apparatus, see, for example, Willy Wo-lap Lam, ‘Beijing Harnesses Big Data & AI to Perfect the Police State’, China Brief, July 21, 2017, at https://jamestown. org/program/beijing-harnesses-big-data-ai-to-perfect-the-police-state/ (accessed February 28, 2020). For a discussion of the Belt and Road Initiative and the ‘debt trap diplomacy’, see, for example, Lucy Hornby and Archie Zhang, ‘Belt and Road Debt Trap Accusations Hound China as It Hosts Forum’, Financial Times, April 24, 2019, at (accessed February 28, 2020). See also Nikki Sun, ‘Xi Pledges Belt and Road Reboot Amid Rising “Debt Trap” Concerns’, Nikkei Asian Review, April 27, 2019, at https:// (accessed February 28, 2020). See ‘The Decision on Major Issues Concerning Comprehensively Deepening Reforms in brief’, China Daily, December 16, 2013, third_plenary_session/2013-11/16/content_30620736.htm (accessed May 8, 2020). Ibid. For a discussion of Xi’s concept of party-led reforms, see, for example, ‘Xi Jinping Raises for the First Time the Two Orientations of Reform’, People’s Daily, April 19, 2016, at html (accessed February 28, 2020). For a discussion of the emphasis Xi has placed on yangqi, see, for example, Nectar Gan, ‘Xi Says It’s Wrong to “Bad Mouth” China’s State Firms … But Country Needs Private Sector as Well’, South China Morning Post, September 28, 2018, at (accessed February 28, 2020). See Xi Jinping, ‘Subversive Mistakes Must Not Be Made over Fundamental Issues’, ­ China News Service, October 8, 2013, at 10-08/5347578.shtml (accessed February 28, 2020). Cited in ‘Xi Jinping: A New Long March: Let’s Start All Over Again’, CCTV, May 22, 2019, at (accessed February 28, 2020). For a discussion of Xi’s views on the law and relative judicial independence, see, for example, ‘Compilation of Xi Jinping’s Expositions on Rule of Law’, Chinese Law and Government, 48 (6), 2016, pp. 468–475. See ‘CCP Central Committee Decision on Certain Major Issues Concerning Comprehensively Advancing Rule of Law’, Xinhua, October 28, 2014, at http:// (accessed February 28, 2020).

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Xi Jinping and the ideological imperative  45






for [Giving Xi] the Power to be the Final Arbiter, But Few People Have Seconded Li’, Radio French International Chinese Service, July 24, 2018, at http:// %E4%B9%A6%E5%A4%A7%E5%96%8A%E5%AE%9A%E4%BA%8E%E4 %B8%80%E5%B0%8A-%E6%9A%82%E6%97%B6%E6%B2%A1%E5%87% A0%E4%BA%BA%E8%B7%9F%E8%BF%9B (accessed February 28, 2020). See also Zong Wi, ‘Liu Qi Chairs Meeting of the Standing Committee of the Jiangxi Communist Party and Plans Economic Work for the Second Half of the Year’, Jiangxi Daily, July 24, 2018, at (accessed February 28, 2020). In mid-August 2018, Xi Jinping called a meeting of the PLA top brass on the subject of ‘party construction within the army’. The commander-in-chief called upon military officers to ‘uphold the party’s absolute leadership over the army’. Although Xi seemed to be asking top generals to rally around him as the unchallenged leader of the country’s military and police forces, there was a surprising lack of senior generals joining the biaotai (show your allegiance) ritual. PLA officers who went on the record seconding Xi’s speech included, for example, Deputy Political Commissar of the Southern Theatre Command Bai Lu, Deputy Secretary of the PLA Commission for Disciplinary Inspection Yang Chengxi and the Political Commissar of an unspecified division of the Rockets Forces, Zhang Youxiang. These officers could not be called members of the top brass. See, ‘Xi Jinping Takes Part in the CMC’s Conference on Party Construction and Gives Major Speech’, Xinhua, August 20, 2018, at (accessed February 28, 2020). See also, ‘Firm up the Army Spirit by Following the Party; Open Up the New Situation of Strengthening the Army and Revitalizing the Army: Xi Jinping’s Important Talk at the CMC Conference on Party Construction Has Elicited Strong Reaction from the Entire Army and People’s Armed Police’, CCTV, August 23, 2018, at 3S08Pptgiqtl180823.shtml (accessed February 28, 2020). Cited in ‘The Internal Speech of Deng Pufang, the Son of Deng Xiaoping, Is Revealed at a Sensitive Movement’, (Beijing), October 23, 2018, at (accessed February 28, 2020). Cited in Liu Yuan, ‘One Should Not Trip Over the Same Boulder Twice: We Should Never Make the Mistake of the Cultural Revolution’, Hong Kong Economic Times, August 20, 2018, at B8%80%E5%A1%8A%E7%9F%B3%E4%B8%8D%E8%83%BD%E7%B5% 8 6 % E 5 % 8 5 % A 9 % E 6 % AC % A 1% 2 0 % E 5 % 8 A% 8 9 % E 5 % B 0 % 91% E 5 % A 5 % 87 % E 5 % A D %9 0 % E F % B C %9A% E 5 % 8B % BF % E 5 % 86%8D%E7%8A%AF%E6%96%87%E9%9D%A9%E9%8C%AF (accessed February 28, 2020). For a discussion of Xi’s much-worsened relationship with Hu Deping, son of Hu Yaobang, see, for example, Gao Xin, ‘Blackening Out Deng Pufang and Bitterly Criticizing Hu Deping: Xi Jinping Masterminds Counter-Attack toward the “Rightist Wing” of the Princelings’, Radio Free Asia, November 5, 2018, at (accessed February 28, 2020). See also Edward Wong and Jonathan Ansfield, ‘Many Urge Next Leader of China to Liberalize’, The New York Times, October 21, 2012, at (accessed February 28, 2020). For a discussion of Xi’s obsession with the Maoist philosophy of ziligengsheng, see, for example, ‘What’s Uppermost in Xi Jinping’s Mind as Seen from His New Year Address’, Xinhua, January 1, 2019, at xxjxs/2019-01/01/c_1123933810.htm (accessed February 28, 2020).

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Xi Jinping’s reform and rejuvenation of the United Front Work Department Drew Thompson

Introduction The United Front Work Department (UFWD) is a Chinese Communist Party (CCP) organ responsible for managing the party’s relations with a diverse range of Chinese citizens and overseas Chinese who are not party members. From its humble beginnings in the caves of Yanan, the UFWD has become one of the most effective tools for expanding the CCP’s influence amongst non-party members within China, as well as overseas Chinese abroad. This chapter will review the history of the UFWD with its close association to the CCP’s senior-most leaders, review its decline during the Mao years and analyse the elevation, expansion and rejuvenation of the UFWD since Xi Jinping was appointed general secretary of the Communist Party in 2012.

Revolutionary period history of the United Front1 The origins of the United Front date back to the earliest days of the civil war, when the Soviet Union, working through the Communist Internationale pressed the newly formed CCP, which numbered in the hundreds of members in the 1920s, to engage with non-party members as a means to expand influence amongst urban workers to undertake class struggle against feudal capitalists in line with Soviet doctrine. Efforts between the Kuomingtang (KMT) and the CCP to join forces against the invading Japanese occurred in the first United Front from 1924 until Chiang Kai-shek purged the Communists in 1927. The CCP lacked a specialised organ or department to manage external engagement with other parties until the second United Front was initiated in 1937. The first United Front Work Group was formed by the CCP’s politburo in December 1937 to engage the KMT in their bastion at Wuhan in the depths of the Japanese invasion and occupation of China. The effort to join with the KMT in a united front with Japan failed, but the bureaucracy that it spawned was quickly institutionalised and expanded.

48  Drew Thompson In 1938, from its sanctuary in Yanan, the CCP’s Central Committee adopted the ‘Decision on Temporary Organizational Organizations of Party Committees at All Levels’ (‘关于各级党委暂行组织机构的决定’) requiring that UFWDs should be established under party committees at all levels of government administration, down to the district level – a structure that remains intact to this day. On January 5, 1939, the Central United Front Department (中央统一战线 部) was founded by the Central Committee, with instructions following six weeks later that ‘all bureaus, provincial committees and special committees’ quickly establish UFWDs, tasking them to ‘investigate and study the situation of various parties, the army, and ethnic minorities’. Mao Zedong’s Soviet-backed rival, Wang Ming, was put in charge of overseeing the department’s work. Within a year, the Central UFWD became functional, communicating with local officials under its own name, establishing policies and guiding the work of subordinate organs. By 1943, the UFWD established five departments: General Affairs Department; (总务科) Friends of the Party (友党科); Friends of the Army (友军科); Non-Party Cadre Department (非党 干部科); and United Society Department (社会统战科). The following year, the Central City Work Department (中央城市工作部) under the UFWD was set up to conduct work behind enemy lines in non-CCP controlled urban areas. In 1945, as Wang Ming’s influence waned and Mao’s power grew, the politburo determined that Mao’s ally Liu Shaoqi should play a greater role in United Front work, appointing him to head the Central City Work Department, which subsumed the other five departments, and subsequently the entire United Front operation under his control. Following Japan’s surrender in September 1945, the Central City Work Department reorganised under Zhou Enlai’s leadership to lead the CCP’s effort to undermine the KMT in areas it controlled, including tailored campaigns targeting farmers, women and anti-Communist ‘diehard’ KMT soldiers. As the civil war with the KMT raged on, in April 1948, Zhou Enlai led CCP members to a new base in Xibaipo in Hebei province, establishing the Central City Work Department offices in a small village nearby. Later that year, the Central City Work Department was reorganised and renamed the UFWD, enabling it to manage the process to establish the Chinese People’s Political Consultative Conference (CPPCC, founded in September 1949); begin outreach abroad; lead efforts to mobilise urban workers in liberated areas; and work and coordinate with minority groups, non-party democratic groups (政权统战) and ‘Fraternal Eastern Parties’ (东方兄弟党) referring to the Communist and socialist parties in North and Southeast Asia. After the founding of the People’s Republic of China in 1949 and the organisation’s relocation to Beijing, Zhou Enlai declared that the United Front Work Group’s core mission was to ‘understand the situation, grasp policy, adjust relationships, and arrange personnel’ (了解情况、掌握政策、调 整关系、安排人事).

Xi Jinping and the United Front  49

Post-liberation cycles of decline, rejuvenation and decline Historically, the UFWD was both a critical means for the CCP to engage, influence and co-opt (where possible) outside parties, and a critical bureaucratic resource that CCP leaders sought to control and use to bolster their power in the midst of rivalry and infighting. In the Yanan period, the United Front was a theatre for competition between Mao and his rival, Wang Ming, who was backed by the Soviets. Wang’s control of the United Front gave him channels to the Soviets which he could exploit for his effort to hold power, until Mao’s politicking (and Wang’s extended stay in the Soviet Union in the 1930s and long absences from Yanan to undertake second United Front work with the KMT) undermined him internally until he was denounced in the Yanan rectification campaign orchestrated by Mao. Likewise, other top leaders vying to succeed Mao or remain in proximity to the centre, including Liu Shaoqi and Zhou Enlai, were drawn to United Front work. Following liberation, the CCP shifted from co-habitation and co-option of non-party groups to outright hostility when the process of land reform and ideology of class struggle dominated the CCP’s nation building efforts. United Front work became a lower priority and the organisation withered, greatly reducing in political and bureaucratic importance. Australian scholar and United Front expert Gerry Groot noted that Mao’s disinterest in United Front work evolved into outright distrust of United Front leadership: To succeed, United Front cadres have to be able to make friends with those who are not the Party’s natural allies, and interpret and translate Party policy to them in a way that can win them over. It can be a tricky balancing act with high stakes: the Party has long been wary of United Front cadres being influenced by their targets rather than the other way round. During the anti-Rightist Campaign of the 1950s, the Party deemed then UFWD head, Li Weihan, to be politically unreliable and he became one of the movement’s victims, for example. The anti-Rightist purge put a damper on United Front work for almost two decades between 1957 and Mao’s death in 1976.2 Following Mao’s death and Deng Xiaoping’s emergence as the leader of the CCP, the United Front became relevant once again as a means to reach out to overseas Chinese, particularly the populations of Hong Kong and Taiwan, to encourage them to return to the mainland with their capital and expertise to develop the economy in support of Reform and Opening. As the economy increasingly liberalised and more and more citizens were no longer working in state-owned enterprises under the planned economy, the UFWD became a key mechanism to reach out and manage the party’s relationship with non-party elites, intellectuals, as well as religious groups and ethnic minorities.

50  Drew Thompson United Front work was not without its perils during the Deng Xiaoping era either, as cadres responsible for engaging with students and intellectuals became caught up in protest politics in 1989. The then head of the UFWD, Yan Mingfu, was responsible for negotiating with students, famously offering himself up as a hostage, before he was sacked following the June 4 crackdown.3 During the Jiang Zemin and Hu Jintao era as Reform and Opening continued to develop, the UFWD conducted its work with little fanfare, adapting to the changing social and political environment by incrementally expanding outreach to key groups outside the party at home and amongst overseas Chinese communities abroad who played a particularly important role in bringing capital and technical expertise to mainland China in the early stages of Reform and Opening.

Resurgence under the new era of Xi Jinping The post-Mao era can be regarded as a relatively unremarkable period for the UFWD until Xi Jinping’s rise to power. The UFWD remained an important CCP organ operating in relative obscurity, overseeing the work of myriad associated organisations with higher, more public profiles, including the Chinese People’s Consultative Congress, the non-Communist democratic parties and a large network of friendship and business associations. The UFWD preferred working in the shadows, like many party organs. The organisation was by no means morbid, however. It evolved slowly, making incremental changes with the times, but without the political drama or dynamism of the revolutionary period. The post-1989 period was particularly dull, with one scholar stating, ‘Although the UFWD held 20 meetings between 1995 and 2006, no significant conference occurred.’4 Xi Jinping’s ascension to the highest ranks of the party at the 18th Party Congress in 2012 dramatically changed the fortunes and status of the UFWD, but Xi’s vision and the intellectual groundwork for its elevation was long nascent. In 1995, as party secretary of Fuzhou across the Strait from Taiwan, Xi Jinping published an essay titled ‘Establishing the Concept of “Great Overseas Chinese Affairs”’ (‘“大侨务” 观念的确立’) in a prominent party journal, indicating the importance he placed on leveraging Fuzhou’s proximity and cultural connections between Taiwan and Fujian Province to further its development. Underscoring his belief in the value of UFWD work, he wrote: We believe that in the new period overseas Chinese affairs work must break through [defined] areas and borders, and step beyond the scope of overseas Chinese affairs agencies, making it into an important task for the party and each level of government, so that all of society together attends to and participates in this important task.5 Xi’s appreciation for the UFWD was possibly imparted by his father. The former head of the UFWD, Yan Mingfu, who was purged in 1989, wrote

Xi Jinping and the United Front  51 an essay noting that Xi Jinping’s father, Xi Zhongxun, was the chair of the United Front Leading Small Group (LSG) formed in 1986, observing that the elder Xi stated that he spent 70 or 80 per cent of his time on United Front work while he served on the politburo, indicating how important the duty was. While it is unclear if Xi Jinping also committed such a significant portion of his time as a politburo standing committee member appointed at the 17th Party Congress in 2007, Xi Jinping was responsible for overseeing key aspects of United Front work, which Hu Jintao had clearly delegated to him. Xi was chair of both the Central LSG for Party-Building, the Central LSG for Taiwan Affairs, and the Central Coordination Group for Hong Kong and Macao Affairs. The LSG for United Front work which his father headed in the 1980s had atrophied and was not active when Xi was promoted in 2007. Xi was also chair of the Central Party School, giving him a platform for shaping and controlling internal ideological debates. As Xi Jinping became an increasingly powerful leader, he had a solid grounding in the United Front bureaucracy, its value, and he had developed a clear vision of the opportunities that a more powerful and influential UFWG would provide him. It should therefore come as no surprise that Xi Jinping took an active, direct interest in such a strategically important Communist Party organ, recognising its potential as a powerful tool to further ensconce the Communist Party in its position of power. Xi Jinping’s effort to elevate and empower the UFWD was methodical, carefully planned and skilfully executed since he became general secretary of the CCP in 2012. This effort to rejuvenate and reform the UFWD can effectively be divided into two phases. An initial phase from his ascension to power in 2012–2013 laid the groundwork for elevation and expansion, climaxing in 2015. A second phase of consolidation, focused on expansion and execution from 2016, is still ongoing today. Before examining the steps Xi took to make the UFWD a more capable bureaucracy, it is important to consider the context in which the UFWD’s transformation took place. It is not publicly known why Xi Jinping felt it was necessary to invest his time and political capital to reform the department, leaving us to look at the social and political environment that made United Front work a high priority for him. The UFWD’s core mission, like that of all party and government organs, is to ensure the CCP remains the sole, uncontested power that rules China for the foreseeable future. The decade before Xi Jinping’s ascension saw dramatic changes in China’s society, economy and international situation, all of which potentially threatened the party’s grip on power. Foreign Direct Investment (FDI), which had been increasing rapidly since 1990 began to accelerate at a more rapid pace, bringing in more foreign experts, managers and Western management concepts, which threatened to impact Chinese society. After joining the World Trade Organisation, China’s economy began to expand even more rapidly, with privately owned companies increasingly setting up offices and factories in China, with employment in

52  Drew Thompson foreign companies growing. International travel became more common for increasingly well-off Chinese business people and tourists. Cell phone and internet penetration rates increased rapidly, ending the party’s monopoly on news outlets and traditional propaganda channels. Buzzwords in CCP study sessions expressed fear of ‘spiritual pollution’ (精神污染) and ‘peaceful evolution’ (和平演变), evoking the spectre of velvet revolutions and echoes of the collapse of the Communist Party in the Soviet Union. Ethnic unrest, particularly in Western China indicated that there were significant problems with ethnic minority and religious affairs policies, and clear inadequacies in the work of cadres in regions with large non-Han populations. Major riots in Xinjiang’s capital Urumqi in 2009 made global headlines, while smaller clashes and incidents increased in scale, particularly in 2012, 2013 and 2014.6 Large-scale riots broke out in Lhasa, Tibet, in 2008, with the People’s Armed Police being forced to evacuate the city centre, only retaking it after being reinforced by People’s Liberation Army units. Riots in the ethnic Tibetan areas of Ganze, Sichuan, in 2012 resulted in officials cutting off phones and internet service to the region. Throughout China, civil disturbances and mass unrest, particularly in urban areas consistently increased from 2011, peaking in 2014.7 Environmental concerns were a key cause of many disturbances, and the dismal air quality in Beijing in the run-up to the 2008 Olympics was a source of local discontent, as well as international embarrassment, underscoring the party’s inability to effectively enforce environmental regulations and govern without crackdowns and unsustainable enforcement campaigns. The party’s shortcomings in governance were becoming increasingly visible to non-party citizens. Perhaps most disturbing to Xi Jinping were internal and external political challenges to the party’s rule. The Hu Jintao era was characterised by relative openness and tolerance for public discourse – though intellectuals and dissidents who crossed certain boundaries were dealt with, the overall environment was socially and (relatively) politically permissive. The expansion of civil society and freedom of expression in academic circles during the Hu Jintao era created an environment where intellectuals felt empowered to make bold policy recommendations, challenge the party directly or speak out to protect their rights. Human Rights lawyers and dissidents collaborated and mobilised in various forums, drawing the party’s attention. The drafting and signing of ‘Charter ‘08’ by over 300 intellectuals was too much for the party, resulting in the arrest of its architect, Liu Xiaobo. Chinese journalists likewise began reporting and publishing articles critical of the party, or individual cadres, worsening public perception of the government and party. The party’s grip on the media appeared to slip when the newsroom of the Southern Weekend paper in Guangzhou went on strike in 2013 over censorship. These cracks exposing dissent and opposition amongst intellectuals were likely disconcerting, but they were probably not nearly as alarming to Xi Jinping as the transitions occurring within the party itself.

Xi Jinping and the United Front  53 Xi Jinping was born into a party family, grew up working within it as a junior administrator to a top leader, then in successively more important leadership roles in the provinces, as well as at the centre. He has spoken and written extensively about the party and governance, and has expressed orthodox, conservative views. He, like all party members, has sat through countless study sessions, some of which focused on the internal threats and risks that the party faces, including studies evaluating the collapse of the Soviet Union. Xi Jinping clearly saw that as Reform and Opening wore on, the party increasingly exhibited a lack of discipline, engaged in pervasive corruption and had lost its ‘revolutionary’ spirit and focus. Since 1979, the CCP underwent changes commensurate with the dramatic transformation the country underwent as a whole, introducing diversity by including progressive voices which changed the party’s makeup and identity. Jiang Zemin’s contribution to party ideology was the ‘three represents’, institutionalising this trend by opening party membership to ‘advanced productive forces’ – which is code for private-sector business people – and a broader swath of society than the traditional CCP base of worker, peasant, soldier. Party membership also expanded dramatically, doubling between 1985 and 2016, while increasing 26 per cent between 2005 and 2016.8 Many of these new members came from what is known as ‘new social strata’: entrepreneurs, self-employed experts in the services sector and professionals in the private sector.9 When Xi Jinping became party secretary in 2012, there were clear signs the party was in trouble, from widespread corruption to major scandals involving politburo members and senior military officers. He undoubtedly felt that the party’s expansion and inclusiveness presented a risk that mirrored those faced by the Soviet Union. As Xi sought to tighten discipline and ideological control over the party, he also likely felt it was necessary to gain greater control of, and focus on the work of one of the party’s key organs, the UFWD. The key rationale was to bolster the party’s influence in the broader population, and increase the party’s ability to gather intelligence on key constituencies of Chinese society at home and abroad to prevent any organised threat to the party from emerging. The next section of this chapter reviews how he accomplished that.

Xi Jinping’s rejuvenation and elevation of the UFWD Xi Jinping’s effort to elevate the UFWD occurred in two distinct phases. The first phase began when Xi consolidated his power after becoming the CCP general secretary at the 18th Party Congress in 2012, and president at the 12th National People’s Congress in 2013. Xi himself immediately raised the organisation’s profile – by giving well-publicised speeches about the UFWD’s mission, participating in high-level meetings as well as addressing subordinate UFWD groups and replacing top cadres – making it clear to other leaders, working-level party cadres and the public the importance he placed on United Front work. The first phase reached its pinnacle in 2015,

54  Drew Thompson which saw the most significant reform of the UFWD since Zhou Enlai took over its operations in 1945. The second phase focused on consolidating and expanding the UFWD to execute its mission more effectively, reflected in a significant reorganisation of the UFWD bureaucracy. Xi Jinping wasted little time in signalling to the public and his own government that he considered United Front work to be critically important. His first major speech as party general secretary and head of government at the 12th National People’s Congress was captured for posterity in his ‘Thoughts on Governing China’. In it, Xi set out his vision for the United Front and its work:10 We must consolidate and develop the most extensive patriotic united front, strengthen the unity and cooperation between the Chinese Communist Party and the democratic parties and non-party members, consolidate and develop the socialist ethnic relations of equality, solidarity, mutual assistance and harmony, and bring into play the role of religious people and religious believers in promoting economic and social development. Develop the positive role and the maximization of all forces that can be united. The vast number of workers, peasants and intellectuals throughout the country must use their talents and work diligently, and actively play the role of the main force and the vital force in economic and social development. All non-public economic people and other new social strata should carry forward the spirit of labor creation and entrepreneurship, give back to society, benefit the people, and be a builder of socialism with Chinese characteristics. Compatriots of the Hong Kong Special Administrative Region and the Macao Special Administrative Region must focus on the overall interests of the country, Hong Kong and Macao, and jointly safeguard and promote the long-term prosperity and stability of Hong Kong and Macao. The vast number of Taiwan compatriots and mainland compatriots must join hands to support, maintain and promote the peaceful development of cross-strait relations, enhance the well-being of compatriots on both sides of the strait, and jointly create a new future for the Chinese nation. The vast number of overseas Chinese are expected to carry forward the fine traditions of the Chinese nation, and work hard to promote the development of the motherland and promote the friendship between the Chinese people and the local people. Between 2012 and 2015, Xi gave numerous speeches, and addressed major annual gatherings of key UFWD groups including CPPCC groups, overseas Chinese groups, democratic parties and the All-China Federation of Industry and Commerce (ACFIC), signalling to all politically aware individuals that he was paying attention and considered United Front work to be

Xi Jinping and the United Front  55 important. Many of these speeches containing detailed prescriptions were published in widely disseminated books and received saturation media coverage, consistent with coverage of all Xi Jinping’s public activities. Xi Jinping was also active shaping internal messages that addressed his concerns about ideological threats, both internal and external to the party. In mid-2012, the General Office of the Communist Party circulated a document titled ‘Communiqué on the Current State of the Ideological Sphere’, but it has come to be known colloquially as ‘Document Number 9’. The document, leaked in 2013 by a dissident who was subsequently imprisoned, identified Western, liberal values and those within China who espouse them as a threat. While the document emphasised that the ideological threat was foreign in nature, it indirectly acknowledged that the threat comes from within as well: Western anti-China forces and internal “dissidents” are still actively trying to infiltrate China’s ideological sphere and challenge our mainstream ideology. Some of their latest major efforts include: Some people have disseminated open letters and declarations and have organized petition-­signings to vocalize requests for political reforms, improvement of human rights, release of “political prisoners,” “reversing the verdict on ‘6/4’ [the Tiananmen Massacre],” and other such political demands; they have made a fuss over asset disclosure by officials, fighting corruption with the Internet, media supervision of government, and other sensitive hot-button issues, all of which stoke dissatisfaction with the Party and government.11 Intellectuals and the CCP have historically had an antagonistic, distrustful relationship dating to the days of class struggle. The UFWD is specifically tasked with engaging intellectuals and professionals – those most exposed to and predisposed to support the liberal ideals that the CCP sees as threatening its survival. The party’s use of internal and public messaging set the conditions for reform by emphasising the importance of guarding against ideological threats and building the United Front to ensure competing ideological concepts do not take root amongst Chinese outside the party. The next step in the process of rejuvenating the UFWD involved personnel moves that solidified Xi Jinping’s control over the organ. Hu Jintao’s close ally Ling Jihua was head of the CCP Central Committee’s powerful General Office when he was transferred to become the head of the UFWD in September 2012 just prior to the 18th Party Congress. He was subsequently elected to become the vice chairman of the CPPCC in March 2013. One year earlier, his son was reportedly killed in a high-speed car accident in Beijing while driving a Ferrari. Ling was unable to cover up the accident, making him a vulnerable target for Xi Jinping’s nascent anti-corruption campaign. He found himself formally placed under investigation in December 2014, ultimately resulting in his expulsion from the CCP, arrest, public trial and

56  Drew Thompson imprisonment the following year. At the end of 2014, Sun Chunlan, former party secretary of Tianjin and Fujian, was appointed head of the UFWD and vice chairman of the CPPCC. While Sun is not known to have a close relationship with Xi, she and her two top deputies took office in 2012 at the same time, making a clean sweep of the organ’s leadership, presumably also pledging their absolute loyalty to Xi and the party in the process. The political signalling and leadership changes in the UFWD set the stage for the significant changes that were to take place in 2015. The first move was an internal party document. In April, the politburo promulgated a set of regulations governing the work of the UFWD called ‘Regulations on the Work of the United Front of the Communist Party of China (Trial)’ (‘中国共产党统一战线工作条例(试行)’; henceforth the Regulations).12 This document, which was not made public until September 2015, sets out the party’s vision for the United Front, and identifies the specific constituencies the United Front should focus its attentions on: The United Front is the political priority and strategic policy of the Chinese Communist Party to unite people’s hearts and gather strength. It is an important magic weapon for winning the revolution, construction, and reform, and is an important factor in strengthening the party’s class foundation, expanding the party’s mass base, and consolidating the party’s ruling status. It is an important magic weapon for building a well-off society in an all-round way, accelerating socialist modernization, and realizing the nation’s China dream of great rejuvenation. Reminding its readers that the United Front targets its work on ‘representatives of the people outside the Party’, it goes on to list the 12 targets for clarity: (1) members of the democratic parties; (2) non-party persons; (3) intellectuals outside the party; (4) ethnic minorities; (5) religious people; (6) non-public economic entities; (7) new social strata; (8) studying abroad and returning students; (9) Hong Kong compatriots and Macao compatriots; (10) Taiwan compatriots and their relatives on the mainland; (11) overseas Chinese, returned overseas Chinese; and (12) other personnel who need to be contacted and united. The Regulations do not reveal any previously unknown activities or responsibilities, but set out in an authoritative, concise manner Xi Jinping’s expectations for the work of the UFWD, its subordinate organs in the centre and United Front organs at lower levels of government. The second major development in 2015 was the convening of the CCP Central Work Conference on United Front work from May 18 to 20. Xi Jinping was in attendance – a first for the party general secretary – giving a speech and promulgating the recently circulated Regulations which formally came into force on the same day.13 This was the first United Front Work Conference held since 2006, and the first to be branded ‘Central’ – previous conferences had been labelled ‘National’ – conveying to all cadres

Xi Jinping and the United Front  57 that the UFWD’s work, even though it had always been a party (not a government) organ, had been upgraded from a government to a party priority. This is particularly significant in a Leninist system where the authority and status of a Communist Party organ is higher and greater than a government organisation, which is subordinate to its own party committee. The release of the Regulations, and Xi Jinping’s presence and elevation of the United Front Work Conference to the ‘Center’, purposefully started a cascade of follow-up meetings throughout China, which was one of Xi’s critical objectives. The central government’s UFWD in Beijing sits at the top of a network of mirrored UFWD organs at every level of administration down to the county level. There is a saying in China, ‘the mountains are high and the emperor is far away’, alluding to the still common phenomena where local officials pursue their own agendas and ignore the directives or priorities of higher-level leaders. Meetings at the provincial level and below ensured that all cadres in the CCP enterprise acknowledged their roles and responsibilities, as well as the importance that Xi Jinping himself placed on this form of political work. The Regulations and his presence at the high-level conference henceforth made ignoring United Front work a risky endeavour for any cadre. Following these two developments, party cells and United Front offices throughout China began studying Xi Jinping’s remarks at the conference, the Regulations and other United Front materials pushed out by the centre. Cadres throughout China dutifully tallied meetings and accomplishments in United Front work to report back to the centre by the end of the year. All told, 30 provinces reported that they had held United Front Work Conferences at their level, with 22 developing implementation plans and 20 forming provincial-level LSGs, with the majority headed by the provincial party secretary. Eleven provinces reported that they had established committees headed by the party secretary at the provincial, city and county level, including in the minority regions of Tibet, Qinghai and Ningxia.14 In just six-months, Xi Jinping had effectively made the party secretaries of every province and more than a third of the sub-provincial party secretaries throughout the country personally responsible, and potentially accountable for United Front work. The third activity in 2015 was the least transparent, but the most impactful. On July 30, Xi Jinping chaired a politburo meeting which endorsed the decision to set up a Central LSG for United Front work. Like his father 30 years earlier, Xi Jinping would chair it. The announcement of the formation of this LSG did not come as a surprise to cadres since it was a requirement set out in Article 10 of the Regulations, which was closely studied at the May conference. The Regulations established the basis for the formation of the LSG. The Regulations stated that the role of the LSG is to ‘conduct research, coordinate guidance, supervise and inspect implementation of the Center’s guidelines, policies, laws, and regulations on the United Front’.15 The value of the LSG is not only the promise that United Front policies will

58  Drew Thompson be continually reviewed, updated and refreshed by China’s top leaders. The formation of the LSG sends a very powerful signal to all cadres in the system that Xi Jinping and the top leaders consider United Front work to be vitally important, and that the work of leaders and cadres will be scrutinised over the long term. Without the LSG, there is the risk that cadres will presume that the flurry of propaganda about United Front work is just the latest short-term campaign by the centre, which will eventually peter out like so many campaigns that came before it. The LSG also creates a sustained and unignorable demand signal for situational data and performance metrics, stimulating United Front organisations at the national, provincial and local levels to implement and report their progress. The three major United Front developments all occurring in 2015 – the legal framework; wide communication of the leaderships’ prioritisation of the mission and elevation of the organisation; and the formation of an oversight body to hold cadres accountable – set the stage for a major reorganisation to enable the United Front enterprise to better execute its mission. The second phase of the UFWD’s rejuvenation following the 2015 developments featured a process of bureaucratic acquisition and expansion that enables the organisation to conduct its work more effectively, and likely at a greater scale. The reorganisation has seen the UFWD expand from 9 to 12 departments, increasing its ability to manage the UFWD’s constituencies in China and globally. Bureaus on Tibet and Xinjiang were established to deal with the unique social, economic, religious and security issues in each region. To address changes in Chinese society, a new bureau was created in 2016 to engage the ‘new social strata’ (新的社会阶层), including new media entrepreneurs and professionals in the knowledge-based service sector. The most dramatic evidence of the elevation of the UFWDs mission is the incorporation of three government organs – the Religious Affairs Bureau, the State Ethnic Affairs Bureau and the State Council’s Office of Overseas Chinese Affairs – into the party-based UFWD. The UFWD has reportedly increased the personnel under its purview by 40,000, though it is unclear how that is distributed between the centre and the provinces, or if that includes the cadres in the Religious Affairs, Tibet, Taiwan and Overseas Chinese Affairs offices that are now under the UFWD.16 Regardless of whether this represents a massive expansion, or a consolidation, it is nonetheless a transformation and elevation of a once obscure organ of the CCP that is now more empowered and capable of expending its party’s influence both at home and abroad.

International and domestic implications The elevation and rejuvenation of the United Front and its work has significant implications around the world, and the results of its expanded capabilities are already being felt. Scholars in Australia, New Zealand, Canada and the United States have published extensively about the extent of United

Xi Jinping and the United Front  59 Front work and influence operations being conducted in their countries, so this chapter will not address the impact of United Front work in other countries, nor will it seek to establish causation between the elevation of the UFWD under Xi Jinping and an increase in influence operations abroad.17 It is also important to remember that the United Front is not the only CCP or government organ seeking to expand China’s influence overseas. The CCP’s approach to building relations and influencing non-party individuals and groups both at home and abroad is a comprehensive effort involving more than just the United Front. For example, under Hu Jintao, China’s propaganda enterprise, particularly state-owned media companies including CCTV and Xinhua received billions of dollars in increases in their annual budgets to expand operations and broadcasting overseas.18 Likewise, the party’s flagship newspaper, People’s Daily, publishes its English-language version in several countries and has advertising insert arrangements with major US newspapers including The New York Times and The Washington Post. The Chinese Ministry of Education’s Confucius Institutes represent another global agent of influence not under the direct guidance of the UFWD. The United Front, however, focuses its efforts on specific groups abroad, particularly ethnic Chinese citizens of other countries. United Front organs, both at the national and local levels, conduct outreach with ethnicChinese people globally, as well as host visiting individuals and groups from a range of organisations representing a cross-section of society, including cultural, academic, business and politically focused groups. Countries with large Chinese diaspora populations, particularly those with large numbers of first-generation Chinese emigrants who associate closely with the People’s Republic of China garner particular attention from UFWD cadres. Taiwan and Hong Kong are a key focus of United Front work, as denoted by their distinction of having eponymous bureaus within the Central UFWD. In Taiwan, United Front work is particularly vigorous, involving a broad spectrum of stakeholders. An unnamed Taiwan government official, citing national security intelligence, revealed in a newspaper interview that in Taiwan, the United Front is targeting 10 groups for engagement, including ‘local townships, young people and students, Chinese spouses of Taiwanese, Aborigines, pro-China political parties and groups, temples, descendants of Chinese who retain roots in China, labour groups, farmers’ and fishermen’s associations, and military veterans’. In addition to these groups, and Taiwanese doing business with the mainland, Chinese officials have also overtly sought to influence Taiwan’s media. In May 2019, representatives of nearly 70 Taiwan media outlets travelled to Beijing for the Fourth CrossStrait Media Summit, where they were feted by Politburo Standing Committee member Wang Yang and propaganda czar Huang Kunming, giving the Taiwan participants access to senior leaders rarely granted to other members of the international media.19 The elevation of the UFWD coupled with the empowerment and motivation of cadres throughout the United Front enterprise will increase the

60  Drew Thompson volume, and potentially also the effectiveness of their influence operations targeting these key populations around the world, as well as amongst the key non-party constituencies within China. The United Front, as a result of Xi Jinping’s vision and the successful elevation, expansion and rejuvenation in his first term, will play an increasingly visible and significant role in China’s effort to leverage soft power and increase its influence and assert its preferences globally. Most importantly, the enhanced abilities and focused attention of cadres on key non-party constituencies at home will potentially improve the UFWD’s ability to collect intelligence on these groups and enhance their effectiveness in providing incentives for compliance and allegiance, and disincentives for dissent. Ultimately, Xi Jinping’s focus on the UFWD enhances the party’s resiliency, and makes any internally driven effort to dissolve the party or dislodge it from power an increasingly remote possibility.

Notes 1 This section is drawn from the UFWD’s own recounting of its history. A key source is: ‘中央统战部的由来’, United Front Work Group, at cn/tzgs/296828.jhtml (accessed February 26, 2020). 2 Gerry Groot, ‘The Expansion of the United Front under Xi Jinping’, The China Story Project, Australian National University Centre on China in the World, at (accessed February 26, 2020). 3 Alex Joske, ‘The Central United Front Work Leading Small Group: Institutionalising United Front Work’, Sinopsis, July 2019, at (accessed February 26, 2020). 4 Marcel Angliviel de la Beaumelle, ‘The United Front Work Department: “Magic Weapon” at Home and Abroad’, China Brief, 17 (9), July 2017, at https://james (accessed February 26, 2020). 5 习近平, ‘‘大侨务’观念的确立’. 《战略与管理》 (1995). Cited in Alex Joske. 6 March 2008 Lhasa riots. February 2012 attack in Yecheng, Xinjiang, killed 24 and injured 18. April 2013 clashes in Bachu, at least 21 people dead, including 15 police and officials. June 2013, 27 people killed in riots in Shanshan. June 2013 plane hijacking, two Uyghur hijackers beaten to death. March 2014 Kunming rail station attack resulted in 31 killed and 141 injured. 7 Jay Chih-Jou Chen, ‘Containing Social Protest through Selective Repression in Xi’s China’, Unpublished Paper, August 20, 2019. 8 Lea Shih and Kerstin Lohse-Fredrich, ‘Centralized Leadership – Heterogeneous Party Base’, Mercator Institute for China Studies China Monitor, 2017, at https://­ base (accessed February 26, 2020). 9 Ibid. 10 Xi Jinping, 在第十二届全国人民代表大会第一次会议上的讲话 (2013 年 3 月 17日) at (accessed February 26, 2020). See also《习 , 近平谈治国理政》 第一卷, Foreign Languages Press, Beijing. 11 ‘Document 9: A ChinaFile Translation’, November 2013, at http://www.china (accessed February 26, 2020).

Xi Jinping and the United Front  61 12 ‘Regulations on the Work of the United Front of the Communist Party of China (Trial)’ (‘中国共产党统一战线工作条例(试行)’). 人民网-人民日报, 2015 年 09 月 23 日, at (accessed February 26, 2020). (Note that Mao Zedong used the term ‘magic weapon’ to describe United Front work – repeating this phrase evokes him in the document.) 13 ‘习近平:巩固发展最广泛的爱国统一战线’, Xinhua, May 20, 2015, at http://www. (accessed February 26, 2020). See also: 张亦, ‘中共重大会议前都有哪些’信号’?’, 多维新闻, 2015 年 11 月 23日。at (accessed February 26, 2020). 14 ‘【巡礼2015】统战数据·TOP10’, United Front, at 38514.jhtml (accessed February 26, 2020). 15 ‘Regulations on the Work of the United Front of the Communist Party of China (Trial)’, no. 12. 16 Alex Bowe, ‘China’s Overseas United Front Work’, US-China Security and Economic Review Commission, August 24, 2018, at default/files/Research/China’s%20Overseas%20United%20Front%20Work%20%20Background%20and%20Implications%20for%20US_final_0.pdf (accessed February 26, 2020). 17 Some of the most prominent academics who write extensively about UFWD include: Anne-Marie Brady at University of Canterbury in New Zealand; Geoff Wade at the Australian National University; Alex Joske at the Australian Strategic Policy Institute; J. Michael Cole at the Global Taiwan Institute; and Peter Mattis at the Victims of Communism Memorial Foundation. 18 For an overview of Chinese media’s global expansion, see Zhang Xiaoling, ‘Chinese Media Going Global’, East Asia Institute, National University of Singapore, at pdf (accessed February 26, 2020). 19 ‘第四届两岸媒体人北京峰会开幕’, Beijing Daily, May 11, 2019, at https://web. t20190511_11101030.html (accessed February 26, 2020).


Social governance in China under Xi Jinping Big brother is watching you! Jean-Pierre Cabestan

Introduction Since Xi Jinping came to power in late 2012, the Chinese Communist Party (CCP) has decided to adopt a more holistic approach to the control of the society, underscoring its growing concern about the long-term stability of the regime. It has substituted the expression shehui guanli (社会管理, social management) with shehui zhili (社会治理, social governance), a notion which recognises social actors’ role in governance, alongside government and businesses. According to Section XIII, titled ‘Making Innovations in Social Governance System’, of the decision approved by the CCP Central Committee on November 12, 2013, ‘social governance’ will ‘strengthen leadership by the Party committee’ and ‘give full play to the leading role of the government’. Nonetheless, at the same time, ‘social governance’ will ‘encourage and support the participation of all sectors of the society’, and ‘establish an open and orderly mechanism under which people can express their grievance’, in order to achieve ‘positive interaction between the government management on the one hand, and social self-management and residents self-management on the other’.1 Social management was basically a top-down approach to control the society: it included the four main functions of the government, namely political leadership, policymaking, maintenance of stability and public services. In contrast, social governance echoes not only Xi Jinping’s strong emphasis on ‘governance’, but also his ambition to involve the society, making it partly responsible for the stability of the system. To be sure, the transition from social management to social governance has been gradual and already called upon under Hu Jintao by several scholars such as Chen Jiagang (陈家刚) of the China Center for Comparative Politics and Economics.2 Some experiments were conducted prior to 2013. However, it was under Xi and at the 18th Party Central Committee’s Third Plenum in October 2013 that the concept of social governance was officially endorsed.3

Xi Jinping’s social governance in China  63 The objective of this new approach is clearly maintaining social and political stability. As the introduction to Section XIII of the Decision indicates: To make innovations in social governance, we must direct our primary attention to safeguarding the fundamental interests of the broadest masses of the people, increase the factors of harmony to the maximum, invigorate social development and improve the social governance level, comprehensively promote the building of “China of law and order,” safeguard national security, ensure that the people live and work in peace and contentment, and that the society is stable and orderly. Xi Jinping’s report to the 19th CCP Party Congress held in October 2017 talks a lot about governance, actually much more about law-based governance (全面依法治国是国家治理) than social governance.4 Nonetheless, Xi reasserts CCP’s aim to ‘establish a social governance model based on collaboration, participation and common interests’. It states in particular: We will step up institution building in social governance and improve law-based social governance model (法治保障的社会治理体制 fazhi baozhang de shehui zhili zhidu) under which Party committees exercise leadership, government assumes responsibility, non-governmental actors provide assistance, and the public gets involved. We will strengthen public participation and rule of law in social governance, and make such governance smarter and more specialized (智能化、专业化水平 zhinenghua, zhuanye shuiping). As a result, the society should now actively participate in social governance. But in order to achieve this objective, the party-state has, on the one hand, strengthened its leadership over China’s civil society, particularly the Non-Governmental Organisations (NGOs). At the same time, in November 2013, it decided to establish a new institution aimed at enhancing social and political stability: the National Security Commission under the CCP Central Committee and chaired by Xi himself. Taking advantage of the new digital surveillance technologies, it has, on the other hand, intensified its control of citizens as well as the society as a whole, nipping in the bud any burgeoning of independent NGOs, let alone political protest or opposition. Gradually introduced since 2014 and officially aimed at (re)building trust between the government, economic entities and citizens, the Social Credit System (SCS) today plays a key role in social governance, and more importantly in social control. In this new political environment, how much can the society participate in social governance? To what extent people are able to express their grievances? Under Xi, has the CCP managed to achieve ‘positive interaction’ with the society? Is the political regime’s future more secure? The answers to such questions are far from being obvious.

64  Jean-Pierre Cabestan

Chinese society, particularly NGOs, under tighter party control The slogan ‘Small Government, Big Society’ (小政府 – 大社会 xiao zhengfu – da shehui) was approved as early as 1997 by the 15th Party Congress as China was heading towards a major privatisation of its economy, particularly its enterprises.5 Nevertheless, this objective has been somewhat misunderstood. Then, the priority was clearly the rapid dismantlement of many of the money-losing State-Owned Enterprises (SOEs) and a parallel expansion of private and foreign businesses in order to reassign as many laid-off SOE workers as possible to these new and more dynamic sectors of the economy. But very quickly, the CCP adapted to this new economic and social environment and adjusted its policy: in 2001, not only, it decided to open its door to private entrepreneurs or capitalists but also to gradually set up party branches in every private business. That was the basic objective of Jiang Zemin’s famous ‘Three Represents’ (三个代表 san ge daibiao). True, this latter policy – increasing CCP presence in private enterprises – was slowly introduced under Jiang Zemin and Hu Jintao, as the government’s top priority was then economic development and globalisation. But it was already in place when Xi came to power. What Xi has done since 2012 has been to accelerate its implementation, compelling nearly all large- and medium-size businesses to set up party branches. In 2018, about 1.9 million ‘non-state enterprises’, or officially 73 per cent of them, and 303,000 social organisations or NGOs (62 per cent) had a party committee.6 Under Jiang and Hu, the Chinese Government decided to ease the establishment of NGOs, delegating to them an increasing number of tasks earlier fulfilled by the administration. However, it never really left them off the hook. The Ministry of Civil Affairs has always asked any NGO to be set up under a sponsor organisation that supervises it and is fully responsible of its activities. It is true that a small window of relaxation temporarily opened up in 2008 after the Wenchuan earthquake and just before the Beijing Olympics.7 But this window rapidly closed up. As a result, many NGOs have remained unregistered or have registered as companies (2 to 3 million against 760,000 registered NGOs in 2017). Since Xi came to power, while the NGOs’ legal framework has remained basically unchanged,8 the policy has become much stricter, forcing NGOs to set up a party branch and accept, on a daily basis, a much more hands-on CCP supervision. On the one hand, NGO registration has been somewhat simplified and relaxed. For example, in Wenzhou and elsewhere, entrepreneurs have been allowed to register several business associations in the same sector of activity. Similarly, since the entry into force of the new law on charities on September 1, 2016, dual registration is no longer required for organisations conducting ‘charitable activities’.9 The main reason for this simplification is that the government has decided to outsource more services to NGOs, all the way from business management to health, education or

Xi Jinping’s social governance in China  65 environment protection. This evolution is not without interesting precedents in Chinese history, both under the Kuomintang (KMT; in mainland China as in Taiwan) or even Imperial Era.10 And, on the positive side, it has contributed to improving government’s transparency and local governments’ compliance with central policies, for example, in the environment sector.11 But, on the other hand, under Xi, party supervision over NGOs has been strengthened, forcing them to host and finance a CCP committee, to toe the line and disseminate CCP propaganda. Moreover, control of non-registered NGOs has been intensified. For example, since 2017, most labour NGOs have been dismantled including in Guangdong where, more often tolerated, they survived longer. In July 2016, the liberal-leaning magazine Yanhuang Chunqiu was taken over by ‘intellectuals’ close to Xi. Even Unirule, a liberal think tank registered as a company, under immense pressure to dismantle since 2018, was declared illegal and forced to close down in late August 2019.12 The repression of any independent NGO that borders political opposition has been even harsher. As early as April 2013, Xu Zhiyong, the New Citizens Movement leader, was arrested and sentenced to four-year imprisonment (he was freed in July 2017 before being detained again since February 2020). In July 2015, 200 human rights lawyers were arrested. Although most of them were later released, this has contributed to stopping the expansion of legal activism. This wave of repression has not fully silenced China’s liberals. In July 2018, Professor Xu Zhangrun, of Tsinghua University, managed to circulate a vitriolic criticism of Xi Jinping’s dictatorial inclinations. Yet, he has since been banned from teaching and put under investigation; he lost his job and was briefly detained after having published another critical article in 2020. The Hong Kong protest movement against the extraction bill tabled by Hong Kong Chief Executive Carrie Lam in June 2019 has once again highlighted the Chinese Government’s fear of ‘colour revolutions’ and the possible contamination of democratic ideas to the mainland. While the risks of such contamination seem today limited, allowing Hong Kong to fully democratise has remained a non-starter in Beijing because of the risks of turning the Special Administrative Region into a ‘base for subversion’ against mainland China. The CCP’s fight against the coronavirus epidemic that broke out in Wuhan in December 2019 has also illustrated the CCP’s and Xi’s obsession with control. The epidemic’s initial mismanagement at the local and central levels, the tragic death in February 2020 of Li Wenliang, one of the eight whistle-blowers that were reprimanded by the Wuhan public security, and substantial segments of Chinese public opinion and social media’s subsequent call for freedom of speech have not diverted Xi and the CCP leadership from their objective: silencing any dissenting voice and enhancing at all cost the party leadership on the society. Once again Xu Zhangrun spoke up; moreover, hundreds of citizens, led by academics, including Xu, signed a petition to the National People’s Congress asking a better protection of the freedom of expression. But these initiatives were ignored and rapidly censored.13

66  Jean-Pierre Cabestan In other words, any organised activity needs to be supervised by the party. Any activity that has a political flavour must be repressed and the organisations behind dismantled. This line of conduct has very little chance of changing as long as Xi remains in charge.

Intensified digital surveillance of the society Since Xi came to power, party-state’s digital surveillance of the society has intensified thanks to both the advance of technologies and a stronger willingness to check on citizens’ thinking and behaviours. The means put together to better manage and control society are not all aimed at reining in political criticism or dissent. Many of them, as the Great Firewall, the SCS, Closed-Circuit Television (CCTV) cameras and facial recognition devices, have arguably been set up to fight more efficiently against illegal practices (such as child pornography and fraud) or behaviour (rude attitude in public transports, jaywalking, etc.). They are also part of the technologies needed for establishing safe and ‘smart cities’. Nonetheless, the rapid development of digital surveillance of the Chinese society has taken an Orwellian dimension, underscoring a clear intention to prevent and pre-empt any kind of unexpected social unrest or political protest, and even more political change. The great firewall Since late 2012, online activities have been more widely censored and monitored. In November 2013, Xi decided to establish and chair the CCP Central Cybersecurity and Informatisation Leading Small Group (LSG, 中央 网络安全和信息化领导小组). This LSG has been instrumental in tightening control and management of the blogosphere. Highlighting its importance in the eyes of the Chinese leadership, vis-à-vis the three other key LSGs (Deepening Reforms, Foreign Affairs and Finance and Economy), the Cybersecurity and Informatization LSG was elevated to the rank of Commission (中央网络安全和信息化委员会 Zhongyang wangluo anquan he xinxihua weiyuanhui) in March 2018. The LSG and now Commission’s Office (办公 室 bangongshi) is headed by the director of the Cyberspace Administration of China (CAC, 国家互联网信息办公室 Guojia hulianwang xinxi bangongshi), a State Council organ, headed by Zhuang Rongwen (庄荣文) since August 2018. Zhuang is also deputy director of the CCP Central Propaganda (Publicity in official English translations) Department, underscoring the direct relationship between this powerful Central Committee bureaucracy and the CAC. The CAC includes 60,000 internet propaganda workers and two other millions employed off-payroll.14 The task of such a large number of people is to direct discussion on social networks and snuff out content deemed noxious.15 These ‘internet police’ labelled by critics as Wumaodang (50-cent party), for the amount supposedly paid to them for each politically correct post, initially numbered 40,000.

Xi Jinping’s social governance in China  67 But internet policing has gone much further and now targets users accused of spreading ‘rumours’, be they of political, economic or financial nature.16 Consequently, the number of ‘inspectors’ in charge of ‘internet clean-up’ on behalf of administrations or private companies, estimated at two million in 2013, has since then sharply increased.17 Since 2013, the government’s stricter control of Weibo and its decision to force users to register with their real name and to close many accounts, particularly the ones developed by well-known public intellectuals – the socalled ‘big Vs’ – have convinced a lot of Chinese to move to WeChat where only shorter messages (500 characters) can be exchanged.18 WeChat’s penetration rate today is 83 per cent among smartphone users.19 As a result, the number of Weibo users dropped from over 500 million in 2012 to 220 million in 2015. Nonetheless, it increased again to 462 million at the end of 2018,20 pointing to a gradual internalisation of the new rules of the games by most Chinese netizens. The most significant turning point after 2012 was the adoption on November 7, 2016, of the Cybersecurity Law.21 This law’s major objective is to better and more systematically control the internet, giving priority to defending state interests and securing critical infrastructures. Article 9 of the law states that ‘network operators … must obey social norms and commercial ethics, be honest and credible, perform obligations to protect network security, accept supervision from the government and public, and bear social responsibility’. While the law also aims at protecting individuals against cybercrime and data thefts, it does not establish any concrete mechanisms, let alone any independent institution, guaranteeing the privacy of information exchanged on the web. More importantly, the law removes anonymity from the web: internet providers must now verify the identity of users when offering network access or data services and can be fined or closed if they don’t. Moreover, data collected by domestic providers of ‘key digital infrastructures’ may only be stored in China, triggering heavy criticism from foreign, particularly Western companies. Any export of data out of the country is subject to prior governmental authorisation.22 In the following years, the Chinese authorities have intensified their crackdown, for example, in October 2017, on Virtual Private Networks (VPNs); VPN devices can be bought online and are widely used in China to go around the Great Firewall and get access to blocked websites or applications. Since then, owning, using and selling VPNs that are deemed illegal by the authorities has been criminalised.23 In April 2018, Chinese technology start-up ByteDance (字节跳动, valued $ 30 billion by investors) was ordered to shut down its app for sharing jokes and ‘silly videos’, after many ‘honest citizens’ had reportedly complained about its content. A few days earlier, its flagship app Jinri Toutiao (今日头条), a news aggregator that claims 120 million users, was pulled from app stores. It is in that context that Zhang Yiming (张一鸣), ByteDance’s founder and chief executive, publicly apologised, indicating that the ‘(Toutiao) content

68  Jean-Pierre Cabestan did not accord with core socialist values and was not a good guide for public opinion’.24 In August 2018, Tencent was forced by the Chinese Government to impose stricter rules and limits on its very popular online games, in order to reduce, in particular, gaming addiction among young Chinese.25 Tencent, which derives two-thirds of its revenues from its games, was later forced to restructure.26 In the eyes of the CCP, censorship is not enough;27 it should be completed by active propaganda in order to impose its official narrative about China’s history and politics in particular, both inside and outside of the country. As a result, in addition to the ‘internet police’, the party has mobilised a large number of people, whose status is hard to determine, to fulfil this task. For example, since 2016, there has been a burgeoning nationalist ‘troll army’ or ‘Little Pinks’ (小粉红, xiaofenhong) voluntarily launching all-out attacks against anyone venturing to criticise the party or Xi’s policies.28 These nationalists have obviously been used by the regime to better disseminate and shield its propaganda. The CCP has also expanded its repressive objectives, targeting Chinese Twitter users, a social media platform popular among overseas political or rights activists, for ‘liking’ posts accused of insulting the party leadership or even for opening an account.29 Similarly, an increasing number of Chinese ‘trolls’ are active on Facebook, conducting organised raid on accounts defending Uyghurs’ cause or human rights.30 In January 2016, they launched an ‘expedition’ against Taiwanese President Tsai Ing-wen’s own Facebook account shortly after her election.31 More recently, in the summer of 2019, the CCP mobilised large groups of Chinese nationalist netizens to feed Facebook and Twitter (both banned in China) with vitriolic statements against the anti-extradition bill and pro-democracy movement in Hong Kong to the point that both platforms decided to suspend around 1,000 accounts.32 More generally, the crackdown on VPNs has intensified, underscoring the fact that more Chinese (probably around 90 million), in particular the educated youth, are using these services; at the same time, it also highlights the CCP’s ambition to check on its people’s online behaviour beyond the Great Firewall. In a similar vein, ByteDance has made sure to wall off users of Douyin and Tiktok in order to ‘avoid having problematic content created outside of China viewed by domestic audience’, according to Samm Sacks, a China digital economy expert with New America;33 and this in spite of Tiktok’s growing success worldwide (1 billion users in early 2020).34 Control of online communication has recently witnessed a more microlevel development: in a growing number of universities, students are asked to give the university authorities their personal data including WeChat account, QQ number and email address.35 More generally, as Margaret Roberts has shown, censorship has become subtler, making access to critical information more difficult and distracting netizens with or diverting them to contrarian and pro-government messages.36

Xi Jinping’s social governance in China  69 The social credit system In 2014, less than two years after Xi came to power, the party-state decided to introduce a new digitalised instrument aimed at better controlling the society: the SCS (社会信用体系 shehui xinyong tixi). In June of that year, the State Council issued a circular that planned to fully establish such a system by 2020.37 Borrowed from Western credit institutions, it aims in particular at assessing and rating the reliability of citizens and companies regarding not only their loan repayment ability but also a number of extremely vast and varied set of activities: respect for law, as well as political, social and moral conduct. Citizens are rated under four main areas: administrative affairs, commercial activities, social behaviour and law enforcement. The SCS’s objective is also – and this is often overlooked – to better check on government officials and the judiciary and improve citizens’ confidence in their institutions. But to date, the SCS has not been activated to better check on the government or the courts. What has been most noticed outside of China is the former objective.38 For example, individuals marked as asocial for not visiting their parents or behaving badly in public transport, jaywalking or, worse, being labelled as dissidents or dangerous for social stability in view of, say, their participation in an underground church or in a workers’ rights NGO, could receive a negative rating and attract a certain number of sanctions or constraints: ban on travel in public transport especially high-speed train or aircraft, non-access to social housing or public jobs, prohibition from leaving the territory, etc. This task is facilitated through the accumulation by the party-state, and especially by its security services, of vast data on any individual or organisation (the already mentioned Big Data), as also progress in Artificial Intelligence (AI). Conceived in the early 2000s for controlling businesses and compelling them to show greater respect for their legal, economic and social obligations (adhering to rules and their own entrepreneurial engagements, tax returns, environment protection, energy-saving, corporate social responsibilities, etc.), the SCS has gradually been set up on the basis of local trials; and since 2014 been extended to control not only citizens and companies but also government organs and courts. In December 2017, 12 cities including Hangzhou, Nanjing and Xiamen initiated local personal credit scoring system. A smaller city, Rongcheng (Shandong) has also been included and often been promoted as a model.39 Since then, nearly 20 cities have created similar official systems, and their number will continue to grow.40 Officially, the SCS should be fully in place in 2020.41 Coordinated by the CCP LSG and, since March 2018, Commission for Comprehensively Deepening Reforms chaired by Xi himself, the system is managed by the State Council’s National Development and Reform Commission (NDRC) that officially keeps a nationwide database and a China Credit website which regularly publishes information.

70  Jean-Pierre Cabestan Interestingly, as indicated above, the official objective of the SCS has been to restore citizens’ faith in the government, the judiciary, economic actors and in their fellow citizens. To some extent, the SCS attests to the high level of mutual distrust in the Chinese society today. Targeting enterprises, Chinese or foreign, this project also aims at reducing the cost of transactions and cutting economic risks by compelling the government to gather a great deal of legal, financial and commercial information on the firms. As of now, 75 per cent of such information has been made public, the rest being restricted mainly to government access.42 This new system links mechanisms for holding individuals responsible with social control methods. On the one hand, the society is induced to take part in the system since participation would allow access to diverse services and advantages; on the other hand, the society’s implication in the SCS opens it to potential sanctions, i.e. holding it responsible.43 For example, in June 2018, the government released a list of 169 people who had committed misbehaviours such as provocations on flights, attempting to take a lighter through airport security, smoking on a high-speed train, tax evasion and failing to pay fines. Those on the list ended up banned from buying train and plane tickets for a year. In addition, in an attempt to shaming them, they were listed on the Credit China website.44 More generally, according to the NDRC, by the end of April 2018 some 10.5 million people had been named and shamed by the courts, which had prompted a quarter of them to fulfil their obligations.45 A year later, the NDRC published even more compelling figures, resulting in the blacklisting of 13.49 million people classified as ‘untrustworthy’. In its report, the NDRC claims that between 2014 and the end of March 2019, the SCS has blocked the sale of 20.47 million plane tickets (including 17.46 million in 2018 alone) and 5.71 million high-speed train tickets (5.47 million) as punishment for people failing to repay debts or engaging in other misbehaviours. The list of blacklisted people has been compiled by Chinese courts. Local authorities can also put pressure on untrustworthy persons in preventing them from buying premium insurance, wealth management products or real estate.46 In 2018, 3.51 million citizens and companies repaid their debt or paid off taxes and fines ‘due to pressure from the SCS’. In addition, 3.52 million enterprises were added to the creditworthiness blacklist, banning them from various activities including bidding on projects, accessing security market, taking part in land auction and issuing corporate bonds. 1,282 peer-to-peer lending platforms were also blacklisted because they could not pay back their investors or were involved in illegal fundraising.47 In April 2019, Yuan Da, the NDRC spokesman, indicated that the National Public Credit Information Centre, a NDRC unit that manages the social credit database, has started sharing credit scores of individuals and enterprises with credit firms in various sectors, as gas, coal, travel and transport. This centre will also give priority to cracking down fraud in the

Xi Jinping’s social governance in China  71 medical sector in establishing a blacklisting system targeting hospitals, doctors and insured persons.48 Consequently, it appears that there is a close relationship between the development of the SCS and the establishment by the judiciary of an online inspection and control network (网络查控系统 wangluo chakong xitong) of the implementation of courts’ decisions. The 2019 Supreme People’s Court report to the National People’s Congress sheds some light on the progress of the latter, which officially has been far from being easy. The Supreme Court claims in particular that this network has been able to ‘connect 16 units and more than 3,900 banking financial institutions, including the Ministry of Public Security and the Ministry of Natural Resources, covering 16 categories of deposits, vehicles, securities, real estate, and network funds’, and as a result, substantially improve the execution of court judgments.49 For example, in order to speed up the introduction of the SCS and improve the implementation of difficult court decisions, Shaanxi province’s higher people’s court decided in October 2018 to improve its online inspection and control network of the financial, construction and real estate sectors.50 Although the introduction of the SCS could help clean up the internal economic environment, improve economic actors’ behaviour, reduce corruption and regulate the market, the SCS obviously contains an Orwellian dimension that internet growth can only deepen. The SCS increases the party-state’s right to oversee business activities, its interference in market mechanisms and its control over the private sector, including foreign companies. It confirms the CCP’s intention to remain on the top of the political system as well as the economy and thwart the emergence of economic forces out of its tight leash. The SCS establishes above all a level of surveillance and micromanagement of citizens that is particularly anti-freedom, ignoring among other things respect for privacy and the right to be forgotten. It promotes a ‘rule of trust’ arbitrarily defined and carried out by the CCP to the detriment of the rule of law.51 Finally, the SCS contributes to creating a new Panopticon, the perfect jail dear to Jeremy Bentham and later Michel Foucault,52 in which citizens are both inmates and guards, empowered to spy on their neighbours. For the time being, the SCS is in force only partially and is far from being fully centralised: much data is being held and managed by local governments, which draw their information from their own services, mobile payment companies that hold personal data or court verdicts. And the coronavirus epidemic that broke out in late 2019 has probably contributed to postponing its full implementation. In any event, the SCS seeks to reassure credit enterprises, consumers, parents and the government, highlighting the need for security and predictability the Chinese society is obsessed with, much more than with individual freedoms or privacy. This also confirms the low level of interpersonal

72  Jean-Pierre Cabestan confidence within the Chinese society, the priorities of the majority of its members and its dominant political culture.53 Facial recognition Facial recognition is the most recent product of citizens’ digital surveillance. It has been presented in China first and foremost as a gem of domestic innovation. But the real objective of this new technology is to better monitor citizens, particularly their movements and behaviours in public spaces. Since 2017, facial recognition has been gradually used by local public security bureaus across China, with the help of local companies as Megvii and Sense Time that have mastered the technology. They are part of what is call in China the ‘Smart Eyes’ programme, itself an important dimension of this country’s ‘Smart City’ programme. Facial recognition is a substantive component of the AI industry, another key target of ‘Made in China 2025’. The State Council expects that this industry will be worth around $ 150 billion by 2030.54 Local governments’ objective in using facial recognition is to ‘run their city more efficiently’, i.e. keeping it safe, stopping street crime and protecting residents from pickpockets. However, the authorities’ (not so) hidden but crucial objective is, as in the case of internet censorship, social stability.55 According to some reports, the Chinese authorities have ambitious plans: using facial recognition and AI to track and monitor 1.4 billion citizens. China is already the biggest market in the world for video surveillance – $ 6.4 billion in 2016 – and has the highest number of security cameras: 170 million in use for its Skynet surveillance system with 400 million more in the coming years. By 2020, China is equipped with 623 million CCTV cameras against some 200 million in 2019.56 Skynet is a national system aimed at fighting crime and preventing possible disasters. In March 2018, Beijing police started to use facial recognition and AI-powered glasses to catch criminals.57 Since 2018, the Chinese security has introduced advanced facial recognition technology specially designed for tracking Uighurs and other Turkic minorities. First used in Xinjiang where Beijing launched around the same time an unprecedented crackdown on the Uighur ethnic group, it has been adopted by a growing number of provincial and city governments. Developed by software companies as Yitu, Megvii, SenseTime and CloudWalk, this racial profiling technology has also benefitted from investments from US companies as Fidelity International, Qualcomm Ventures and Sequoia or the Beijing-based Sinovation Venture, founded by the Chinese tech investor of Taiwanese origin Kai-Fu Lee (李開復).58 More generally, the CCP leadership’s ambition is to turn China into a huge Panopticon in which any one can be constantly watched, and as a result, regulates his or her behaviour accordingly, in order not to be caught. All in all, thanks to digitalisation, the People’s Republic of China (PRC) party-state is today much better equipped to understand and control the

Xi Jinping’s social governance in China  73 Chinese society as well as to predict any of its potential moves precisely at a time it is rapidly urbanising. The simultaneity and connection between the two phenomena need to be underscored. To a large extent, Xi Jinping is preparing the country to mitigate the multiple risks attached to the country’s rapid and unprecedented urbanisation, e.g. an increasing concentration in the same places of a growing number of middle-class dwellers and migrant workers. To better face these risks, the party-state has decided to more tightly manage the internet and social media with a degree of flexibility and pluralism used on purpose as both a safety valve and a gigantic source of information, the Big Data. It has decided to use these new technologies as fresh sources of power conducive to keeping social stability and defending the interests of the CCP regime. It has introduced an SCS and facial recognition technics. All these new instruments add to the many factors behind the regime’s ability to maintain in the foreseeable future the means for not only controlling society but also preventing on time any social manifestation that could weaken or a fortiori destabilise the political regime. In other words, under Xi, the CCP is much better prepared to face and overcome the new challenges attached to China’s first real urbanisation in its history.

The society’s limited participation in social governance Since Xi came to power, the Chinese society has been more actively asked to participate in social governance, but more as a collaborator of and an assistant to the party-state that as a force able to restrain the latter. As it is well-known, the CCP wants to remain alone in the driving seat. Party’s adaptation and modernisation goes on To be sure, the CCP’s adaptation to the new socioeconomic environment it has created has gone on under Xi. To that aim, it has continued modernising its governance system and introduced more flexibility or society’s participation in it. First of all, the party knows that it needs to adapt because the Chinese society, even under Xi, is far from being inert. Petitioners continue to try to get the attention of the central or provincial authorities if they cannot get their grievances addressed by the local authorities, particularly their Letters and Visits Offices that are more than ever saturated with requests. In 2016, in accordance with a joint programme launched by these offices and the Ministry of Justice, lawyers have started giving legal advice to petitioners, at least in Beijing.59 Likewise, social unrest, when it occurs continue to be managed with a mixture of repression and negotiation, particularly conflicts linked to environmental damage or degradation.60 Similarly, while keeping the official trade unions under the party leadership, under Xi, the local authorities have also continued to introduce some

74  Jean-Pierre Cabestan flexibility in the management of labour disputes and collective action, in order to better take into account the interests of the workers and as a result more efficiently preserve social stability.61 Moreover, in order to better connect (or reconnect) with the society, another very official mass organisation which operates under the CCP leadership, the All-China Women’s Federation (ACWF), has gone through extensive restructuring between 2015 and 2018. Today, local branches are trying harder to address women’s problems, the discriminations that they increasingly face as well as their deteriorating social status.62 In the same period of time, legal reforms have been introduced in order to facilitate filing non-political court cases and make their adjudication less biased and especially dependent upon local vested interests. The establishment of circuit-courts since 2013 has been precisely aimed at reducing cases of ‘judicial protectionism’. At a more political level, consultative (or deliberative) democracy (協商民 主 xieshang minzhu) has been more actively promoted, at least in the party’s discourse. For example, more often, chosen citizens are invited to attend local people’s congress hearings. To be sure, the call to ‘improve the public hearing and expert consultation system of public decision-making process’ was already mentioned in the 12th Five Year Plan for National and Social Development of March 2011.63 But officially introduced as a key feature of ‘socialist democracy’ at the 18th Party Congress in November 2012, consultative democracy has been much more actively promoted since the 19th Party Congress. In other words, under Xi, consultative democracy has been more forcefully presented and upgraded as China’s specific approach to democracy.64 At the same time, having restored Mao’s famous ‘mass line’, Xi is keener than Hu to promote United Front work and to refrain from consulting the segments of the society that the CCP does not control.65 As a result, co-opting the local elites, especially the rich and famous, CCP-led national and local people’s consultative political conferences are supposed to play a key role in the development of this form of democracy.66 Under Xi, the party never gives in Nonetheless, under Xi, to a larger extent than before, the CCP has given priority to stability, law and order and more generally to the regime’s longterm survival as if this survival were more often challenged than before. As a result, in every area of social and economic, let alone political, activity, the party wants to make sure to remain in the driving seat, at the top of things: Government, military, society and schools, north, south, east and west, the Party is the leader of everything 党政军民学,东西南北中,党是领导一切的 [dang zheng jun min xue, dong xi nan bei zhong, dang shi lingdao yiqiede].67

Xi Jinping’s social governance in China  75 In order to guarantee the regime’s long-term stability and legitimacy, first of all the party presents its relationship with the society not as contentious, dominated by conflicting interests, but as harmonious. In his report to the 19th Party Congress, Xi states as an obvious truth: ‘There is greater unity in thinking both within the Party and throughout society.’68 Xi clearly recognises the major problems facing the Chinese society today: growing expectations and increasingly unequal distribution of wealth. As he says: ‘What we now face is the contradiction between unbalanced and inadequate development and the people’s ever-growing needs for a better life.’ But only the party can manage and overcome this contradiction: ‘We must keep on strengthening the party’s ability to lead politically, to guide through theory, to organize the people, and to inspire society, thus ensuring that the party’s great vitality and strong ability are forever maintained.’ Strengthening the party leadership, both to the detriment of the government, but even more so to the detriment of the (civil) society has been Xi’s clear priority since 2012. Since the 19th Party Congress, this trend has become even more obvious. The CCP continues to pay lip service to bringing the society on board: The government should ‘coordinate with all parties in society’ in order to ‘safeguard social harmony and stability’. ‘Joint development, co-governance and sharing’ between the government and the society are the new features of social governance in China.69 However, while claiming to innovate, give more weight to grass-root social governance and enhance citizens’ participation, the document approved at the Fourth Plenary Session of the 19th Central Committee clearly gives priority to crime prevention as well as public and national security.70 It is impossible in this short contribution to list all the sectors of society in which the party has strengthened both its leadership and its control of social activities: it goes all the way from NGOs, the internet and private and foreign companies to universities, the film industry and religious activities. In spite of the slightly larger autonomy which official mass organisations may have enjoyed since the beginning of the reforms, under Xi, this autonomy is reaching obvious limits. This is particularly the case of China’s Communist Youth League (CYL), a CCP subsidiary aimed at attracting young people into the party system. Although it has diversified its activities, setting up dating services and promoting rap music, it is now in the challenging position of both being asked to be less ‘aristocratic’ and more active in promoting Xi Jinping Thought.71 Between 2012 and 2017, the CYL membership was cut from nearly 90 million members down to 81 million.72 Even when the society is invited to participate in social governance, the party’s role is enhanced. For example, China’s urbanisation has triggered many social changes and trauma. To accompany and ease this transition, local CCP authorities have decided to involve more often the new urban

76  Jean-Pierre Cabestan citizens (新市民 xinshimin) in community affairs. However, they have usually done so through residents’ ‘mobilisation’ and conflict resolution. The authorities’ objective has been to help the new urban dwellers to construct their ‘urban’ identity, not so much to ask them to participate in local administration.73 More generally, with the help of the new organisational pattern and technologies introduced, rather than social governance, it is clearly social management and even more social control that have remained the CCP’s priority. Under Xi’s purview, grid management and technology-based surveillance have rapidly expanded. As Sheena Chestnut Greitens indicates in a well-informed recent article: Grid management works by dividing cities into geographic cells that become administrative units. In each grid, a grid manager and related staff collect information, identify and report potential problems, and address resident complaints. At the district level, information from the grids is integrated with other layers of data (on public utilities, traffic, sanitation, housing, population, crime, etc.), as well as with information collected via mobile applications and citizen/volunteer input provided through online portals and phone hotlines. This integrated information platform is then shared across multiple government departments, including public security; it is intended to facilitate early identification of social-management problems so that they can be resolved proactively.74 As we have seen, digital surveillance technologies as well as the SCS under construction do help local authorities exert social control more efficiently. But this integrated approach does not only rely on these technologies or the SCS, it also involves a lot of human capital and volunteers who collaborate with the government (and the public security) and help them maintain law and order as well as social and political stability. Introduced in 168 of the 332 prefecture-level municipalities by 2015, the grid management system has been expanded to the whole urban China after the 19th Party Congress. In such an environment, not only politics remains the monopoly of the CCP, but any social activity that might have a political flavour in the eyes of the party is also banned, nipped in the bud or dismantled. This policy has of course imposed stricter restrictions on pro-democracy critics, as Xu Zhiyong or Pu Zhiqiang. However, the repression has extended to women activists, as the Feminist Five who were arrested and released on bail in March 2015 and have been under constant surveillance since then;75 and to Marxist student activists, as Yue Xin (岳昕) from Peking University, who in the summer of 2018 dared supporting workers on strike at Jasic company in Shenzhen, Guangdong. Yue Xin, who also participated earlier in #MeToo protests against sexual harassment at Peking University (Beida), has not been seen in public since her arrest, with 50 other activists supporting Jasic workers, in August 2018. One of her friends, Qiu Zhanxuan

Xi Jinping’s social governance in China  77 (邱占萱), the leader of the Peking University Marxist Society, a student organised group that studies Marxism, was also arrested on December 28, 2018, which happened to be Mao Zedong’s birthday. It is clear that the CCP does not want any activist to interpret Marxism independently and use it as a counterweight to its leadership. It is impossible to close this section without mentioning Xi’s heavy-handed control and repression of religious activities. Of course, already mentioned above, Xinjiang’s Muslims, particularly Uighurs have been targeted more than any other religious groups, leading the party-state to detain over one million of them in detention camps for an undisclosed period of time, in order to ‘re-educate’ them.76 Other religions have been targeted, too, particularly Christian (underground) house churches. Besides, while before it was a quasi-private matter, now party members need to choose between their faith in communism and other religions, especially if they practise a non-Chinese religion. In other words, citizens’ participation in social management has remained highly controlled by the party-state. While the ‘people are the master of the country’ and the party must ‘serve the people’, 77 in reality the party leads and controls the people with total impunity, as it sees fit. Although this approach is nothing new, under Xi, it has taken a more ambitious and comprehensive dimension. The party has kept adapting to the new urbanised environment that it has contributed to creating; it has continued to modernise institutions as well as state-society relations; but it controls everything and does not intend to leave any social activity beyond its reach or off the hook. The manner that the CCP and Xi himself have managed the coronavirus pandemic in early 2020 has confirmed the priority given to this strategy. Facing a Chinese Chernobyl, Xi has reacted more like Brezhnev than Gorbachev: he sent to Wuhan one of his closest protégés, Chen Yixin, secretary general of the powerful CCP Political and Legal Commission, to deal with the crisis of confidence that this epidemic has provoked. And he has refused to listen to the voices asking for more freedom of speech. Is it a sign of self-confidence or paranoia?

Conclusion Since Xi Jinping came to power in late 2012, social governance has been understood by the CCP as a more comprehensive management system of the society, in which potentially all citizens are supposed to cooperate and help the authorities, and not only the public security, maintaining law and order, and more generally political stability. There is an aforementioned Orwellian dimension in the tools that the party-state has introduced in order to achieve this goal, particularly internet control, the SCS and facial recognition. But in so doing the CCP has also the ambition to create a country-wide Panopticon in which, as in Jeremy Bentham’s, and later Michel Foucault’s perfect jail, the party or the Supreme Guard, not only puts citizens, or inmates,

78  Jean-Pierre Cabestan in a state of constant insecurity (am I checked?) but also turns them into potential collaborators, or guards, who, in order to protect themselves and be better treated, will be strongly inclined to report on the other citizens, or inmates’ perceived misbehaviours. This totalitarian project raises many questions which go far beyond China’s future. As far as the PRC regime is concerned, the new social governance system that is emerging is likely to provide the CCP with a long-term life insurance, particularly in the current context of rapid urbanisation. Under Xi more than his predecessors, the Chinese party-state has equipped itself with the means to control the situation. More importantly, it is now better prepared to face the social and political challenges of an unprecedentedly and mostly urbanised Chinese society. The good news for the CCP and Xi is that most mainland Chinese accept and support the CCP and Xi’s leadership. Most protests and unrests are not political. And no alternative political force has a chance to emerge in today’s PRC. In other words, the CCP has good reasons to be self-confident about the future.78 Nonetheless, at the same time, the party leadership appears more and more paranoid. It has identified, without any evidence, the recent protest in Hong Kong as the work of American (and Western) black hands. It also sees in the Hong Kong protest signs of a ‘colour revolution’ that has the potential to turn the Special Administrative Region into a ‘base for subversion’ and, as a result, to destabilise the whole of China. The outburst of protest triggered by the mismanagement of the coronavirus epidemic has also fed the CCP’s concerns about the future. I am unable to reconcile the mixture of growing self-confidence and paranoia that the PRC regime projects. But it is worth keeping it in mind, particularly as we try to assess China’s increasing influence around the world. How long can Xi afford acting like Brezhnev and turning his back to political reform? This brings us to a final question: can China’s social governance system become a model for the rest of the world? Chinese companies have started exporting their technologies and expertise in terms of creating safe and smart cities, in which all citizens are constantly connected and the authorities are empowered to micromanage and pre-empt any grievance, protest or unrest. A growing number of developing authoritarian countries, such as Rwanda, Djibouti or Iran, are attracted by these technologies. Yet, democratic nations have started putting legal limits to the power that these technologies can put in the hands of the state. For instance, in August 2019, the European Union decided to introduce strict regulations on the use of facial recognition. And the protection of privacy as well as political pluralism are likely to impose additional restrictions on any technology-based social governance system. For the time being and in the foreseeable future, most Chinese support empowering their party-state as well as the new high-tech or human control mechanisms it has introduced, such as the SCS. Nevertheless, down the road, things will probably change. Most mainland Chinese may not realise or support the idea that Hong Kong, and Taiwan for that matter, are

Xi Jinping’s social governance in China  79 showing the way. But in 20–30 years from now, the situation is very likely to be different as the PRC continues to develop, urbanise and get wealthier. As a result, then, will the demands and expectations of mainland Chinese not be closer to that of their Hong Kong compatriots and Taiwanese cousins?

Notes 1 ‘Decision of the Central Committee of the Communist Party of China on Some Major Issues Concerning Comprehensively Deepening the Reform’, adopted at the Third Plenary Session of the 18th Central Committee of the Communist Party of China on November 12, 2013,, January 16, 2014, Section XIII, at content_31212602_13.htm (accessed February 9, 2020). 2 Chen Jiagang, ‘Cong shehui guanli zou xian shehui zhili’ (From Social Management to Social Governance), Xuexi shibao, October 22, 2012. An English translation of the main contents of the article can be found in Chen Jiagang, ‘Governance Not Management’, China Daily, November 20, 2012, at http://www. (accessed February 9, 2020). 3 Simona Novaretti, ‘Social Governance vs. Social Management: Towards a New Regulatory Role for Social Organizations in China?’, Opinio Juris in Comparatione, Studies in Comparative and National Law, 1 (1), 2017, pp. 1–30, at http:// (accessed February 9, 2020). 4 Xi Jinping, ‘Secure a Decisive Victory in Building a Moderately Prosperous Society in All Respects and Strive for the Great Success of Socialism with Chinese Characteristics for a New Era’, delivered at the 19th National Congress of the Communist Party of China, October 18, 2017, at english/download/Xi_Jinping’s_report_at_19th_CPC_National_Congress. pdf (accessed February 9, 2020); Chinese version: politics/19cpcnc/2017-10/27/c_1121867529.htm (accessed February 9, 2020). 5 Andreas Fulda, ‘Government Procurement of CSO Services in the PR China: Doing the Party’s Work?’ China Policy Institute, Policy Paper, No. 4, 2013, at (accessed February 10, 2020). 6 Jean-Pierre Cabestan, China Tomorrow: Democracy or Dictatorship? Rowman & Littlefield, Lanham, MD, 2019, p. 22. 7 Yi Kang, ‘The Development of Grassroots Chinese NGOs Following the Wenchuan Earthquake of 2008: Three Case Studies, Four Modi Vivendi’, Voluntas, February 6, 2017, pp. 1–25. 8 ‘Regulations on the Registration and Management of Social Organizations’, published by the State Council at the 8th ordinary session on October 25, 1998, and revised on February 6, 2016. 9 Civic Freedom Monitor: China, International Center for Not-For-Profit Law, December 5, 2016, at (accessed February 11, 2020). 10 Karla Simon, Civil Society in China. The Legal Framework from Ancient Times to the ‘New Reform Era’, Oxford University Press, Oxford, 2013, pp. xxxvii, 118–122. 11 Sarah E. Anderson, Mark Buntaine, Mengdi Liu and Bing Zhang, ‘Non‐ Governmental Monitoring of Local Governments Increases Compliance with Central Mandates: A National‐Scale Field Experiment in China’, American

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Journal of Political Science, 63 (3), July 2019, pp. 626–643, at https://online (accessed February 12, 2020). Matthew Campbell and Peter Martin, ‘China’s Latest Crackdown Target Is Liberal Economists’, Bloomberg, May 11, 2019, at features/2019-05-11/china-s-latest-crackdown-target-is-liberal-economists (accessed January 12, 2020); Lily Kuo, ‘Chinese liberal Thinktank Forced to Close after Being Declared Illegal’, The Guardian, August 28, 2019, at https://www.the (accessed January 12, 2020). Xu Zhangrun ‘Viral Alarm: When Fury Overcomes Fear’, translated and annotated by Geremie R. Barmé, China File, February 10, 2020, at http://www. (accessed February 12, 2020); Minnie Lau, Echo Xie and Guo Rui, ‘Coronavirus: Li Wenliang’s Death Prompts Academics to Challenge Beijing on Freedom of Speech’, South China Morning Post, February 12, 2020, at https:// (accessed February 14, 2020). Christopher Cairns, ‘Seizing Weibo’s “Commanding Heights” through Bureaucratic Re-centralization’, Dissertation, Chapter 3, January 1, 2015, at http:// commanding_heights_through_bureaucratic_re-centralization_-_final_7.30.15. pdf (accessed February 7, 2020). Gary King, Jennifer Pan and Margaret Roberts, ‘How the Chinese Government Fabricates Social Media Posts for Strategic Distraction, Not Engaged Argument’, American Political Science Review, 111 (3), 2017, pp. 484–501. Mei Wu, ‘China’s Crackdown on “Internet Rumors” and “Illegal” Internet Publicity Activities’, in Lijun Yang and Wei Shan (eds.), Governing Society in Contemporary China, World Scientific, Singapore, 2016, pp. 41–56. No figures have been officially published. See Ian Williams, ‘China’s Internet Crackdown Is Another Step towards “Digital Totalitarian State”’, NBC News, September 6, 2017, at (accessed January 14, 2020). Phil Muncaster, ‘China’s “Big Vs” Disown Selves Online to Avoid New Gossip Laws’, The Register, September 18, 2013, at 09/18/verified_accounts_weibo_unverify_rumour_crackdown/ (accessed January 15, 2020). Laurie Chen, ‘Why China’s Tech-Savvy Millennials Are Quitting WeChat’, South China Morning Post, July 22, 2018, at society/article/2156297/how-growing-privacy-fears-china-are-driving-wechatusers-away (accessed January 15, 2020). CIW Team, ‘Weibo Monthly Active Users Grew to 462 Million in Dec 2018, 93% on Mobile’, China Internet Watch, March 6, 2019, at https://www.chinainternet (accessed January 16, 2020). ‘Cybersecurity Law’ (中华人民共和国网络安全法), adopted on November 7, 2016, came into effect on June 1, 2017, at content_2001605.htm (accessed January 16, 2020); English translation: ‘Cybersecurity Law of the People’s Republic of China’, Asiapedia, January 2019, at (accessed January 16, 2020). David Schulze and Nadine Godehardt, ‘China 4.0: Party and Society Debate the Digital Transformation’, SWP Comments, 6, March 2017, at https://www. pdf (accessed January 17, 2020).

Xi Jinping’s social governance in China  81 23 ‘Fortifying the Great Firewall: The Criminalization of VPNs’, Human Rights Journal, Dui Hua Foundation, parts I & II, August 14 and 22, 2019, at https:// (accessed January 17, 2020) and wall_22.html (accessed January 17, 2020). 24 Raymond Zhong, ‘It Built an Empire of GIFs, Buzzy News and Jokes. China Isn’t Amused’, The New York Times, April 11, 2018, at https://www.nytimes. com/2018/04/11/technology/china-toutiao-bytedance-censor.html (accessed January 18, 2020); Jon Russell, ‘Ambitious New Media Firm Bytedance Is No Longer a Secret Outside of China’., Techcrunch, November 10, 2017, at https://techcrunch. com/2017/11/10/what-exactly-is-bytedance-and-toutiao/ (accessed January 18, 2020). 25 Iris Deng, ‘Tencent Launches Strictest Verification System Yet to Detect Minors after Beijing’s Call for Action on Gaming’, South China Morning Post, September 6, 2018, at (accessed January 18, 2020). 26 Iris Deng, ‘Tencent Restructures with Eye on Industrial Internet as Gaming Business Slows’, South China Morning Post, October 1, 2018, at https://www. (accessed January 19, 2020). 27 James Griffiths, The Great Firewall of China. How to Build and Control and Alternative Version of the Internet, Zed Books, New York, 2019. 28 Brice Pedroletti, ‘La Chine vaillamment défendue par son armée de trolls’ (China Vigorously Defended by Troll Army), Le Monde, June 4, 2017, at https:// (accessed January 19, 2020). 29 Christian Shepherd and Yuan Yang, ‘China Increases Crackdown on Twitter Users’, Financial Times, April 16, 2019, p. 4. 30 Sigal Samuel, ‘China Paid Facebook and Twitter to Help Spread Anti-Muslim Propaganda’, Vox, August 22, 2019, at 2019/8/22/20826971/facebook-twitter-china-misinformation-ughiur-musliminternment-camps (accessed January 19, 2020). 31 James Griffiths, ‘How Chinese Internet Trolls Go after Beijing’s Critics Overseas’, CNN, April 19, 2019, at (accessed January 19, 2020). 32 Owen Churchill, ‘Twitter and Facebook Suspend Accounts for Being Part of China-Backed Campaign to Disrupt Hong Kong Protests’, South China Morning Post, August 20, 2019, at 3023495/twitter-and-facebook-suspend-accounts-being-part-china (accessed January 20, 2020). 33 Samm Sacks, Disruptors, Innovators, and Thieves: Assessing Innovation in China’s Digital Economy, CSIS, Washington D.C., January 2018, at https://csis-prod. Thieves_Web.pdf?22jQMv.fUUhvJsneUUmP767drezraCXy (accessed January 20, 2020). 34 Yingzhi Yang, ‘Short Video App Tiktok Extends Reach in Global Markets, Sees In-App Purchases Surge More than 200 Per cent’, South China Morning Post, April 16, 2019, at (accessed January 20, 2020); Brandon Doyle, ‘TikTok Statistics – Updated February 2020’, Wallaroo Media, January 30, 2020, at (accessed January 20, 2020). 35 Wang Xi, Jie Han, Siu-san Wong and Siu-fung Lau, ‘Chinese Universities Ordered to Spy on Staff, Students in Ideological Crackdown’, Radio Free Asia, April

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45 46

47 48 49

8, 2019, at html (accessed January 21, 2020). Margaret Roberts 2018 Margaret E. Roberts, Censored: Distraction and Diversion Inside China’s Great Firewall, Princeton University Press, Princeton, NJ, 2018. Social Credit System, 国务院关于印发社会信用体系建设规划纲要(2014—2020 年)的通知, June 14 2014, at content_8913.htm (accessed January 21, 2020); English translation (Rogier Creemers): ‘Planning Outline for the Construction of a Social Credit System (2014–2020)’, China Copyright and Media, June 14, 2014, at https://chinacopy (accessed January 21, 2020). Martin Chorzempa, Paul Triolo, and Samm Sacks, ‘China’s Social Credit System: A Mark of Progress or a Threat to Privacy?’ Policy Brief, pp. 18–14, Peterson Institute for International Economics, June 2018, pp. 4–11, at https://piie. com/system/files/documents/pb18-14.pdf (accessed January 12, 2020). Simina Mistreanu, ‘Life inside China’s Social Credit Laboratory’, Foreign Policy, ­ April 2, 2018, at (accessed January 11, 2020). Yuzhe Zhang and Wei Han, ‘In Depth: China’s Burgeoning Social Credit System Stirs Controversy’, Caixin, April 1, 2019, at 2019-04-01/in-depth-chinas-burgeoning-social-credit-system-stirs-controversy101399430.html (accessed January 21, 2020). Jiaquan Zhou, ‘Drones, Facial Recognition and a Social Credit System: 10 Ways China Watches Its Citizens’, South China Morning Post, August 4, 2018, at (accessed March 9, 2020). Mirjam Meissner, ‘China’s Social Credit System’, Merics China Monitor, May 24, 2017, at (accessed January 22, 2020). Samantha Hoffman, ‘Managing the State: Social Credit, Surveillance and the CCP’s Plan for China’, China Brief, 17 (11), August 17, 2017, at https://jamestown. org/program/managing-the-state-social-credit-surveillance-and-the-ccps-planfor-china/ (accessed January 22, 2020). Frank Tang, ‘China Names 169 People Banned from Taking Flights or Trains under Social Credit System’, South China Morning Post, June 2, 2018, at https:// (accessed January 22, 2020). Ibid. Amanda Lee, ‘China’s Credit System Stops the Sale of over 26 Million Plane and Train Tickets’, South China Morning Post, April 18, 2019, at https://www. (accessed January 23, 2020); Huifeng He, ‘China’s Social Credit System Shows Its Teeth, Banning Millions from Taking Flights, Trains’, South China Morning Post, February 18, 2019, at https:// (accessed January 23, 2020). Huifeng He, ibid. Amanda Lee, no. 46. ‘Main Work Accomplished in 2018, Section 7: Consciously Accept Supervision and Promote Fair Justice for the People’ (最高人民法院工作报告 2018年主要工 作, 七、自觉接受监督,促进司法为民公正司法), Supreme People’s Court Report, Xinhua, March 12, 2019, at 1124253887.htm (accessed January 23, 2020).

Xi Jinping’s social governance in China  83 50 ‘Shaanxi Province Higher Court Improve the Online Inspection and Control ­Network’ (陕西省法院完善网络执行查控系统.信用中国), Xinyong Zhongguo, Credit, October 16, 2018, at huanlan/aWeek/xinyongdongtai/201810/t20181016_128179.html (accessed January 23, 2020). 51 Yu-Jie Chen, Ching-Fu Lin and Han-Wei Liu, ‘“Rule of Trust”: The Power and Perils of China’s Social Credit Megaproject’, Columbia Journal of Asian Law, 32 (1), 2018, pp. 1–36, at 3294776#%23 (accessed January 24, 2020). 52 Michel Foucault, Discipline and Punish: The Birth of the Prison, Penguin, Harmondsworth, 1985. 53 Bruce J. Dickson, The Dictator’s Dilemma: The Chinese Communist Party’s Strategy for Survival, Oxford University Press, Oxford, 2016; Jean-Pierre Cabestan, no. 6, pp. 59 ff. 54 Cyrus Lee, ‘China Identifies 17 Key Areas to Make AI Breakthroughs’, ZDNet, November 19, 2018, at (accessed January 24, 2020). 55 Rob Schmitz, ‘Facial Recognition in China Is Big Business as Local Governments Boost Surveillance’, National Public Radio, April 3, 2018, at https://www. (accessed January 24, 2020). 56 Phoebe Zhang, ‘Cities in China Most Monitored in the World’, South China Morning Post, August 19, 2019, at article/3023455/report-finds-cities-china-most-monitored-world (accessed January 25, 2020). 57 Jiaquan Zhou, no. 41. 58 Kai-Fu Lee, who earlier worked for Microsoft and Google, is known for his book AI Superpowers: China, Silicon Valley, and the New World Order (Houghton Mifflin Harcourt, Boston, 2018) that predicts China’s global dominance in AI, including over the US. See Paul Mozur, ‘Inside China’s Dystopian Dreams: A.I., Shame and Lots of Cameras’, The New York Times, July 8, 2018, at https://www. (accessed January 25, 2020). 59 Cong-rui Qiao, ‘Duality or Complementarity? The Political and Legal Orientations of the Chinese Petitioning Mandate’ (blog), Utrecht University, 2019, at (accessed January 25, 2020). 60 Eleanor Albert and Beina Xu, ‘China’s Environmental Crisis’, Council on Foreign Relations, January 18, 2016, at (accessed January 26, 2020). 61 Chloé Froissart, Yan Liu and Quan Meng, ‘Trade-Offs Between State Organisations and Workers’ Organisations Chinese Unions in Search of Authoritarian Collective Bargaining’, China Perspectives, 2, 2019, pp. 29–39. 62 Yunyun Zhou, ‘“Being a Good Daughter of the Party”? A Neo-Institutional Analysis of the All-China Women’s Federation Organisational Reforms in China’s Xi Era’, China Perspectives, 2, 2019, pp. 17–28. 63 Simona Novaretti, no. 3, p. 23. 64 王永香 陆卫明 (Wang Yongxiang and Lu Weiming), 协商民主是中国社会主义 民主政治的特有形式和独特优势 (Deliberative Democracy Is the Unique Form and Unique Advantage of Chinese Socialist Democratic Politics),红旗文稿 (Hongqi Wengao, Red Flag Essays), 2019, at 2019-03/06/content_317009.htm (accessed January 26, 2020). 65 Jean-Pierre Cabestan, ‘The Contradictions of Xi Jinping’s Socialist Democracy’, in Julia G. Bowie (ed.), Scrambling to Achieve a Moderately Prosperous Society,

84  Jean-Pierre Cabestan Party Watch Annual Report 2019, December 11, 2019, pp. 27–30, at https://www. (accessed January 27, 2020). 66 Rebekka A. Sagild and Anna L. Ahlers, ‘Honorary Intermediaries? The Chinese People’s Political Consultative Conferences in Theory and Practice’, China Perspectives, 2, 2019, pp. 9–16. 67 Quoted by Bill Bishop, ‘Seven China Themes For 2018‘,Sinocism, December 31, 2017, at (accessed January 27, 2020). 68 Xi Jinping, no. 4. 69 Liu Lihui, Social Governance in China: The Role of Government and Transformation of Government Functions, Research Report, No. 85, Development Research Centre of the State Council, May 15, 2018, at content_36598955.htm (accessed January 28, 2020). 70 (受权发布)中共中央关于坚持和完善中国特色社会主义制度 推进国家治理体系和 治理能力现代化若干重大问题的决定 ([Authorised for Release] The CPC Central Committee Decision on Several Important Issues on Upholding and Improving the Socialist System with Chinese Characteristics and to Promote the Modernization of the National Governance System and Governance Capacity), adopted by the Fourth Plenum of the 19th Central Committee, October 31, 2019, at http:// mc_eid=22b31dea24 (accessed January 28, 2020). 71 Jérôme Doyon, ‘Low-Cost Corporatism? The Chinese Communist Youth League and Its Sub-organisations in post-Mao China’, China Perspectives, 2, 2019, pp. 39–46. 72 ‘Number of Communist Youth League of China (CYLC) members from 2006 to 2017’, Statista, September 23, 2019, at number-of-communist-youth-league-of-china-cylc-members/ (accessed January 29, 2020). 73 Beibei Tang, ‘Intermediary Governance Space in Relocation Neighbourhoods’, China Perspectives, 2, 2019, pp. 57–65. 74 Sheena Chestnut Greitens, ‘Domestic Security in China under Xi Jinping’, China Leadership Monitor, March 1, 2019, at (accessed January 29, 2020). 75 Jinyan Zeng, ‘China’s Feminist Five: “This Is the Worst Crackdown on Lawyers, Activists and Scholars in Decades”’, The Guardian, April 17, 2015, at https:// (accessed January 30, 2020). 76 Adrian Zenz, ‘“Thoroughly Reforming Them towards a Healthy Heart ­Attitude” – China’s Political Re-Education Campaign in Xinjiang’, SocArXiv, September 7, 2018, at (accessed January 30, 2020). 77 Xi Jinping, no. 4. 78 Jean-Pierre Cabestan, no. 6; Bruce J. Dickson, No. 53.


The difficulty of being Xi Jinping1 Avinash A. Godbole

Since the 19th National Congress held in October 2017, the Communist Party of China (CPC) has been governed under what is now called the “Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era”. The policy document that came out of it at the end is quite significant for many reasons. The new principal contradiction, as stated by Xi, essentially acknowledges that China today is in midst of one of the most significant transitions in its modern political history. One of the fundamental questions facing the party today has to do with how the party retains its central authority and status in the lives of people even as its role from day-to-day affairs continues to retreat rapidly. This chapter is an exercise to understand the details of this question and the party’s search for answers to these. The reasons to study the party are crystal clear; CPC governs the largest population that any country and the second largest economy in the world and has under its wings the armed forces that have one of the top defence budgets. It is also one of the last five odd singe party Communist regimes in the world. Keeping CPC company are the Democratic People’s Republic of Korea, Laos, Cuba and Vietnam. It is also the only single party regime in top ten of the world economies.2 Its ability, or lack of it, to adapt to the forces of change is bound to have a substantial impact on the world, in both political and economic terms. There are various ways to look at this idea: the origins, the strengths and weaknesses and the implications of what the Xi Jinping thought means, and that is something that this chapter aims to do. However, before that there are three significant questions that need answering in order to understand as to what makes Xi unique. First, what is the Xi Jinping thought exactly and how it differentiates itself from the ideas of his predecessors, if at all? Second, what are the sources of legitimacy of the CPC. This question would help understand what happens to the party’s relations with the people in the post-ideological era and how the changing contours of accountability and of rule according to law would affect the future course of promotions. The third, how is the idea of Chineseness being reinvented and how does it impact the Xi legacy for the party in the longer run.

86  Avinash A. Godbole

The Xi Jinping thought: new or old? Hu Angang, who is professor at Tsinghua University and one of the core proponents of the Xi thought, describes the Xi Jinping thought as being development centric and being divided over six areas which include; peoplecentred development, innovation development, green development, coordination development, opening-up development, and sharing development.3 If one looks at this from the point of view that in the messaging style of the CPC, a lot of self-criticism does tend to get turned into course-correction tasks to be fulfilled by the next generation of leaders, it becomes clear that these are the areas where the development was slow or where inequalities created and sustained as the country got richer. Thus, the foundations of Xi Jinping thought are actually in the idea of scientific development that was associated with Hu Jintao. What needs to be remembered is also the fact that Xi governs a China that is not only more powerful but also more insecure, domestically. China is stronger and confident globally, but for many years now, it is spending more on internal security. Its domestic security budgets have exceeded defence budgets consistently since 2011 and while part of this has to do with the two riots in Tibet in 2008 and in Xinjiang in 2009, it also has to do with spread of unrests what were called mass incidents in many of China’s urban centres. One of the more fundamental questions surrounding the Xi era is whether Xi is larger in stature and power than the rest of the Politburo Standing Committee (PBSC) members or is he still one of the seven top men of the CPC. Depending on how one answers this question, the answer to Xi’s ability to leave a lasting imprint would change and fundamentally so. Therefore, that is the first question this chapter would get into. The anti-corruption campaign: is it unique to Xi? One of the often attributed measures of Xi Jinping’s powers have been his anti-corruption campaigns. However, it must be remembered that there was a collective support to this effort of Xi granted by the work report presented by Hu Jintao at the start of the 18th party Congress in which the word corruption appeared on 19 occasions and the word discipline on 14 occasions. On corruption in fact, the mandate seems to be crystal clear given the heading of one of the subsections reads, “Unswervingly combat corruption and preserve Communists’ political character of integrity”.4 The section begins with a serious warning that corruption was an urgent as well as immediate issue and that any delay or inability or unwillingness to combat it would have serious consequences. He says, “If we fail to handle this issue well, it could prove fatal to the Party, and even cause the collapse of the Party and the fall of the state”.5 There was of course the backdrop of the now infamous Ferrari crash was a grim reminder of what could happen with corruption

The difficulty of being Xi Jinping  87 and misuse of official power, coupled with control of the flow of information. Thus, the anti-corruption campaign did emerge from a consensus at the top level of leadership and was not necessarily an agenda of Xi himself. Second, Xi’s anti-corruption campaign is also not necessarily new. There have been two major cycles of anti-corruption campaigns with the CPC before Xi. The one under Xi, has lasted longest and has caught the most number of officials, including most number of the Central Committee members. Approximately 27 sitting or former Central Committee members were investigated, indicted or convicted since the beginning of 2013, whereas the entire number of such cases for Central Committee members was 15 between 1990 and 2012.6 Third, there needs to be a sincere assessment whether the depth and spread of anti-corruption campaign reflects the strength of Xi Jinping’s power or the depths of genuine weakness that the party actually suffers from. Many scholars like Claude Arpi have already written on this issue.7 These writings also reflect that the length of anti-corruption campaign actually erodes the credibility of the party. Why then does the party need such a campaign in the first place? Stability remains a core concern for the CPC, and it aims to achieve that by strictly ensuring adherence to three core ingredients: preventing large-scale protests, avoiding public leadership splits and keeping the military loyal to the Party.8 CPC is one party that likes to be in command all the time, and this time around while it is losing a sense of command, it is substituting it with a stringent control. Even some of the subsequent policy decisions, like more supervisions, inspections and commissions, increased party committees, classroom surveillance and controlled internet are mechanisms for better control. Seen from this perspective, the anti-corruption campaign looks rather a danger bell. In a famous statement, Xi Jinping had said that his anti-corruption campaign aimed to eliminate “tigers and flies” alike. Addressing the plenary session of the Central Commission for Discipline and Inspection (CCDI), Xi had then said, “We must uphold the fighting of tigers and flies at the same time, resolutely investigating law-breaking cases of leading officials and also earnestly resolving the unhealthy tendencies and corruption problems which happen all around people”.9 Tigers here denote big leaders, central level officials, leaders in charge of influential sectors and corporations and provincial party secretaries with serious ambitions. The outcome document of 2013 CCDI session also listed “foxes and rats” as being the targets of the anti-corruption campaign. The 18th Central Discipline Inspection Commission’s fifth plenum held in Beijing in January 2015 listed enforcing party discipline by taking down gangs and factions as its core task.10 The reason to list these developments in the first tenure of Xi Jinping is to highlight that the anti-corruption movement, search for intra-party discipline, and controlling of factions are all different aspects of the same process of keeping the party unity intact and ensuring that the core debates are handled within the party and not in front of the world.

88  Avinash A. Godbole The report presented at the 19th Congress of the CPC said, Only by intensifying efforts to address both the symptoms and root causes of corruption—by making sure that officials are honest, government is clean, and political affairs are handled with integrity—can we avoid history’s cycle of rise and fall and ensure the long-term stability of the Party and the country. (emphasis added)11 This shows that the central objective has to do with maintaining party unity, which it has always been. Towards ensuring party centrality, authority and loyalty, Xi has made more reforms to the CPC governance structure by issuing new codes and revising older ones at a faster pace than what his predecessors did. In his entire career as President, Jiang issued six new codes during the course of his thirteen years in power; Hu issued ten new codes and revised three codes between 2002 and 2012. But in six and half years Xi has issued ten new codes and has revised fourteen. Some of the significant codes revised include the “CPC’s Discipline and Penalty Code, the Inspection Work Code, and the Cadre Appointment and Promotion Code”.12 Even in the last annual meeting of the CCDI, Xi had called for ensuring “greater strategic achievements in full and strict governance over the Party”. He also reportedly asked for “maintaining healthy comradeship within the Party and enforcing the system of democratic centralism”. Another of Xi’s message and the outcome guideline was that “Officials should also take the lead in establishing a healthy working relationship and not use public resources as a tool of building clout or underhand connections to seek illicit gains”.13 This basically means that competition, rent-seeking, campaigns and favouritism must be avoided in appointments at higher levels as was seen to be happening before the 19th congress. Another flabbergasting development in this meeting has been the CCDI declaration that ensuring and safeguarding Xi’s statues as a core leader was one of its top priorities in 2019. The reason for this is that not recognising Xi as a core leader is now likely to be considered a moral and ideological corruption making it liable for punishment. Xi for life? One of the most significant questions about China today is whether Xi Jinping is going to be in power for life. Especially, since the March 2018 amendment, which removed the two-term limits on Chinese presidency, there was a storm of opinions on this issue and many seemed to take a “we told you so” kind of posture on the issue of Xi the strongman of the CPC. However, it is important to note that the real power in China lies with the post

The difficulty of being Xi Jinping  89 of Communist Party general secretary and Central Military Commission chairman and none of these had term limits. So in theory, even if presidential term limit was not abolished, Xi could have remained in power until he controlled one of the two other abovementioned posts. Many have described this removal of term limit as a process of bringing the national constitution in line with the party constitution. The absence of anointed sixth generation from the Standing Committee has only further added to the confusion. However, some of the recent thinking in the party seems to be that designating a successor brings them into sudden limelight and also adds pressure on each of their action.14 It’s also possible that those who miss out start leaking unfavourable stories to foreign media about the designated successor in order to weaken them. Xi’s own position has been that public bargaining for top posts leads to unreasonable bargaining and possible buyouts of support which is counterintuitive to collective leadership. It is possible that the three groups, the Xi group, the Jiang Zemin group and the Communist Youth League group of Hu Jintao, have not been able to agree on the order of successors. Also, there have been too many contenders who cannot be ignored as the entire post-cultural revolution generation is at the central committee and part of the politburo with an equally credible record. Thus, better delay the nomination than create more factions. CPC’s struggle with factions (otherwise known as cliques, groups, or circles) is of course not new. There was the Lin Biao case, the Gang of Four episode, the reformers versus revolutionary veteran leaders and the more recent Communist Youth League versus Princelings factions. And the struggle has always been the same; to ensure the façade of party unity. Alice Miller lists three types of factions usually seen in the CPC based on what motivates the groupings: first, ideological factions, reformists vs. conservatives, second, power-seeking factions, Shanghai group of the post-Deng era and CYL, for example, and third, the bureaucratic factions, armed forces, the Petroleum group, etc.15 Over a period of time, the ideology-­d riven power struggle has given way to interest or association-­ based groupings. The two core features of factions are clientelism and reciprocity on the basis of purpose and/or interests. There is, in most cases, a senior leader under whose patronage these factions flourish and survive. Factions emerge in new form, colour and outlook because interest and business groups are on the lookout for networks that can get contract and patronage and profits. In the absence of democratic norms and bureaucratic processes, promotions have been largely dependent on favouritism and an ambitious leader has had to build his networks in order to ensure smooth transition to higher levels. The intra-party reforms process since 2013 has attempted to correct this major lacuna. Second, higher level leaders need followers because they want

90  Avinash A. Godbole to avoid persecutions after retirements, especially those who did not make it to the levels of politburo. The new sets of factions, or groups within the party are likely to be the ones which critique the Belt and Road Initiative (BRI). The example of the reformist, and now labelled revisionist, think-tank Unirule is of course well known. However, there are also important other voices emerging as critiques of the BRI. There are three different strands of thought within the overall critique. First that it is a wasteful expenditure, second that it would lead to corruption in new ways in the form of awards of important positions as well as contracts and third that the money being invested in BRI is hard earned by the Chinese workers and other citizens and that they should be the principal beneficiaries of the prosperity and not corporations and powerful bureaucrats and leaders.16 Xu Zhangrun, a now suspended professor of Tsinghua University is one such outspoken academic who chose to make his displeasure with BRI public. In July 2018, he had written one essay titled, Imminent Fears, Immediate Hopes, which critiqued the leadership style of Xi Jinping. This essay was later banned in China however by that time it was already viral amongst the Chinese people. There is also a general clampdown on the way history is being taught in China as part of the patriotic education campaign. This essay also coincided with the vaccine scandal that had rocked China in 2018 and Xi’s visit to Africa. It is important to note that Tsinghua is also the place where Xi Jinping studied and was previously being seen as a strong source of support for Xi’s policies. There is also a view that Xi Jinping has been more or less successful for eradicating factionalism within the CPC for now. However, this view can be strongly contested. The purge and subsequent conviction of Sun Zhengcai who was once being seen as one of the generation six leaders of China just 4 months before the 19th Congress of the CPC had come as a surprise. Sun’s name was being discussed because he was the youngest politburo member in the 18th Central Committee. Sun was seen as someone with strong support based as well as having a serious ambition of a top position. Some anonymous sources have been quoted as saying that “Sun and other senior figures prosecuted in Xi’s anticorruption crackdown were conspiring openly to usurp party leadership”. If these allegations were to be true, bribery charges would seem like an effort to make the crime less severe while ensuring that the intra-party disputes remain out of public glare. The leader who seems to have emerged as an outcome of Sun’s fall has been Chen Min’er. Hu Chunhua is the other possible next generation leader of the CPC. In April 2019, Xi visited Chongqing and was seen to be travelling alongside Chen and Hu. Chen has been a long-time protégé of Xi Jinping’s having worked under him in Zhejiang province. Age is also on the side of Chen as he (born 1960) is also in a position to hold power for two terms starting 2022. Even if he were to be born in 1959, he would have to vacate his position in 2027 as a 68+ years old. Thus, Chen is emerging as a strong probable

The difficulty of being Xi Jinping  91 successor to Xi Jinping, if at all. The probable reason why Chen is being promoted is his work as Xi’s propaganda chief in Zhejiang between 2002 and 2007 when Xi was a provincial secretary there. This was a time when Xi’s national image as a no-nonsense anti-corruption leader was build up. Just the way Xi got to head Shanghai after a corruption scandal there and before being drafted into a national role as a member of the politburo standing committee and then as vice-president, Chen has been given responsibility of Chongqing municipality in the aftermath of ousting of Sun Zhengcai. Hu Chunhua is one of the Vice Premiers and one in charge of the poverty alleviation program. Hu is a protégé of former President Hu Jintao and under the patronage of Premier Li Keqiang also a product of the CYL. While Hu Chunhua’s portfolio appears the weakest amongst the four vice premiers, his work is to oversee Xi’s ambitious target of eliminating poverty in China by 2020. This is what gives him also ample reason to balance his interests between his past and his future as the potential premier under Chen Min’er as president. In China, thus far, leaders have not been able to choose their own successors because the transition was always planned by the previous generation. Hu Jintao was nominated by Deng and Hu could not appoint Li as President as he wanted. What Xi has done thus far unlike his predecessors is that he has removed an almost declared successor who was a protégé of his own predecessor through the alleged corruption case and apparently appointed his own protégé as his successor. Xi’s effort to balance Chen and Hu also appears as an attempt to signal compromise after the removal of the presidential term limit caused a serious backlash and uproar last year. Xi did that by praising efforts of Chongqing government for its work.17 On the other hand, Hu Chunhua, one of the vice premiers is tasked with achieving poverty alleviation goals. Xi has also stated in the past that leading officials should be selected from among those with provincial or municipality experience rather than ones who have bureaucratic organisational experiences. This is because those who work in provinces have more problem-solving skills than those groomed largely in Beijing. Xi himself had worked in four such including in Hubei, Fujian, Zhejiang and Shanghai before coming to Beijing. However, whether this is indeed a genuine belief or just an excuse to root out the potential sixth generation remains far from clear. If the belief is genuine, then it is possible that Xi has started grooming the seventh generation as well and the sixth generation may be the one to lose out due to this adjustment under Xi.18 There was also a ripe speculation whether Xi would include the sixth generational leadership at the fourth plenum of the 19th national congress held in October 2019. However, it would have been highly unprecedented as fourth plenums usually focus on policy and governance-related issues. Similarly, the last plenum was no exception and no expansion of the standing committee happened then. It is also possible that the news about such

92  Avinash A. Godbole expansion began in one of the publications supported by non-Xi factions, just perhaps to stir the sentiment. Governance Deficit under Xi? Equally important has been the Xi regime’s lack of ability to push through difficult reforms and to maintain an economic growth rate that is considered healthy. This has been compounded by the US–China trade war. At the 2018 National People’s Congress, China had set a rather modest target of around 6.5 per cent for growth in 2018, whereas in 2019 the estimates have been of achieving 6.0 to 6.5 per cent of growth. Xi Jinping set out a wonderful set of reform targets in the third plenum of the 18th central committee in calling and letting the markets play a more decisive role in resource allocation. Alice Miller argues that while previous third plenums, usually known for issuing policy directives, usually focused on a single issue area, this one had 60 decisions.19 What followed in policy came to be known as supply-side reforms and other sets of structural reforms. However, very little of that has been implemented. China’s notorious and slow to change State Owned Enterprises (SoEs) have also been major targets of Xi-Li reforms initiatives. However, they are also more or less where they were in 2012–13 in terms of reforms, just because they have a stubborn intrinsic logic. On multiple occasions Xi has told his ministers and governors on the urgency and immediacy of the reforms; reform or perish was the gist of his message to them.

The legitimacy question: is Chinese model still unique? Max Weber’s classical analysis says that there are three models of legitimate authority; traditional, charismatic and rational-legal.20 In the Mao era, it was the charismatic leadership and the promise of equal distribution to all. Subsequently came the idea of performance legitimacy in the post-Mao China, the idea that economic growth and the concomitant rise in international status ensures the party’s right to rule. In recent years, it has been called hard authoritarianism, or as others call, populist authoritarianism as discussed below. The easiest and most commonly accepted answer to the question is that the party has shown extreme level of adaptability. Not only has it changed its approach legitimacy question of what the party is and what its purpose is, it also studies the political systems across the world quite carefully as argued by David Shambaugh.21 It is important to analyse as to where the CPC model fits on the Weberian scale of legitimacy. It is also important to ask whether the norms are changing and what are the roadblocks in that process. An important question and one that will leave a lasting impression on the Xi legacy as far as the party is concerned is also to do with the ongoing developments in Hong Kong and Beijing’s apparent inability to get a grip on it. This can be a weakness as well as a potential source of Chinese nationalism as discussed below.

The difficulty of being Xi Jinping  93 In the Deng Xiaoping era, the communist ideology and the idea of continuous revolution of Mao era was replaced by preference for stability coupled with pragmatism and flexibility. The idea that a communist political party could easily transit to the concept of Socialist Market Economy is the most significant example of that pragmatism. This term, an apparent oxymoron, allowed China to accept the fact that in the period of reforms and opening up, some people would get rich first but more people were likely to have productive employment and other benefits that it would bring. Ensuring its access to all became the new raison d’etre for the party. In its latter half, especially after the Tiananmen Square massacre, the party reinvented Chinese nationalism and began to instil an unswerving pride in culture and history, something Mao’s China had sought to distance itself from. Nationalism suited the party when the country was weak and when it could externalise the threats and injustices. The promotion of state led nationalism has also led to flourishing of museum culture and related tourism China. The number of museums in China at the end of 2018 had crossed 5000 which at the beginning of reforms and opening up era was less than 400.22 Even in tier 3 cities in smaller provinces, there are museums of massive sizes that are new and tell a story. Most of these museums follow a familiar pattern; even if most of the artefacts are replicas or recreations, they showcase a rich heritage and a sense of united history followed by graphic representation of imperial and colonial invasions and usually a section on liberation and subsequent reemergence under the leadership and guidance of the party. And it is evident to anyone who visits China that these museums attract hordes of crowd day every day. So what do these museums really do? They reassert and remind the people of the paths travelled by the nation and thus also bring a sense of historical legitimacy to the rule of the party authority. It is no doubt that the party did make significant sacrifices in the fight against Kuomintang and against the Japanese, both of whom were better equipped and trained. However, the  museums certainly project the progress of the nation being knit around the idea of the centrality of the party. Revival of Chinese nationalism? The core question today would be about what would follow nationalism as the legitimising strategy for the party and what are the real limits of the strategy of populist authoritarianism. Or would the party continue to revert to nationalism when necessary? Under Xi, the first major pronouncement of nationalism was in the announcement of the Chinese Dream. At its most basic, this is a replica of the American dream and encompasses twin objectives of building a moderately prosperous society and realising the national rejuvenation. In his first visit as President Xi visited the National Museum and saw an exhibit titled “the Road to Revival” where he said that the general

94  Avinash A. Godbole goal of the Chinese nation was “to realise the renaissance of the Chinese nation is the greatest dream for the Chinese nation in modern history”.23 Nationalism, is of course a two edged sword and the leadership has always let it flourish in a controlled manner. In recent years, it has been used to isolate Japan regionally and to assert Chinese centrality in the regional security order, especially since the celebrations of the end of World War II in September 2015. This was again done with a cleaver use of history and memory. Nationalism is useful for forging a sense of unity and as a rallying point in modern times. However, nationalism also comes with its own redline; the party cannot allow nationalism to show it being weak and not able to solve the problems facing China. That is why all those museums are useful in reminding the people as to why they must trust the party to look after them, to solve their problems and to collectively think for them. Whether or not Xi’s China becomes more nationalist is one question that everyone is eager to know. A simple answer to that would be that it would depend on whether or not the party sees the country’s external environment as a moment of opportunity or as a moment of threat. One indicator to check whether China faces a sense of challenges abroad is the number of white papers that the State Council publishes in a year and in 2019 there has been a bumper crop of white papers in China with 12 white papers published till 15th of October.24 If it is former, then nationalism is more likely to be subdued or controlled and if it is latter, then Chinese nationalism is likely to take on a stronger colour. In the recent times, it can be argued that there has been some upsurge in Chinese nationalism. There have been a few triggers for this discussed below. The foremost being the ongoing protests in Hong Kong over which there have been verbal spats between China and a few European countries including Italy recently where China registered a strong protest for the members of parliament had an interaction with the Hong Kong student leader Joshua Wong.25 Jeremy Goldkorn also estimates that there may be a recent shift to publish more about Hong Kong in the domestic press, especially to showcase the protests being motivated and sustained from abroad.26 In another development, Wang Yi, China’s Foreign Minister and State Councilor, recently instructed Chinese diplomats to showcase their “fighting spirit” in the face of international challenges.27 Some senior Chinese diplomats have said that this is the first time such a directive has been made, indicating a sense of deteriorating external environment. The other recent incidents that can act as triggers for Chinese nationalism can be the ongoing US–China trade dispute, South Korea’s purchase of Terminal High Altitude Area Defense (THAAD) missile defence systems, and of most importance would be the policy positions of the Democratic Progress Party (DPP) government led by Tsai Ing-wen. More worrying is the internet nationalism in China. In the recent past, the triggers did not require to be state led but even incidents like a speech by a Chinese student abroad, or a dress of a model wearing Chinese flag have led to severe online backlash.28

The difficulty of being Xi Jinping  95

The future of the CPC Harvey Nelsen begins his chapter titled The Future of the Chinese State with the following statement; “Thinking about the future is an exercise in humility. Thinking about China’s future, if its modern history is any guide, is an exercise in frustration”.29 This remains as true as it was nineteen years ago. Not only this exercise is difficult, it’s also most likely to fail as most of the brave predictions about the party and about the Chinese state have been by and large failures. Practically nobody foresaw the reforms and opening up, very few imagined the party surviving the Tiananmen massacres and even fewer imagined China winning after the collapse of the Asian tigers or emerging stronger after the 2008 global financial crisis.30 This is one of the more difficult questions in dealing with China. In the past, there have been many occasions when scholars from the West have predicted the visible, or impending or even a certain collapse of the party. Others have believed that there would be “normalization”/democratisation of the CPC. Previously, the occasions for this kind of predictions were bigticket internal or external events that appeared like potential triggers for change. The first being the Cultural Revolution, the second, the biggest trigger, was the 1989 students revolt and Tiananmen Square protests that were clearly the outcome of factional politics. The third trigger of China joining the WTO and becoming a part of the global trading system. Finally, the fourth possible trigger was the 2008 Summer Olympics which China hosted. However, it can be seen that in each of these events, the party came out stronger and reasserted its centrality in the overall process. One of the next landmarks for the CPC will be 2023 when it would surpass the Soviet Union as the longest surviving communist regime. There are a few China studies scholars whose practically entire careers have been based in predicting the collapse of the party and of the China model. Gordon Chang, for example, wrote The Coming Collapse of China in 2001 and then again revised his thesis periodically till 2012 and on a few occasions also by giving precise dates on which his prediction was likely to come true.31 Minxin Pei who previously wrote books like China’s Trapped Transition: The Limits of Developmental Autocracy (2016) and China’s Crony Capitalism: The Dynamics of Regime Decay (2016) has recently joined this bandwagon of projecting the CPC crisis in an article titled The Coming Crisis of China’s One-Party Regime (2019).32 The point is not to ridicule the bravado behind such writings but to see why almost all the scholars seem to agree that the party is standing on the edge now. Professor David Shambaugh, one of the sharpest observers of the party, has been arguing that the party has entered a phase of “hard authoritarianism” since 2009 and it continues even today. It is important to note that this phase begins even before Xi came to power. Besides this, he has also generally been an optimist about the party’s ability to adapt to new demands and to changed social realities. However, in recent years, Prof. Shambaugh

96  Avinash A. Godbole has taken on a pessimistic tone on the party beginning with his 2015 piece titled “The Coming Chinese Crackup”, which was published in the Wall Street Journal.33 In this article, Shambaugh argues that the possible demise of the CPC “is likely to be protracted, messy and violent”. This is a marked shift from his 2008 book China’s Communist Party: Atrophy and Adaptation wherein he concluded that The central conclusion of this study, however, is that the CPC is adapting fairly (but not entirely) effectively to meet many of these challenges, has learned the negative lessons of other failed communist party-states, and is proactively attempting to reform and rebuild itself institutionally— thereby sustaining its political legitimacy and power.34 Subsequently, Shambaugh did give a few interviews where he described why he turned pessimist about the future of the party in the recent times.35 However, there are others like Wenfang Tang who have argued that what China has is not hard authoritarianism but instead “populist authoritarianism” wherein the party goes overboard to compensate for a democracy and other weaknesses in the system by addressing the demands that it can.36 This can be treated as an advancement over the idea of performance legitimacy discussed above. The new era and the new principal contradiction Significantly, the 19th national congress also unveiled “the new era of socialism with Chinese characteristics”. This is the Xi Jinping imprint on the theoretical outlook of the CPC just like his predecessor’s Scientific Outlook on Development. However, there is also more to the idea of “new era”. In the third 30-year cycle, or the new era, that began with the 19th national congress, accountability appears to be taking centre stage as far as governance is concerned. Ensuring accountability has been one of the goals of the anti-corruption campaign. The most significant change of that is the new principal contradiction that was spelt out by Xi at the 19th National Congress of the party. In his work report presented to the 19th National Congress of the Communist Party of China(CPC), Xi Jinping proclaimed, “What we now face is the contradiction between unbalanced and inadequate development and the people’s ever-growing needs for a better life”.37 China’s rapid economic growth has brought along many costs as well. In 2007 itself, even before the global economic meltdown, then Premier Wen Jiabao had warned that “the Chinese economy was quickly becoming unstable, unbalanced, uncoordinated, and unsustainable”. China faces regional and class inequalities, besides a seriously imbalanced wealth distribution index. China is one of the most unequal countries today in terms of income. Its Gini Coefficient is one of the highest in the world at 0.47 in 2016.38

The difficulty of being Xi Jinping  97 In 2015, Lou Jiwei, former Chinese Finance Minister had predicted that China needed to grow by 6.5 per cent annually for five years at least to avoid falling into the middle-income trap. Lou had said, “Without reforms to remove obstacles hindering the free flow and allocation of land, labour and capital, China’s economic growth miracle might end”.39 With lack of reforms in the sectors that most urgently need them, the 6.5 per cent rate may be little reassuring and likely to be giving restless nights to the leaders in Zhongnanhai. There are other domestic concerns as well; lack of consumption growth, corruption and slowdown, pollution and general demand for accountability and participation in development process as countless local protests against environmentally harmful plants have shown. Core and strong? The Sixth Plenary Session of the 18th central committee also called on all party members to “closely unite around the CPC Central Committee with Comrade Xi Jinping as the core”. One of the significant points of the Communiqué issued at the end of the Plenum was that Xi Jinping was elevated to the level of “core” leader. There has been a lot of debate on what this status means and whether or not it’s a sign of strength of Xi Jinping or a message that the party needed to be united and urgently so. It is well worth recalling that Xi is the first serving President of China to himself adopt such status. Deng Xiaoping had coined this term and called Mao Zedong and himself as the core leaders of their generation, and Jiang Zemin of the third generation of the CPC leadership. When Deng had devised this term, China was passing through a political crisis in the aftermath of the 1989 Tiananmen Square protests. Thus, the idea behind identifying Jiang Zemin as a core leader was also to reduce the status of Hu Yaobang and Zhao Ziyang. Presently, the idea that China does need a core leader stems from the perception that the country is facing immense economic and political challenges at home and abroad and that the country needs a strong party and the party needs a strong leadership to tide over these challenges. Further, the Chinese media argue that the new status is also meant to help Mr. Xi’s fight against corruption. The gap between CPC and the people? One of the future challenges as discussed by Daniel C. Lynch in his book China’s Futures; PRC Elites Debate Economics, Politics and Foreign Policy is on a potential clash between the country’s Leninist political system and its evolving pluralistic and wealthy society.40 May others, including Isabel Hilton have argued that countries like Taiwan and South Korea became democratic, innovative and moved up the value chain at the same stage of their economic development as China finds itself now. Their civil and judicial reforms also made this transition easier and made their growth a welcoming one from a global perspective. What China is doing right now

98  Avinash A. Godbole is opposite; its process of separation between the party and state that was clearly underway in the Hu era has not reversed with so many supervision and inspection commissions. China’s externally assertive behaviour is not far apart from the treatment that its citizens receive at home as Hilton (2018) argues; “Arbitrary detention, censorship, ideological coercion, intolerance of debate, secrecy, a leader cult, religious and ethnic persecution, maritime expansion and bullying of its smaller neighbours are China’s new order”.41 China’s controlling streak reappeared in 2013 when a new directive issued a list of issues that could not be discussed with university students. This list included issues like universal values, a free press, civil society, civic rights, the party’s past “mistakes”, corruption and an independent judiciary. Encouraging students to think and discuss these issues was deemed to unleash “dangerous Western influences”.42 It can be easily concluded from this list that these issues are all linked with liberal values. That compliance with this was accorded the highest urgency and can be gauged from the fact that this order apparently came directly from the office of the central committee. This behaviour towards greater control and supervision also goes against the spirit of the new principal contradiction that was shared at the 19th party congress discussed above. The new principal contradiction, when unveiled, was also expected to be about advancement of rule of law and about promotion of civil rights for the citizen and institutionalising greater accountability on the part of state agencies. This was clearly stated in Xi’s explanation on the new principal contradiction and its areas of priority. Xi says “Not only have their material and cultural needs grown; their demands for democracy, rule of law, fairness and justice, security, and a better environment are increasing”.43 These policies also continue from Hu Jintao’s Scientific Outlook to Development and harmonious society which essentially spoke the same language. In his work report to the 18th Party Congress, Hu Jintao (2012) had said, “We must coordinate urban and rural development, development between regions, economic and social development, relations between man and nature, and domestic development and opening to the outside world”.44 How does China avoid the middle-income trap and make a transition towards an innovation driven economy is an important question for the leadership. For that to happen, the reforms need to succeed and serious residence to reforms needs to be controlled. The policy of Made in China 2025 is bound to have significant economic, political and social benefits as well as costs in unknown categories. The ability to make that transition is not just a matter of capacity but a political choice as well and that is the core question on how the party convinces all the stakeholders. Old and new difficulties for Xi In general, Xi’s China is facing unprecedented challenges at home and abroad. The US–China trade war has taken the steam out of China’s economic growth and the ongoing COVID19 has lent a serious body blow to

The difficulty of being Xi Jinping  99 the economy. While economists in China maintain that China’s economy will recover within a quarter, COVID19 has damaged China’s status across the world. Li Wenliang, a doctor who alerted authorities of the exceptional characteristics of COVID19, died of it eventually after he was told “to stop spreading rumours” and was investigated for it. He was not the only doctor to have died of it as many more medical practitioners have also succumbed because of it. In many ways, the blood of more than 185,000 dead globally (as of 21st April 2020) is on the hands of the party for its habit of concealing and repackaging the truth. Thus, China’s ability to build hospitals at breakneck pace cannot wash away the evils of its repressive polity. Equal amount of bad press has been about China’s handling of the minority question, especially in Xinjiang, through what it calls the re-education camps. These are clearly detention camps and this policy has many potential implications. China has long moved on from its pride in being a multicultural, multi-ethnic society as a hard-line assimilation strategy has taken centre stage. What works for Xi in such cases that he is just one of the many global leaders whose domestic and external policies are highly disjointed and the world is turned too much inwards to point that out. What does not work in his favour is that he is doing it under a communist single party rule rather than under a democracy. Xi and China also get away with it because China is almost at the centre of the world economy today and no one can afford to impose sanctions of any kind.

Conclusion To conclude, the CPC is amidst of a crucial transition. A stronger China is also becoming a more uncertain and insecure China. A China that has begun to assume its great power status and is almost too eager for the world to acknowledge it instantaneously. However, this is only a reflection of the way the party operates at home; to be acknowledged on the basis of where it all began instead of where all it can lead up to. When that does not happen, it becomes nationalist and assertive. The party is at the beginning of the third phase, since the 19th national congress, where it wants to enjoy its democratic space globally without having it at home. It wants to make a transition to knowledge-driven economy even as it makes the internet more controlled. It wants to make a transition to accountable and inclusive governance without having a system that allows for open public debate. These are the new contradictions and the CPC’s legitimacy hinges on its ability to answer these questions swiftly and in a logical manner, at home and abroad.

Notes 1 The first draft of this chapter was written prior to the COVID19 outbreak in China and around the world and thus does not discuss its impact due to the ongoing nature of the development. 2 Kerry Brown and Konstantinos Tsimonis ‘The Future of the Chinese Communist Party’, in Willy Wo-Lap Lam (ed.), Routledge Handbook of the Chinese

100  Avinash A. Godbole

3 4 5 6 7

8 9

10 11

12 13 14

15 16 17


Communist Party, Routledge, London and Oxon, 2017, pp. 335–351. Russia is at number 11. Hu Angang et al., Xi Jinping’s New Development Philosophy, Springer; Singapore, 2018, p. 8. Hu Jintao, ‘Full Text of the Report Presented at the 18th Party Congress’, November 27, 2012, at Congress_Eng/t992917.htm (accessed November 13, 2019). Ibid. Author’s estimates based on various sources. For more see, Claude Arpi, ‘Is Xi Jinping All That Powerful?’, DailyO, September 29, 2019, at (accessed March 12, 2020) and Wang Xiangwei, ‘Is Xi’s New ‘Core’ Status a Sign of Strength, or Weakness?’, South China Morning Post, March 25, 2017a, at (accessed March 12, 2020). Also, Frank Ching ‘How Strong Is Xi Jinping Really?’, ejinsight, July 15, 2019, at http://www.ejinsight. com/20190715-how-strong-is-xi-jinping-really/ (accessed March 11, 2020). Susan Shirk, China, A Fragile Superpower, Oxford University Press, Oxford, 2007, p. 39. Reuters, ‘China’s Xi Urges Swatting of Lowly “Flies” in Fight on Everyday Graft’, January 22, 2013 at 90L0AA20130122 (accessed March 10, 2020). Alice Miller, ‘The Trouble with Factions’, China Leadership Monitor, 46, March 2015, p. 2, at (accessed September 23, 2019). Xi Jinping, ‘Secure a Decisive Victory in Building a Moderately Prosperous Society in All Respects and Strive for the Great Success of Socialism with Chinese Characteristics for a New Era’, Report Delivered at the 19th National Congress of the Communist Party of China, October 18, 2017, p. 61, at’s_report_at_19th_CPC_National_ Congress.pdf (accessed November 4, 2019). Minxin Pei, ‘Rewriting the Rules of the Chinese Party-State: Xi’s Progress in Reinvigorating the CCP’, China Leadership Monitor, June 1, 2019, at https:// (accessed October 17, 2019). Xinhua, ‘Xi Calls for “Greater Strategic Achievements” in Party Governance’, January12, 2019, at 65.htm For more see, South China Morning Post, ‘Why China’s Xi Jinping Is Unlikely to Anoint a Successor’, October 20, 2017, at china/policies-politics/article/2116120/why-chinas-xi-jinping-unlikely-anointsuccessor (accessed March 10, 2020). Alice Miller, no. 10. Matt Schrader, ‘Domestic Criticism May Signal Shrunken Belt and Road Ambitions’, August 10, 2018, at criticismmay-signal-china-scaling-back-its-bri-ambitions/ (accessed December 6, 2019). Reuters, ‘China’s Xi, in Scandal-Plagued Chongqing, Praises City’s Achievements’, April 17, 2019, at (accessed December 13, 2019). Choi, Chu-yuk, ‘Will China’s Leadership Succession after Xi Jinping Skip a Generation?’, South China Morning Post, January 5, 2019, at

The difficulty of being Xi Jinping  101


20 21 22 23




27 28

29 30 31 32

news/china/politics/article/2180788/will-chinas-leadership-succession-afterxi-jinping-skip (accessed December 19, 2019). There were 22 points that dealt with the economy, 11 focussed on political structure and legal reform, four on cultural reform, nine on social services and “social management” reforms, four on environmental issues, and three each on military and party reform. Alice Miller, ‘How Strong Is Xi Jinping?’, China Leadership Monitor, 43, March 2014, p. 2, at (accessed November 30, 2019). Christopher Ryan Maboloc, ‘Max Weber’s 3 Types of Authority’, The Inquirer, May 29, 2015, at (accessed December 13, 2019). David Shambaugh, ‘The Party State Studies Abroad’, Current History, 107 (710), 2008, at (accessed November 14, 2019). People’s Daily, ‘Number of Museums in China Reaches 5,000’, December 29, 2018, at (accessed November 18, 2019). Carry Huang, ‘Just What Is Xi Jinping’s ‘Chinese Dream’ and ‘Chinese Renaissance’?’, South China Morning Post, February 6, 2013, at news/china/article/1143954/just-what-xi-jinpings-chinese-dream-and-chineserenaissance (accessed November 15, 2019). Of these, there were three on Xinjiang, one on Tibet and one on Human rights issues. In 2018 there were two white papers on minority issues out of total seven white papers. A few white papers in 2019 focussed on China’s achievements as the Republic celebrated 70th anniversary of its establishment. For the full list, see James Palmer, ‘Chinese Diplomacy Takes an Aggressive Turn’, Foreign Policy, December 4, 2019, at (accessed December 5, 2019). Jeremy Goldkorn, ‘Is Xinhua Shifting Focus of Hong Kong Message to Domestic Audience?’, SupChina, December 4, 2019 at 04/is-xinhua-shifting-focus-of-hong-kong-message-to-domestic-audience/ (accessed December 6, 2019). Reuters, ‘China Demands ‘Fighting Spirit’ from Diplomats as Trade War, Hong Kong Protests Simmer’, December 4, 2019, at us-china-diplomacy-idUSKBN1Y80R8 (accessed December 6, 2019). For more see, Wang Xiangwei, ‘Chinese Nationalism Is a Double-Edged Sword for Global Ambitions’, South China Morning Post, May 27, 2017b, at https:// (accessed November 18, 2019). Harvey Nelson, ‘The Future of the Chinese State’, in David Shambaugh (ed.), The Modern Chinese State, Cambridge University Press, London and New York, 2000, pp. 216–238. Brown and Tsimonis No. 2. The authors note that only Stephen Fitzgerald had suspected before 1978 that the party was “about to fundamentally change its policies and its governance philosophy”. See for example, Gordon C. Chang, ‘The Coming Collapse of China: 2012 Edition’, Foreign Policy, December 29, 2011, at the-coming-collapse-of-china-2012-edition/ (accessed November 14, 2019). Minxin Pei, ‘The Coming Crisis of China’s One-Party Regime’, Project Syndicate, September 20, 2019, at (accessed December 5, 2019).

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Part II

Xi Jinping’s social governance and China’s commercial party-state affairs


State–business relations under Xi Jinping Steering the private sector and private entrepreneurs Gunter Schubert and Thomas Heberer

Introduction Since Xi Jinping took charge as general secretary of the Communist Party, relations between the state and China’s private entrepreneurs have become increasingly strained. Although Xi and his government have repeatedly promised to strengthen China’s private economy, most notably by liberalising access for private companies to market sectors so far dominated by StateOwned Enterprises (SOEs), his approach to the private sector development has proven lukewarm at best. In fact, Xi seems to promote a new brand of Chinese state capitalism that seeks to bring the private sector increasingly under state control. At the same time, many private entrepreneurs have been targeted by Xi’s anti-corruption campaign, while all of them have been forced to comply to party supremacy more than ever. Steering the private sector by both economic and political means is an important manifestation of Top-Level Design (TLD) under Xi Jinping, which has been identified as the defining feature of Xi Jinping’s reign soon after he assumed power in 2012.1 TLD means a (re-)centralisation of political decision-making which has been observed in almost every policy field over recent years, vindicating Xi Jinping as the ‘core leader’ of the Chinese party-state. There is little doubt among scholars and party officials that the fulfilment of Xi’s ‘Chinese dream’ of the ‘rejuvenation of the Great Chinese nation’ very much depends on the vitality of China’s private enterprises and its entrepreneurs. However, a systematic strengthening of the private sector is at odds with a major objective of Xi’s political agenda, namely, to build a strong public sector economy which is modern, innovative and globally competitive. For Xi, the state should effectively control the private sector without suffocating it, making use of its creativity and economic success to the benefit of China’s local and national development. At the same time, Xi Jinping wants to make sure that the country’s private entrepreneurs, who are the driving force of industrial upgrading and innovation, the most important providers of employment, indispensable taxpayers and contributors in social welfare programmes and charity work, remain loyal supporters of Communist one-party rule. It seems as if the party-state under Xi is

106  Gunter Schubert and Thomas Heberer struggling more than ever with the role of the private sector, and private entrepreneurs, in China’s economic transformation and political rise. This chapter assesses China’s state–business relationship and its scholarly interpretation in post-Mao China with a focus on the Xi Jinping era. In the first part, we show how state–business relations have been ideologically framed in this era. Following, we discuss major obstacles and problems of private sector development in contemporary China and how the Chinese leadership deals with these problems. We then highlight different modes of political incorporation by which the party-state has, so far successfully and with new vigour under Xi Jinping, ascertained that private entrepreneurs remain loyal regime supporters. We continue by looking at the role of private entrepreneurs as agents of political change and conclude with a tentative look into the future of China’s private economy and state–business relations. Besides drawing on the existing scholarly literature in Western and Chinese language on this topic, we include primary sources and extensive fieldwork data which we have gathered since 2012 in different parts of China while conducting a research project on the scope and limits of political agency of private entrepreneurs in contemporary China.2

Framing state–business relations in the Xi Jinping era With slowing growth rates caused by declining returns on capital investment and sluggish export demand, huge overcapacity in the industrial and real estate sectors, and a serious public debt problem which overshadows the country’s financial system, China’s economy faces serious challenges and must undergo a process of structural change.3 As a consequence, the central government has for some years pursued a ‘paradigmatic change’ in economic policy by turning from a growth model based predominantly on domestic capital investment and export-led growth to one more driven by domestic consumption. The strengthening of the private sector is seen as critical in this undertaking. Hence, the ‘Decision of the Central Committee of the Communist Party of China on Some Major Issues Concerning Comprehensively Deepening the Reform’ (henceforth the Decision), adopted at the Third Plenum of the 18th Chinese Communist Party (CCP) Congress in November 2013,4 places special emphasis on developing the private economy. Highlighting the critical relationship between state and market, and the urgent need to readjust in order to strengthen China’s ‘basic economic system’ ( jiben jingji zhidu), the opening section of the Decision outlines the state’s role in this process as follows: Economic system reform is the focus of deepening the reform comprehensively. The underlying issue is how to strike a balance between the role of the government and that of the market, and let the market play the decisive role in allocating resources and let the government play its functions better.… We must actively and in an orderly manner promote

State–business relations under Xi Jinping  107 market-oriented reform in width and in depth, greatly reducing the government’s role in the direct allocation of resources, and promote resources allocation according to market rules, market prices and market competition, so as to maximize the benefits and optimize the efficiency. The main responsibility and role of the government is to maintain the stability of the macro-economy, strengthen and improve public services, safeguard fair competition, strengthen oversight of the market, maintain market order, promote sustainable development and common prosperity, and intervene in situations where market failure occurs.5 That the private sector plays a significant role in the Chinese economy is evident. Officially, at the end of September 2016, there were 58 million ‘individual enterprises’ (getihu) with a workforce of 124 million people and 22.2 million ‘private enterprises’ (siying qiye) with 175 million employees officially registered.6 According to a well-known formula backed by official Chinese statistics, the private economy contributes more than 50 per cent of China’s tax revenue, 60 per cent of its gross domestic product, 70 per cent of technological innovation, 80 per cent of urban employment and 90 per cent of newly created jobs.7 In sections II and III of the above-mentioned Decision, a comprehensive reform agenda has been spelt out for both the public and the private sector. Though unspecific in detail, the Decision announces, among other issues, an improvement of property rights protection; the development of a mixed economy ‘with cross holding by and fusion of state-owned capital, collective capital and non-public capital’; support of the private sector by abolishing ‘all forms of irrational regulations for the non-public economy’; the enactment of fair, open and transparent rules to guarantee equal market access for public and private enterprises; a strict ban and penalties on ‘all unlawful acts extending preferential policies, combat regional protection, and oppose monopoly and unfair competition’ (aiming to end local protectionism of both SOEs and selected private enterprises which has become increasingly common in many parts of China); and liberalisation and modernisation of China’s financial market, as a fundamental prerequisite for strengthening the private sector which is in constant need of capital (ibid). In fact, private (‘non-public’) sector reform, as part of the broader agenda of economic rebalancing, has been addressed in a number of important central level documents published in the early years of Xi Jinping’s reign already. All of them, however, have remained unspecific, if not elusive, concerning concrete policy design.8 At the same time, private entrepreneurs became targets of Xi’s anticorruption campaign. Many of them were deeply involved in major corruption cases, invoking the spectre of systemic ‘crony capitalism’,9 but the campaign intensified a widespread feeling among the whole constituency of private entrepreneurs that the party was turning against them. This prompted the Chinese leadership, and Xi Jinping himself, on various occasions to publicly

108  Gunter Schubert and Thomas Heberer reinforce the message that the Communist Party would not stop supporting the private sector, enlarging its space and helping to improve its efficiency. In his address to the annual session of the National Peoples’ Political Consultative Conference in March 2016, Xi Jinping summarised the central leadership’s stance on the private economy, state–business relations and necessary private sector reforms to be brought on track by the central government. He first recalled the government’s ‘two unshakables’ (liangge bu dongyao) which had already been pronounced at the 16th National Party Congress in 2002, i.e. ‘being unshakable in strengthening and developing the public sector economy’ and ‘being unshakable in encouraging, supporting and guiding the non-public sector economy’. He then emphasised at length that the party would guarantee equal treatment, as both the public and the private sector were essential for China’s economic progress. Xi also reminded his audience of a speech he had given a year before at a work conference of the Party’s United Front Department when he declared that the non-public sector economy should be encouraged to ‘grow healthily to maturity’ ( jiangkang chengzhang). Finally, he defined the ‘new relationship’ between the state and private entrepreneurs (xinxing zhengshang guanxi) as ‘intimate’ (qin) and ‘clean’ (qing), with qin referring to frequent, honest, truthful, constructive and whole-hearted party-state authorities; and qing meaning honest, bona fide, law-abiding, honourable and open-minded entrepreneurs.10 In September 2017, shortly before the 19th Party Congress, a joint statement issued by the CCP’s Central Committee and the State Council reemphasised the state’s willingness to put new policies on track to assist private entrepreneurs and protect their legal rights. These policies should ensure private entrepreneurs’ innovative capacity, but also their ‘entrepreneurial spirit’ (qiyejia jingshen), i.e. their willingness to contribute and consistently act in the interest of the nation, their businesses and their employees.11 The whole ideological vocabulary was then repeated in Xi’s report to the 19th Party Congress in October 2017, which, however, addressed the private economy only marginally. Interestingly, it was the first time Xi Jinping officially spoke of government support for the development of ‘private enterprises’ (minying qiye), instead of the non-public economy ( feigong youzhi jingji), and also the first time that he specifically mentioned the government’s resolve to support the innovative capacity of small- and medium-sized (private) enterprises.12 However, China’s private entrepreneurs remained sceptical. Even though they seemed to enjoy firm ideological and political support from the central government, policies to boost the private sector were only reluctantly implemented at the local level. In fact, confronted with Xi Jinping’s demands to be committed patriots13 and the non-committal attitude of many local governments towards upper-level policy guidelines, strong feelings of uncertainty continued to persist among private entrepreneurs. These feelings aggravated in September 2018 when a hitherto unknown financial consultant

State–business relations under Xi Jinping  109 and private entrepreneur, Wu Xiaoping, published an online article in which he claimed: The private economy has already completed the important interim stage of its historic task to assist a breakthrough in the development of the state economy. For the next step it is better not to blindly let the private economy expand, but to develop a comprehensive new pattern of a more centralized, more unified and more scaled-up public-private mixed economy, which will probably account for an increasingly large proportion of new development in the socialist economy.14 More articles and blogs arguing in the same direction popped up over the next days and weeks, so much so that the central government saw itself forced to switch to ‘campaign-style’ activism to counter the claims made by those voices. Xi Jinping himself has been going out of his way to refute the impression that the government would give consent to a fading out of the private economy and criticised those promoting such views, though he never called Wu Xiaoping out by name. Xi started calling private entrepreneurs ‘our own people’ (women ziji ren) in a symbolic move to reinvigorate the latter’s trust in the Communist Party.15 Local governments at the provincial and municipal levels have come up with new policy measures to push private sector reform since the end of 2018, obviously following orders by the party centre.16 However, as these have not yet been thoroughly implemented, even today, many private entrepreneurs remain unimpressed, and a rising number of them opt for leaving the country.17 To sum up, in terms of ideological framing, China’s private entrepreneurs have been assured repeatedly during the Xi Jinping era that their place in China’s ongoing economic transformation and modernisation is secure. At the same time, they have been warned not to engage in ‘crony capitalist activities’, and many have been disciplined by Xi’s anti-corruption campaign. Furthermore, they have been ‘encouraged’ to serve the nation by being committed patriots,18 meaning subservient regime supporters, agents of industrial upgrading and innovation and generous contributors to the finance of public goods provision. Moreover, the party-state has intensified the political incorporation – or co-optation – of private entrepreneurs through a number of established mechanisms which have shaped state–business relations since the onset of the reform period, but which arguably lost some of their efficiency during the later Hu-Wen era (2002–2012).

Private sector in the Xi Jinping era: economic and political challenges A report published in 2018 by the Dacheng Enterprise Institute (Dacheng Qiye Yanjiuyuan), an independent think tank founded by Huang Mengfu19

110  Gunter Schubert and Thomas Heberer and Hu Deping, the influential son of the late CCP chairman Hu Yaobang, pointed at a number of serious problems facing the private sector in contemporary China. It was unusually outspoken, most notably about discriminatory policies towards the private sector, market monopolisation by state authorities and SOEs, the unwillingness of state-owned banks to lend to private enterprises, heavy taxation, insufficient protection of private properties of entrepreneurs and legal uncertainty. Opponents of the private sector, the report noted, would argue that its existence caused tremendous income gaps, unequal income distribution, and rising conflict, between capital and labour. Opponents would further argue that entrepreneurs corrupt government officials, produce and trade fake products or goods of inferior quality, destroy natural resources and cause environmental damage, that they evade taxes, illegally transfer property abroad, buy political positions and excessively strive for social status while their offspring flaunt their wealth and lead a decadent life. Moreover, many people believe that the wealth of private entrepreneurs was the outcome of an ‘original sin’ (yuanzui), i.e. grounded in criminal behaviour from when they ‘jumped into the sea’.20 It thus comes as no surprise that despite all assurances by the central leadership, the private sector is not treated on an equal footing with the public sector. As was reported in 2018 in the context of China’s debt-cutting efforts, private companies perish due to bond defaults whereas state-owned firms, despite amounting to more than 70 per cent of China’s total corporate debt, are surviving due to massive state subsidies. The crackdown on shadow banking and ‘illegal borrowing’ in 2018 and 2019 has only aggravated the problem of private sector finance. A State Council executive meeting held in August 2018, chaired by Premier Li Keqiang, therefore decided that smaller enterprises should enjoy better access to affordable loans. Financial institutions should be incentivised to be more supportive of smaller businesses, and regulatory oversight should be improved to ensure that credit services are made available for small- and medium-sized private companies. At the same time, it was suggested that taxes for these enterprises should be reduced. A few days later the ‘State Leading Group for Promoting the Development of Small and Medium Enterprises’ (Guowuyuan cujin zhong xiao qiye fazhan gongzuo lingdao xiaozu) admitted that small- and medium-sized enterprises in particular were still discriminated against in favour of SOEs, and that the ‘Law on Promoting Medium and Small-sized Enterprises’ (Zhong xiao qiye cujin fa), promulgated in 2017, had so far not been properly implemented. A package of measures to solve the most urgent problems concerning access to bank loans and excessive taxes for private companies was then brought on track.21 In February 2019, the CCP’s Central Committee and the State Council ordered that all Chinese banks increase lending to private enterprises in order to support the private sector and to avoid a further slowdown of the economy. Moreover, large commercial banks have been asked to increase the number of loans offered to small- and medium-sized enterprises by more than 30 per cent.22

State–business relations under Xi Jinping  111 However, the credit crunch is not easy to tackle. Particularly in times of economic crisis, banks are reluctant to lend to private enterprises as they need more time to repay than SOEs and cannot offer the same stateguaranteed collateral SOEs usually can. Even if the government demands that banks lower their lending standards to support private enterprises, change is unlikely so long as the state does not back up credits for the private sector in some way – for instance, by loosening capital requirements for banks or providing guarantees on private sector loans to reduce the lending risk.23 Moreover, the granting of loans is selective. As Quan and Leng24 have shown, in many places local governments decide which company is qualified to receive a loan and which is not, giving priority to hightech businesses and obstructing loans to small- and medium-sized firms in the manufacturing sector, which have been the primary driving force of economic development in recent decades.25 On top of this, if an enterprise is unable to win contracts from public offers, it might not qualify for any credit at all. Besides the loan problem, private enterprises are strongly exposed to the government’s efforts to upgrade and turn the Chinese economy ‘green’. In June 2018, the Central Committee of the CCP and the State Council ordered that polluting enterprises should be technically upgraded, transferred to other areas in interior China or simply closed.26 All administrative levels were ordered to take immediate steps to implement this directive, and implementation would become an indicator of cadre performance evaluation. The rigid implementation of environmental policies hampers the private sector significantly. Obviously, the party-state wants polluting industries, i.e. the more traditional sectors of the Chinese economy, to cease production. At the same time, it encourages high tech-enterprises to push for a modern, innovation-oriented private sector. An investigative report published in 2016 predicted that more than 95 per cent of China’s private enterprises were going to vanish within the next five years, particularly those founded during the 1970s and 1980s when environmental standards were low or non-existing. In fact, as our interviews have shown, many private entrepreneurs want to upgrade, but complain that local governments do not provide technical advice and transparent criteria or standards for those technologies considered environmentally friendly.27 In regards to the taxation of private entrepreneurs, Changdong Zhang has argued that due to high tax rates (value-added tax 17 per cent, corporate tax 33 per cent) almost all private entrepreneurs try to avoid or evade taxes by looking for patrons within the party-state to protect them, which leads to hiding business income from the tax authorities and the outright bribery of officials.28 The party-state, according to Zhang, is not interested in remedying these practices since they allow the authorities to maintain effective political control over private entrepreneurship: In the case of (political) ‘misbehaviour’ entrepreneurs could at any time be arrested by accusing them of ‘tax evasion’.

112  Gunter Schubert and Thomas Heberer Finally, private enterprises are facing considerable pressure from SOEs. Despite constant assurance by the Chinese leadership that private sector policies would not change, it was recently reported that listed private companies have been forced to sell significant stakes to SOEs.29 In September 2018, Li Yang, chairman of the National Institute for Finance & Development, a Chinese Government think tank, contended that investment in and takeovers of private companies by SOEs have increased substantially in recent years. This observation, which has been confirmed by a number of our respondents in the later stages of our fieldwork, points at a more recent trend in China’s ongoing economic transformation, which could be referred to as ‘oligopolisation under SOE leadership’. For example, there is huge pressure on private enterprises to become part of investment companies (touzi gongsi), in which representatives of state authorities, SOEs and private enterprises all have shares. Management positions in these companies facilitate access to public procurement contracts and to bank loans.30 Moreover, state-owned companies at all administrative levels are ‘encouraged’ by local governments to invest in private enterprises, control a majority of shares or buy them out, if possible.31 From an SOE perspective, this makes sense: By investing or swallowing up private enterprises, SOEs can become more innovative and competitive, which facilitates access to bank loans and helps local economic development. One of our respondents told us that, for their part, local governments only trust private enterprises that closely collaborate with state-owned firms, or if an SOE holds a significant share in them. Many private entrepreneurs obviously have no other alternative but to follow this path in order to secure the survival of their companies. On the other hand, cooperation with SOEs can also help private enterprises to improve their efficiency and competitiveness.32 Although many voices warn that the current ‘oligopolisation trend’ will impact negatively on private sector development,33 it is hard to stop given the vulnerability of China’s small- and medium-sized private enterprises, the powerful resources most SOEs have at their disposal and the cadre evaluation system which still privileges economic development as the major indicator of performance effectiveness and qualification for promotion. The effects of the recent debate on private entrepreneurship, combined with the mixed signals sent by China’s leaders, who emphasise the importance of both the public and private sector without clarifying this relationship through consistent policymaking, have unsettled private entrepreneurs and discouraged the younger generation from ‘jumping into the sea’. The call of the party-state for public–private mergers and for SOEs at all administrative levels to invest in private enterprises, combined with increasing debt ratios on the part of private companies facing discrimination within the current credit system,34 has nurtured scepticism on the part of many entrepreneurs, particularly concerning their future of the private sector economy. The official encouragement of state enterprises attracting private investment is read by many as a state-sponsored takeover operation and

State–business relations under Xi Jinping  113 not as the promise of new opportunities for gaining access to markets so far dominated by the state sector.35

State–business relations and the political incorporation of private entrepreneurs Taking an interest in the rise of China’s private sector since the late 1980s, many China scholars have been more or less driven by the implicit assumption (or hope) that the formation of a new social constituency of private entrepreneurs, allegedly belonging to the most modern strata of Chinese society, would challenge the authoritarian rule of the CCP and help bring about political liberalisation, if not democratisation – at least in the long run. But it soon became clear that those ‘jumping into the sea’ (xiahai) of Chinese capitalism would be closely watched and ‘guided’. Since the beginning of the reform era, private sector development has accelerated and become increasingly important for the Chinese economy. As such, it was important for the party-state to ‘domesticate’ private entrepreneurs, who posed a challenge to regime legitimacy both ideologically and politically. A substantial number of them had given up senior cadre positions at the local level before turning to the private economy and thus could make use of their extensive guanxi to benefit from the murky process of privatising ‘Township and Village Enterprises’ (TVEs) and, generally, the absence of sound regulatory institutions in the early period of ‘reform and opening up’.36 This first generation of private entrepreneurs37 were the driving force of China’s economic transformation who, over time, became increasingly significant in local politics because of their privileged access to the leading party and government cadres and their impact on local economic development. Hence, the party leadership observed private entrepreneurs closely and held a firm grip on them right from the beginning of their formation as a meaningful social constituency. Obviously, many entrepreneurs were closely connected to the Communist Party. Later on, when the private economy started to flourish, and the country saw the rise of big private enterprises and conglomerates, the social background of its entrepreneurs gradually changed and professionalised. However, the party-state’s grip remained firm, as the Communist Party never stopped struggling with its decision to develop a private economy under the umbrella of ‘Chinese socialism’. For their part, China’s private entrepreneurs had to be wary of arousing suspicion in a highly sensitive political environment. At the same time, they were totally dependent on the partystate’s provision of the necessary resources and institutional environment to allow their businesses to operate successfully. Hence, the Communist Party has always steered the wheel in state–business relations and continuously made sure that the party-state had full control over private entrepreneurs. However, the gradual rise of China’s private economy strengthened the economic and, arguably, the political clout of private entrepreneurs over

114  Gunter Schubert and Thomas Heberer the course of time. Such was the extent of their influence that Xi Jinping, after taking office as general secretary, decided that it was time to recalibrate state–business relations and reassert party-state supremacy over them.

Incorporation by party membership and party-building After it was officially sanctioned in 2002, Party membership has become an important mechanism through which bonds of loyalty between private entrepreneurs and the Communist regime are created. As mentioned above, one group of private entrepreneurs – those who had been high-level cadres in state- and collective-owned enterprises before these were privatised – had already been party members before. Another group had been recruited by local party organisations when it was not yet officially permitted to do so, in order to incorporate private entrepreneurs into the implementation of local policies. Since the early 2000s, as all available data suggests, the party membership of private entrepreneurs has been increasing steadily. According to official sources, in 2000, the proportion of party members among private entrepreneurs was already quite high (19.8 per cent). According to the bi-annual survey on private entrepreneurs conducted by the Chinese Academy of Social Sciences, the percentage of CCP members among the sample of private entrepreneurs was 39.8 per cent in 2010 and 32.8 per cent in 2012, though it should be noted that this share was significantly lower than the proportion of managers in SOEs (96.5 per cent) and slightly lower than managers in Chinese-foreign joint venture businesses (41.2 per cent).38 That more than one-third of all entrepreneurs are CCP members highlights a steady trend towards closer state–business relations. Simply spoken, many private entrepreneurs are interested in party membership, as well as the associated political protection, which facilitates the pursuit of economic interests and guanxi-making, and thereby provides manifold opportunities for influencing local policymaking. The trend of increasing party membership by private entrepreneurs is compatible with the official policy of party-building and the rising number of party branches within private enterprises over the last decade or so. If an enterprise has at least three-party members, a party branch has to be set up. According to Xinhua, at the end of 2013, party organisations had been established in 1.63 million private firms, 58.4 per cent of the national total.39 In fact, the building of party branches in private enterprises was pushed by a new campaign as early as 2012, even before Xi Jinping became the new general secretary.40 Since then, the campaign has gained much momentum. Local party authorities were instructed to encourage the comprehensive penetration of private companies by the party in their jurisdictions as quickly as possible. In their case study on Anhui province, for instance, Yan and Huang reported that by the end of 2012, 91.6 per cent of all private enterprises had established party branches, a 50 per cent increase over 2011.41

State–business relations under Xi Jinping  115 However, it is not so much the mere existence of party branches that counts, but rather what these organisations actually do, and how significant they are for shaping the relationship between the party-state and private entrepreneurs. Clearly intended to strengthen the ideological and political supervision of the private economy, our own research showed that party-building in private enterprises can be quite business-oriented and genuinely benefit private entrepreneurs. Party branches operate as service-oriented units within a private firm; they help to ensure welfare provision and the safeguarding of labour rights in the workplace, thus reducing the danger of labour-related conflicts. They also run special funds to help workers in need of financial support due to unexpected circumstances. Often, party branches cultivate an ‘elite habitus’ among their members, inducing them to work harder than non-party member employees for the benefit of the company. Most importantly, however, party-building includes the recruitment of company advisors – the so-called ‘sent-down’ cadres – with the explicit objective of transferring their professional expertise to the enterprise and smoothing state–business interaction. As advantageous as this institution may be for private enterprises operating in a market environment as difficult as China’s, however, it also serves the party-state’s constant efforts to politically co-opt business owners and leading managers. Party-building in private enterprises clearly coincides with political control over private entrepreneurs.

Incorporation by membership in PCs and PPCCs Another co-optation mechanism is to award private entrepreneurs’ membership in People’s Congresses (PCs) and People’s Political Consultative Conferences (PPCCs) at the national and local level. According to a recent study based on a representative survey,42 membership of private entrepreneurs in PCs and PPCCs at all administrative levels has gradually increased over the years, the annual average between 1997 and 2014 may have been as high as 44 per cent (see Table 5.1). However, official figures, which are hard Table 5.1 Membership of private entrepreneurs in PCs and PPCCS in per cent (1997–2014)* 1997 2000 2002 2004 2006 2008 County level and below Prefectural level and above

2010 2012 2014 1997–2014

19.26 34.63 31.10 27.86 25.57 28.89 27.33 27.51 19.88 26.58 11.96 19.72 18.39 19.71 16.44 20.00 18.24 14.81 16.77 17.42

Note: All figures provided by respondents of a representative survey. Source: Fan and Lü (2018, p. 70).

116  Gunter Schubert and Thomas Heberer to come by and often incomplete, might be misleading. Although quotas for private entrepreneurs are numerically fixed for local PCs and PPCCs by official regulations, they are indeed overrepresented by the simple fact that local governments also recruit them into categories other than the ‘economic sector’ (e.g. ‘peasants’, ‘technicians’, ‘scientists’, ‘medical doctors’ and ‘teachers’).43 As Chen Minglu has noted, the ‘nomination of private entrepreneurs to different levels of the PPCC is mainly based on two factors: business success  – normally judged by the scale of business activities – and social influence and welfare’.44 Hence, it is generally the rich and reputable who are permitted access to PPCCs, and the richer and more reputable they are, the higher the administrative tier to which they are recruited as PPCC delegates – if they are interested. As a matter of fact, private entrepreneurs are generally very eager to occupy such positions: PPCC activities give private entrepreneurs regular and recurring access to officials at different levels and in charge of different sectors and thus provide opportunities to network and lobby.45 In another study on private entrepreneurs’ participation in local PCs and PPCCs, Sun Xin and his collaborators introduced the term ‘organizational clientelism’ to conceptually grasp the costs and benefits for private entrepreneurs who are incorporated into China’s political institutions.46 Using data collected during a nationwide survey by the All-China Federation of Industry and Commerce, the Chinese Academy of Social Sciences, the State Administration of Industry and Commerce and the CP United Front Work Department already conducted in 2006, they investigated the extent to which membership in local legislatures (PCs and PPCCs) impacted private entrepreneurs’ access to state-controlled resources – most notably bank loans – and their exposure to ‘administrative and policy burdens’, i.e. funding local government budgets, assisting failing local SOEs and providing public goods and services: Firms owned by legislative delegates obtain more loans from statecontrolled financial institutions, but also carry more administrative and policy burdens from the local government.… Local officials channel state resources and other preferential treatments to connected firms in exchange for political and material benefits. In this process, resource allocation is based on clientelistic ties rather than efficiency. Private firms invest heavily in nurturing such ties with local officials through both bribery and contribution to the implementation of various policy tasks. From a comparative perspective, the government-business relationship in today’s China resembles the crony capitalism widely witnessed in many East and Southeast Asian countries, such as Japan, South Korea, and the Philippines.47

State–business relations under Xi Jinping  117 This clientelistic relationship between private entrepreneurs and party-state authorities,48 as institutionalised in PCs and PPCCs at both the national and local level, provides each private entrepreneur with an opportunity to hedge against dependency on individual cadres who may defect or lose influence, but overall this relationship remains asymmetric: Even if some of their interests, most notably protection of property rights and individual safety, may be better safeguarded from the position of delegate, private entrepreneurs’ position vis-à-vis government officials remains precarious. Many of them are focused on membership in legislative bodies to reap whatever benefits possible to advance their individual businesses. At the same time, ‘legislatures are a helping hand for Chinese leaders to attract reliable co-operators in governance, expand administrative and political resources, and, to some extent, stabilize the authoritarian CCP rule’.49 Along the same lines, Changdong Zhang has drawn a very pessimistic picture of private entrepreneurs’ behaviour in local PCs and PPCCs. Upon becoming delegates, as he stated, they are foremost interested in ‘build[ing] political connections, obtain[ing] political privileges, and mak[ing] policy proposals that may benefit their industries’.50 Elections have become strongly ‘commercialized’, such as ‘in some regions of Zhejiang province’, where ‘they spend hundreds of thousands or even millions of yuan to buy votes’.51 At least until recently, party-state officials have traded delegate positions for local investment and generous donations by private entrepreneurs, which helps them achieve a positive evaluation in annual performance assessment procedures. As Zhang concludes, ‘this patron-clientelism may reinforce the co-optation of private entrepreneurs, but conflicts with a credible commitment to economic growth to some degree because the deputy’s privileges may lead to rent-seeking that harms productive activities’,52 invoking the spectre of negative path dependency once genuine legislative reforms are probed. In a similar vein, Zhang Wuchang (Steven Cheung) concludes that local governments compete for private investments and hence strive for close relations with private entrepreneurs.53 They offer them political positions (such as PC or PPCC membership) and thus foster an exchange of political power and economic advantages to the benefit of both local cadres and the entrepreneurs themselves. In our own research, we came across a more nuanced picture of entrepreneurial agency in these legislative bodies. Although we could not prove corruption as an entry card into local PCs and PPCCs, we found that, once private entrepreneurs have become delegates, they actively participate in policymaking and government supervision. They use their mandate to voice complaints and demands, and often do so collectively. Under these conditions, guanxi – or ‘organizational clientelism’ – undoubtedly plays a prominent role, but the asymmetric relationship between private entrepreneurs and the party-state within what we have called a regime coalition may gradually change, with private entrepreneurs gaining more political influence. As McNally has noted,

118  Gunter Schubert and Thomas Heberer The persistence of Leninist control creates institutional ambiguities in the governance of China’s private sector. To enhance firm success, private entrepreneurs use political guanxi networks to embed themselves in party-state institutions, carving out over time increasingly powerful positions vis-à-vis the state mediated by the application of guanxi. Guanxi capitalism thus yields idiosyncratic benefits to certain Chinese firms, while also transforming the Chinese political economy in enabling wealth to be translated into power.54 It is exactly this imminent danger which has induced Xi Jinping to make private entrepreneurs one of the major targets of his anti-corruption campaign. Their incorporation in China’s political institutions and policymaking at the national and local level is risky for the party-state. As an important economic force, private entrepreneurs are inclined towards political lobbying and influence-seeking to protect and expand their economic interests. This is as much the case in China as anywhere else in the world. The more powerful they become economically, the more pretentious they become politically. Under Xi, the party-state walks a fine line between co-opting prestigious entrepreneurs into the political system and constantly reminding them to respect party authority and ‘stay clean’.

‘Corporatist incorporation’ via business associations55 The significance of business associations in post-Mao China and their relationship to the party-state has been a topic of interest for China scholars for a long time. In this context, corporatism has been a prominent – though contested – concept through which to characterise the relationship between private entrepreneurs and the Communist party-state. China scholars are well aware that Schmitter’s ‘canonical’ definition of corporatism56 does not fully apply here, as the rise of associations, which began in the 1980s, has resulted in a complex reconfiguration of state–business relations when compared with the Maoist era. This has triggered a lively scholarly debate on the scope and limits of applying corporatist or civil society theory to the Chinese case, partly informed by ideological stances on the nature of the Chinese state and the potential for civic agency in an authoritarian setting like China’s. Whereas some scholars have explicitly rejected the notion of ‘corporatist state’ or ‘corporatism’ to conceptualise state–business (or state-society) relations in China,57 others have adhered to the concept because they believed it was a better fit than any alternative proposed – at least as a ‘heuristic device’ in combination with a wider conceptual understanding of corporatism.58 For many experts, corporatism remains a useful analytical tool for describing contemporary state–business relations in China, though, as they claim, it must be conceptually refined. We share this viewpoint.

State–business relations under Xi Jinping  119 Many business associations in China are state-subsidised and their leading personnel selected by the government. Primarily, these associations communicate state policies to their members, though, in some cases, business associations also advise the government on policymaking. ‘In all of these respects,’ as Unger and Chan note, ‘these are quintessentially state-corporatist organizations.’59 However, state control over business associations diverges substantially between sectors, administrative tiers and localities. Bottom-up established business associations have also emerged in post-Mao China, reported early on in Wenzhou, Zhejiang province.60 Furthermore, Unger and Chan acknowledge that state-corporatist controls in China have decentralised as ‘local leaderships have gained greater control over their own economic resources and become less dependent upon higher government levels for financing local government operations’ during the reform era.61 In the same way, state-corporatist controls have been taken over by local jurisdictions, making for ‘little corporatist empires’ that occasionally work ‘against the party-state and against the peak level corporatist associations’. Consequently, ‘national and local corporatist arrangements uneasily co-exist’,62 but they do not compromise the tenets of state- corporatist control per se.63 Some scholars have used a different, more descriptive terminology to highlight the changes that have taken place in state–business relations over the last three decades. Yang Keming, for instance, introduced ‘organizational corporatism’ to explain the CCP’s strategy of incorporating the private sector by enforcing the establishment of party branches in private enterprises and business associations; decentralising party-state authority over business associations to local governments in order to ensure against the inevitable demise of a strictly vertically structured corporatist system; and signalling to private entrepreneurs ‘to keep business to business’ when dealing with the party-state and not making political demands, a precondition for associational autonomy (as far as it goes in contemporary China). ‘Organizational corporatism’ thus describes a party-state organisational structure that ‘is a major institutional mechanism through which corporatism is represented and realized’.64 Other scholars, however, have observed a rising degree of autonomy on the part of business associations vis-à-vis the party-state which, they suggest, are not well grasped by corporatist or civil society theory. Therefore, alternative terminologies have been suggested to better address the relationship between the party-state and private entrepreneurs. For instance, in an article on the Wenzhou Business Association (established in the late 1980s), an oft-cited example of China’s self-established and relatively ‘autonomous’ business organisations, Yu Jianxing and Zhou Jun pointed out that ‘the separation of society from the state is currently not really possible, and autonomy is not an essential prerequisite for social organizations to participate in the public domain’.65 Lacking independent institutional channels, the

120  Gunter Schubert and Thomas Heberer Wenzhou Business Association rather ‘embraces’ the local government by establishing a close relationship with government departments and officials in order to influence policymaking in the realm of industrial governance: Arising as a response to “market failure” the Wenzhou Business Association has never taken civil society development as its aim, and thus nor has any confrontation been formed with the government. On the contrary, out of realistic needs, it has taken the initiative to function in industry governance as a capable assistant to the government, which rightly serves as a prerequisite for governmental acknowledgement and corresponding empowerment through its remarkable function performance.66 The major argument made by the authors is simple: Private entrepreneurs’ interests are best represented by business associations which entertain a symbiotic relationship67 with the government and do not insist on organisational autonomy, which is not available under the current regime. Business associations serve their member constituency best by assuming the role of ‘indispensable helper’68 to the government, which is becoming increasingly dependent on business associations in private sector management. In a later article written by Yu Jianxing and his research team,69 the authors introduced ‘privileged access’ as a concept for questioning the usual correlation between organisational autonomy and lobbying intensity (and success) on the part of societal organisations. The significance of ‘autonomy’ for successful lobbying, they have argued, was too easily taken for granted in assessing the existence of a civil society in China, as the term lacked convincing operationalisation.70 In this study, the authors found that self-established, i.e. autonomous, business associations lobbied less than ‘official’ associations, i.e. those set up by the government. The authors concluded that formal autonomy did not account for lobbying frequency and effectiveness, instead, the ‘privileged access’ of ‘official’ associations to government cadres and policymakers proved more important.71 The fact is, however, that ‘privileged access’ confirms the gatekeeper position of the party-state vis-à-vis private entrepreneurs concerning all major decisions and resources pertaining to private sector development. Our research has shown that business associations do indeed serve as useful transmission belts to convey private entrepreneurs’ concerns to party-state authorities, and they do sometimes engage in successful political lobbying. It is fair to say that under the pressure of economic adjustment, rigorously pursued by the central government, business associations currently have little leeway to meaningfully shape the policy process autonomously and can only do their best to secure ‘privileged access’ to the party elite in order to smoothen an otherwise inevitably hard landing for many private enterprises. However, ‘privileged access’ does provide an entry to negotiations with party-state cadres and thus helps safeguarding entrepreneurial interests.

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Private entrepreneurs as agents of political change? Against a background of continuous effort on the part of the party-state to control and incorporate private entrepreneurs, scholars of Chinese politics have paid serious attention to the question of whether, or under which conditions, private entrepreneurs would be willing and able to challenge the party-state’s political supremacy. Historical experience has provided plenty of evidence which suggests that this segment of a society’s ‘modern strata’ can be influential political actors in countries experiencing economic and social transformation. They ally with regime elites or side with their opponents, depending on what best serves their interests; either course of action can have significant consequences for regime stability and legitimacy, and for democratisation.72 Private entrepreneurs tend to support authoritarian regimes when their material interests benefit from the regime’s policies. They also tend to be conservative when they feel that a new regime’s policies, such as demands for higher taxes to pay for new welfare programmes or for the nationalisation of lucrative industries, would harm their businesses. If they come to believe that the regime under which they are governed can no longer defend their interests or if they perceive that the strength of the opposition has reached a tipping point, their support for the status quo can evaporate, replaced by a quest for political change.73 In most of the literature, private entrepreneurs in China are regarded as politically conservative and, if not accused of corruption, easily co-opted by the Communist Party. To cite Dickson in one of his early studies on this topic: In contrast to the popular perception that privatization is leading inexorably to democratization, and by extension that China’s capitalists are democrats at heart, the most recent survey data suggests that they are increasingly integrated into the current political system. They are part of the status quo, not challengers on the outside looking in. On a variety of political questions, the views of entrepreneurs are remarkably similar to local Party and government officials.74 In another study investigating and statistically measuring level of regime support by private entrepreneurs, Chen and Dickson called the latter ‘allies of the state’,75 while McNally and Wright even asserted that private entrepreneurs are ‘thickly embedded’ in the party-state: The interweaving of instrumental and affective ties “overdetermines” private capital holders’ support for the political status quo. Frequent interactions, sentiments of familiarity and trust, and a “we-group” feeling toward each other have made China’s entrepreneurs more positively disposed toward the political establishment than would be the case with solely instrumental ties.… Put differently, the interweaving of affective,

122  Gunter Schubert and Thomas Heberer instrumental and institutional ties that thickly embed private capital holders in the party-state, makes support for the political status quo more enduring and “sticky” than would otherwise be the case.76 This has been very much the assessment of most China scholars over the last 25 years or so and has thus been extensively applied to the Xi Jinping era too.77 We have challenged it based on our own empirical research conducted over the whole Xi Jinping era to date, arguing that, against a background of continuous market transformation, private entrepreneurs have become a ‘strategic group’ in Chinese society that increasingly shapes the political system, no matter how great the pressure on them.78 In fact, power relations between the party-state and private entrepreneurs, bound together in a regime coalition since the early days of ‘reform and opening up’, are constantly reconfigured and, as we argue, have become more horizontal over time. In fact, private entrepreneurs are gaining influence on all administrative levels of the Chinese system, although not (yet) at the expense of party-state political supremacy. In general, private entrepreneurs ‘play ball’ within the institutional structure set up and steered by the party-state. In fact, by pushing for economic reforms, they contribute substantially to system stability and regime legitimacy.79 At the same time, however, we have found that private entrepreneurs – within all the institutional arrangements to secure party-state control discussed above – display an increasing capacity to negotiate their group-specific interests with the regime. This will soon introduce new challenges to the state–business relationship, which China scholars must observe carefully.

Conclusion and outlook This chapter has highlighted the state–business relationship in the Xi Jinping era by putting it into the historical context of China’s four decades of economic reform, the rise of a private economy since the late 1980s and constant efforts by the party-state to maintain control over private entrepreneurs as a constituency. Over the course of the Xi Jinping era, private sector policies have become increasingly rigid in an attempt to merge SOEs and privately owned enterprises or to control private enterprises through public sector investment and the acquisition of shareholding stakes,80 in an obvious attempt to bring about a new brand of state capitalism.81 Moreover, many private companies have been forcefully shut down in conjunction with new party-state prerogatives pushing to restructure the economy, often by claiming to provide for a cleaner environment. Our own research and interviews have revealed that conditions are deteriorating for small- and medium-sized businesses in particular. Often this is a result of overall structural economic change in the Chinese economy in the first instance, but this has been increasingly reinforced by the negative fallout of the US-China trade war as well. A debate in 2018 over whether the private sector should

State–business relations under Xi Jinping  123 be nationalised, combined with frequent politically motivated government inventions into legal proceedings resulting in unfair verdicts against large entrepreneurs, plus official support of high-tech enterprises at the expense of low-tech companies82 all serve to foster a decline of confidence in government policies, and nurture a sense of lacking legal protection among private entrepreneurs. The case of tycoon Chen Tianyong, who recently left China complaining about the harsh environment for entrepreneurs, represents this declining confidence in private sector development in today’s China particularly well.83 At the same time, however, we have found that even under conditions of a deteriorating opportunity structure, private entrepreneurs do act strategically to safeguard their interests and maintain their position within the current regime coalition. It is the declared ‘mission’ of the current CCP leadership to make the country an ‘overall-modernised entity’ on an equal footing with the United States by 2050, which requires the systematic steering of the private sector towards innovation and technical upgrading. The fundamental tension in state–business relations resulting from the regime’s economic dependence on sound private sector development on the one hand and its simultaneous quest for a strong public sector and political control on the other do not bode well for future harmony within the present regime coalition.

Notes 1 Gunter Schubert and Björn Alpermann, ‘Studying the Chinese Policy Process in the Era of “Top-Level Design”: The Contribution of “Political Steering” Theory’, Journal of Chinese Political Science, 24 (2), 2019, pp. 199–224. 2 Thomas Heberer and Gunter Schubert, Weapons of the Rich. Strategic Action of Private Entrepreneurs in Contemporary China, World Scientific, Singapore, 2020. The chapter particularly draws on this book but has been adapted substantially to fit the overarching topic of this volume. 3 Nicholas R. Lardy, Sustaining China’s Economic Growth after the Global Financial Crisis, Peterson Institute for International Economics, Washington, DC, 2012; Michael Pettis, Avoiding the Fall. China’s Economic Restructuring, Carnegie Endowment for International Peace, Washington, DC, 2013. 4 ‘Zhonggong zhongyang guanyu quanmian shenhua gaige ruogan wenti de jueding’ (Decision of the Chinese Communist Party and the Central Government on Some Issues Concerning Comprehensively Deepening Reforms). For the Chinese version, see (accessed August 18, 2019). 5 Quoted from the English translation of the Decision; see cn/china/third_plenary_session/2014-01/16/content_31212602.htm (accessed August 18, 2019). 6 See National Bureau of Industry and Commerce, at content/2016-12/07/content_1882474.htm (accessed August 18, 2019). These figures do not include enterprises with mixed ownership, joint ventures and shareholding companies, which are often privately owned or have a majority of shares in private ownership. 7 Zhou Xin, ‘Xi Promises to Protect Private Firms to Ensure Better Tomorrow’, South China Morning Post, October 21, 2018, at

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china-economy/article/2169546/xi-jinping-promises-protect-chinas-privatebusinesses-ensure (accessed August 15, 2019). See, e.g. the 13th National Economic and Development Plan (Zhonghua Renmin Gongheguo guomin jingji he shehui fazhan di shisange wunian guihua) adopted in March 2016 by the National People’s Congress, which refers, in very general terms, to supporting non-public sector development by more legal protection, fair treatment and more economic opportunity (cf. sections 11–13). See http:// (accessed August 19, 2019); for an English translation, see P020161207645765233498.pdf (accessed August 19, 2019). Minxin Pei, China’s Crony Capitalism: The Dynamics of Regime Decay, Harvard University Press, Cambridge/Mass., 2016. See (accessed August 15, 2019). See also Yating Zou, ‘Xinxing zhengshang guanxi. “Qin” “qing” zai xin ge you suo zun (Xi Jinping zhiguo li zhengguan jianci)’ (New State-Business Relations. ‘Intimate’, ‘Just and Honest’, Everybody Has to Bear that in Mind and to Comply with It), Renmin Ribao haiwaiban (People’s Daily Overseas Edition), August 5, 2016; and Weimin Yang, ‘Xi Jinping guanyu feigong jingji lingyu “liangge jiankang” “sixiang yanjiu” (Study on Xi Jingping’s Thought on the Field of Non-Public Economy)’, Jiangsu sheng shehuizhuyi xueyuan xuebao (Journal of Jiangsu Institute of Socialism), 105, 2017, at (accessed August 15, 2019). For an early academic conceptualisation of ‘entrepreneurial spirit’ with the help of indicators to measure entrepreneurship as well as innovation and leadership capacity, see Xiaobo Wu, Yue Yuan, Xi Feng and Ling Chen, Zhongguo qiye jian-kang zhishu baogao (2014 Report on Health Indicators of China’s Enterprises), Zhejiang daxue chubanshe, Hangzhou, 2014; Kun Hu, ‘Liu Yonghao: Minying qiye jintian zhongyu dedaole renting’ (Liu Yonghao: Today Private Enterprises Are Finally Acknowledged)’, Zhongguo Qiyejia (China’s Entrepreneurs), March 6, 2018, pp. 78–81. Xi Jinping, for his part, added patriotism and social responsibility to the concept of ‘entrepreneurial spirit’. ‘Shijiuda wei minying jingji zhiming fazhang fangxiang’ (Pointing at the Direction of the Private Economy by the 19th Party Congress), at http://theory.gmw. cn/2017-10/27/content_26619115.htm (accessed August 15, 2019). Ting Shi, ‘China Signals Patriotism as Key Expectation for Entrepreneurs’, Bloomberg, September 26, 2017, at 2017-09-26/china-tells-entrepreneurs-they-must-put-patriotism-over-profit (accessed August 15, 2019). ‘Siying jingji yi wangcheng xiezhu gongyou jingji fazhan, ying zhujian lichang’ (The Private Economy Has Already Fulfilled Its Task to Assist Public Sector Development, It Should Gradually Fade Out), at 77918883/wemedia.shtml?_cpb_remenwz0 (accessed August 17, 2019). See also Minxin Pei, ‘The Mysterious Mr Wu and the Growing Threat to China’s Private Companies’, Nikkei Asian Review, September 25, 2018, at https://asia.nikkei. com/Opinion/The-mysterious-Mr-Wu-and-the-growing-threat-to-China-sprivate-companies (accessed August 19, 2019). ‘Minying qiye he minying qiyejia shi women ziji ren’ (Private Enterprises and Private Entrepreneurs Are Our Own People), at (accessed August 15, 2019); ‘Xi Jiping weihe shuo minying qiyejia shi women ziji ren?’ (Why Does Xi Jinping Say That Private Entrepreneurs Are Our Own People?), at (accessed August 15, 2019).

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28 29



32 33





Post, April 21, 2019, at 3006995/chinas-private-firms-traditional-low-tech-sectors-struggling (accessed July 16, 2019). Zhonggong Zhongyang Guowuyuan, Guanyu quanmian jiaqiang shengtai huanjing baohu jianjue dahao wuran fangzhi gongjian zhande yijian (Opinion of the CCP Central Committee and the State Council on Strengthening Ecological and Environmental Protection and Resolutely Prevent and Fight Pollution), 2018, at (accessed August 12, 2018). A respondent told us that in his hometown alone (a prefectural city) hundreds of enterprises had been closed, though many of them continued to operate clandestinely and with the silent approval of the local government. Interview, Chinese entrepreneur, Duisburg, August 8, 2018. Changdong Zhang, ‘Reexamining the Electoral Connection in Authoritarian China: The Local People’s Congress and Its Private Entrepreneur Deputies’, The China Review, 17 (1), 2017, pp. 1–27. Tom Hancock, ‘Xi Jinping’s China: Why Entrepreneurs Feel like Second-Class Citizens. Strong Support for State-Owned Companies Is Weighing Down on the Dynamic Private Sector’, Financial Times, May 13, 2019, at content/fcb06530-680a-11e9-9adc-98bf1d35a056 (accessed August 2, 2019). Li Gengnan, ‘Minying qiye jiujing zai nali? (Where At All Are Private Enterprises?), Xinlang caijing yijian lingxiu zhuanlan (Xinlang Finance and Economy Opinion Leaders’ Forum), December 18, 2018, at china/2018-12-18/zl-ihqhqcir7921217.shtml (accessed December 27, 2018). Meicheng Lu, ‘Zhongguo duojia minying qiye bei guoqi tunbing’ (Many Chinese Private Enterprises Are Absorbed by State-Owned Ones), Jinrong ­Shibao (Financial Times), September 27, 2018, at (accessed December 27, 2018). Interview, entrepreneur, Fujian, September 22, 2018. Li Yang, ‘Jingji bu xing, minqi kaishi zhudong bingru guoqi xunqiu ziqiu’ (If the Economy Is Not Running Well, Private Enterprises Begin Actively to Merge with State-Owned Enterprises Looking for Self-Rescuing), at (accessed December 30, 2019). Wu Xiaomeng and Fran Wang, ‘What Deleveraging? Private Companies’ Debt Ratios Jump’, Caixin, September 19, 2018, at 2018-09-19/what-deleveraging-private-companies-debt-ratios-jump-101328233. html (accessed September 24, 2018). Sun Lizhao and Lin Jinbing, ‘Big State Firms Urged to Bring in Private Capital at Highest Corporate Level’, Caixin, September 19, 2018, at https://www. (accessed September 24, 2018). TVE privatisation was, however, only one of several trajectories of China’s private sector development. For different models of China’s ‘capitalist transformation’, see Xiaoxiao Shen and Kellee S. Tsai, ‘Institutional Adaptability in China: Local Developmental Models under Changing Economic Conditions’, World Development, 87, 2016, pp. 107–127; Thomas Heberer and Gunter Schubert, no. 2. Other ‘first-generation entrepreneurs’ were peasants, craftspeople or petty traders who either started their own small business or registered their ‘individual companies’ (getihu) as private enterprises when this option became available. Moreover, the rise of the private sector offered new opportunities to those who belonged to the deprivileged or stigmatised groups in Chinese society: disabled

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41 42 43

44 45 46 47 48

or jobless people, released prisoners, pensioners or persons with a ‘bad background’ according to Maoist ideology. Houyi Zhang and Peng Lü, ‘Siying qiyezhu de jingji fenhua yu zhengzhi mianmao bianhua’ (Economic Differentiation and Change of the Political Status of Private Entrepreneurs), in Xueyi Lu, Peilin Li and Guangjin Chen (eds.), 2013 nian Zhongguo shehui xingshi fenxi yu yuce (Analysis and Prospects of China’s Social Situation), Shehuikexue wenxian chubanshe, Beijing, 2012, pp. 301–311. Chinese scholars usually refer to the data of the Chinese Enterprise Survey (CPES) which is conducted biannually as a joint project by the CP United Front Work Department, the All-China Federation of Industry and Commerce, the State Administration for Market Regulation and the Chinese Academy of Social Sciences (( Unfortunately, access to survey data is strictly regulated for scholars, who are not allowed to obtain the most recent statistics. ‘CPC Membership Reports Slower Growth’,, June 30, 2014, at (accessed September 20, 2016). Yan and Huang report a number of roughly 1.579 million private companies having established party branches by the end of 2014, amounting to 53.1 per cent of all Chinese private enterprises. See Xiaojun Yan and Jie Huang, ‘Navigating Unknown Waters: The Chinese Communist Party’s New Presence in the Private Sector’, China Review, 17 (2), 2017, p. 57. In March 2012, the Central Organization Department (Zhongyang zuzhibu) issued the ‘Opinions on Strengthening and Improving Party Building in Nonstate Enterprises’, followed by a national conference on party building in private enterprises. See Xiaojun Yan and Jie Huang, no. 41, pp. 45–46. Ibid. Party branches had been established in most of the private enterprises we visited during our fieldwork. Xiaoguang Fan and Peng Lü, ‘Zhongguo siying qiyezhu de “gaizibi beilun”’ (The ‘Gatsby Paradox’ of China’s Private Entrepreneurs), Shehuixue yanjiu (Sociological Studies), 6, 2018, pp. 62–82. Chen’s data of a local PPCC at provincial level show that 128 of 449 delegates (28.5 per cent) between 2010 and 2013 were private entrepreneurs, but only 16 of them (12.5 per cent of all entrepreneur delegates and 44.4 per cent of all occupational sector delegates) officially represented the economic sector. See Minglu Chen, ‘From Economic Elites to Political Elites: Private Entrepreneurs in the People’s Political Consultative Conference’, Journal of Contemporary China, 24 (94), 2015, p. 618. Ibid., p. 621. Ibid., p. 623. Xin Sun, Jiangnan Zhu and Yiping Wu, ‘Organizational Clientelism: An Analysis of Private Entrepreneurs in Chinese Local Legislatures’, Journal of East Asian Studies, 14, 2014, pp. 1–29. Ibid., p. 21. ‘Clientelism’ based on individual guanxi-networks can be, and usually is, part of all modes of political incorporation of private entrepreneurs into the partystate discussed here, though the degree to which it is relevant does vary. For an explicit application of ‘clientelism’ in state–business relations – or ‘guanxi capitalism’ as a generic mode of entrepreneurs’ political incorporation – see, e.g. Christopher A. McNally, Hong Guo and Guangwei Hu, Entrepreneurship and Political Guanxi Networks in China’s Private Sector, East West Center Working Papers No. 19, East West Center, Honolulu, 2007. For an introduction to the concept of ‘thick embeddedness’ as a term to describe the bonds between private capital and the party-state, see Christopher A. McNally and Teresa Wright,

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‘Sources of Social Support for China’s Current Political Order: The “Thick Embeddedness” of Private Capital Holders’, Communist and Post-Communist Studies, 43, 2010, pp. 189–198. There are also numerous studies, not at least in the economics literature, which measure the effect of close political connections on the business opportunities and success of private entrepreneurs, or which trace the major addressees of these connections in the government: See, e.g. Wenfang Wu, Chongfeng Wu, Chunyang Zhou and Jun Wu (2012)‚‘Political Connections, Tax Benefits and Firm Performance: Evidence from China’, Journal of Accounting and Public Policy, 31(3), pp. 277-300; Zhong-qin Su and Hung-gai Fung, ‘Political Connections and Firm Performance in Chinese Companies’, Pacific Economic Review, 18 (3), 2013, pp. 283–317; Junming Wang, ‘Taking the “Red Hat” off Chinese Private Entrepreneurs’, Sociology of Development, 2(3), 2016, pp. 293–321; Wenjing Xie, Keji Liu, Fei Xie and Haoyuan Ding, ‘Political Ties and Firm Performance in China: Evidence from a Quantile Regression’, Journal of East Asian Studies, 17 (3), 2017, pp. 331–341; James Kai-sing Kung and Chicheng Ma, ‘Friends with Benefits: How Political Connections Help to Sustain Private Enterprise Growth in China’, Economica, 85 (337), 2018, pp. 41–74. Xin Sun, Jiangnan Zhu and Yiping Wu, no. 48, pp. 21–22. Changdong Zhang, no. 28, p. 8. Ibid., p. 11. Ibid., p. 19. Wuchang Zhang, ‘Pingshen mei you jianguo zenme haode zhidu’ (In My Whole Life I Have Not Seen Such a Good System), Nanfang Wang, 2008, at http://view. (accessed September 1, 2018); Zhongguo de jingji zhidu (China’s Economic System), Zhongxin chubanshe, Beijing, 2009. Christopher A. McNally, ‘China’s Changing Guanxi Capitalism: Private Entrepreneurs between Leninist Control and Relentless Accumulation’, Business and Politics, 13 (2), 2011, p. 3. For a recent study on the relevancy and conceptual evolution of the guanxi-concept in the context of ‘Greater China’, see Jenn-hwan Wang and Ray-May Hsung (eds.), Rethinking Social Capital and Entrepreneurship in Greater China. Is Guanxi Still Important? Routledge, Abingdon and New York, 2016. We refer to ‘business associations’ as a generic term that includes trade associations (shanghui), industrial branch associations (hangye xiehui), private enterprise associations (qiyejia xiehui) or entrepreneurial hometown associations (yidi shanghui). ‘Corporatism can be defined as a system of interest representation in which the constituent units are organised into a limited number of singular, compulsory, noncompetitive, hierarchically ordered and functionally differentiated categories recognised or licensed (if not created) by the state and granted a deliberate representational monopoly within their respective categories in exchange for observing certain controls on their selection of leaders and articulation of demands and supports.’ Philippe C. Schmitter, ‘Still the Century of Corporatism?’ The Review of Politics, 36 (1), 1974, pp. 93–94. William Hurst, ‘The City as the Focus: The Analysis of Contemporary Chinese Urban Politics’, China Information, 20 (30), 2006, pp. 457–479; Bruce Gilley, ‘Paradigms of Chinese Politics: Kicking Society Back Out’, Journal of Contemporary China, 20 (70), 2011, pp. 517–533; and Jude Howell, ‘Civil Society, Corporatism and Capitalism in China’, Journal of Comparative Asian Development, 11 (2), 2012, pp. 271–292. Jennifer Y.J. Hsu and Reza Hasmath, ‘The Chinese Corporatist State: Lessons Learned for Other Jurisdictions, in Jennifer Y.J. Hsu and Reza Hasmath (eds.), The Chinese Corporatist State. Adaption, Survival and Resistance, Routledge,

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59 60

61 62 63 64

65 66 67 68 69 70

71 72


74 75 76 77

London-New York, 2013, pp. 136–143; Jennifer Y.J. Hsu and Reza Hasmath, ‘The Local Corporatist State and NGO Relations in China’, Journal of Contemporary China, 23 (87), 2014, pp. 498–515. Jonathan Unger and Anita Chan, ‘State Corporatism and Business Associations in China: A Comparison with Earlier Emerging Economies in Asia’, International Journal of Emerging Markets, 10 (2), 2015, p. 184. Alan P.L. Liu, ‘The “Wenzhou Model” of Development and China’s Modernization’, Asian Survey, 32 (8), 1992, pp. 696–711; Jianxing Yu, Jun Zhou and Hua Jiang, A Path for Chinese Civil Society: A Case Study on Industrial Associations in Wenzhou, China, Rowman & Littlefield, Lanham, MD, 2012. Jonathan Unger and Anita Chan, no. 59, p. 8. Ibid. Ibid., p. 9. Keming Yang, ‘Keep Business for Business. Associations of Private Enterprises in China’, in Jennifer Y.J. Hsu and Reza Hasmath (eds.), The Chinese Corporatist State. Adaption, Survival and Resistance, Routledge, London and New York, 2013, p. 79. Jianxing Yu and Jun Zhou, ‘Local Governance and Business Associations in Wenzhou: A Model for the Road to Civil Society in China?’ Journal of Contemporary China, 22 (81), 2013, p. 397. Ibid., p. 406. Ibid., p. 400. Ibid., p. 406. Jianxing Yu, Kenichiro Yashima and Yongdong Shen, ‘Autonomy or Privilege? Lobbying Intensity of Local Business Associations in China’, Journal of Chinese Political Science, 19, 2014, pp. 315–333. The authors themselves, in their research design, operationalised ‘autonomy’ as the freedom of a business association to employ its secretary general on the one hand and the number of government officials employed by the association on the other. ‘Lobbying frequency’ was the dependent variable, measured by asking association officials and members how often they proposed policies in formal and informal ways to government authorities during the year. Data were gathered from business associations in Zhejiang (Wenzhou) and Jiangsu (Wuxi, Ningbo) provinces. Jianxing Yu, Kenichiro Yashima and Yongdong Shen, no. 69, p. 318. Often quoted is Barrington Moore’s famous dictum ‘no bourgeoisie, no democracy’, which suggests that the rise of private entrepreneurship is a precondition of democratic change. Barrington Moore, Social Origins of Dictatorship and Democracy: Lord and Peasant in the Making of the Modern World, Beacon Press, Boston, 1969. Jie Chen and Bruce J. Dickson, ‘Allies of the State: Democratic Support and Regime Support among China’s Private Entrepreneurs’, China Quarterly, 196, 2008, pp. 780–804; Wolfgang Merkel, Systemtransformation, Leske & Budrich, Opladen, 1999. Bruce J. Dickson, ‘Integrating Wealth into Power: The Communist Party’s Embrace of China’s Private Sector’, The China Quarterly, 192, 2007, p. 852. Jie Chen and Bruce J. Dickson, no. 73. Christopher A. McNally and Teresa Wright, no. 48, p. 196. Only a few scholars have focused on the political agency of private entrepreneurs, most notably: Thomas Heberer, ‘Strategic Groups and State Capacity: The Case of the Private Entrepreneurs’, China Perspectives, 46, 2003, pp. 4–14; Thomas Heberer, Private Entrepreneurs in China and Vietnam. Social and Political Functioning of Strategic Groups, Brill, Leiden, 2003; Kellee S. Tsai, Capitalism

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78 79



82 83

without Democracy. The Private Sector in Contemporary China, Cornell University Press, Ithaca, NY, 2007; Dongya Huang and Chen Chuanmin, ‘Revolving Out of the Party-State: The Xiahai Entrepreneurs and Circumscribing Government Power in China’, Journal of Contemporary China, 25 (97), 2016, pp. 41–58; Gunter Schubert and Thomas Heberer, ‘Private Entrepreneurs as a “Strategic Group” in the Chinese Polity’, The China Review, 17 (2), 2017, pp. 95–122. Thomas Heberer and Gunter Schubert, ‘Weapons of the Rich: Strategic Behavior and Collective Action of Private Entrepreneurs in China’, Modern China, 45 (5), 2019, pp. 471–503; Thomas Heberer and Gunter Schubert, no. 2. We therefore question Wank’s argument that the strategic behavior of private entrepreneurs ‘undermines the infrastructural power of the central state’. David L. Wank, ‘Private Business, Bureaucracy, and Political Alliance in a Chinese City’, Journal of Chinese Affairs, 33, 1995, p. 181. Li Yuan, ‘Private Businesses Built Modern China. Now the Government is Pushing Back’, The New York Times, October 3, 2018, at https://www.nytimes. com/2018/10/03/business/china-economy-private-enterprise.html (accessed August 19, 2019). For a pessimist view of China’s new state capitalism, see Yasheng Huang, ‘State Capitalism in China’, The Annual Proceedings of the Wealth and Well-Being of Nations IX, 2015/2016, pp. 19–49, at VOL_VIII.Huang.pdf (accessed August 16, 2019). See also Weihuan Zhou, Henry Gao and Xue Bai, ‘The Resurrection of State Capitalism in China’, East Asia Forum, August 6, 2019, at (accessed August 16, 2019). Elaine Chan and He Huifeng, no. 25. Chen Tianyong, no. 17.


The evolution of China’s industrial policy and ‘Made in China 2025’ Tomoo Marukawa

Introduction US Vice President Mike Pence in his speech on China policy delivered at the Hudson Institute in October 2018 pointed out that, Through the “Made in China 2025” plan, the (Chinese) Communist Party has set its sights on controlling 90% of the world’s most advanced industries…. To win the commanding heights of the 21st Century economy, Beijing has directed its bureaucrats and businesses to obtain American intellectual property … by any means necessary.1 He portrayed ‘Made in China 2025’ (MIC2025) as a manifestation of the Chinese Government’s ambition to control the world’s high-tech industries. Indeed, with its wide coverage of various high-tech industries and detailed descriptions of the products and technologies that China aims to acquire by 2025, MIC2025 seems to reveal a very ambitious strategy of the Xi Jinping administration. With limited government resources, however, it will be impossible to devote enough policy resources to have control over all the high-tech products and technologies listed in MIC2025. Thus, it is questionable whether the Chinese Government has enough policy measures and resources to achieve all its goals. In this regard, a review of China’s past industrial policies vis-à-vis their goals, measures and effectiveness will provide useful insights into the prospects of MIC2025’s effectiveness in fostering high-tech industries. MIC2025 does not appear to be too special compared with China’s past industrial policies. China’s recent five-year plans also have extensive lists of industries that the Chinese Government wishes to promote. In this context, MIC2025 seems to be just another wish list with a dubious effect. The most comprehensive industrial policies in China have been the fiveyear plans. When the allocation of virtually all resources was controlled by central and local governments, these plans were enough to guide the course of industrial development. However, as market forces outside the planned economy started to influence industrial development, in order to adjust its

132  Tomoo Marukawa course, the government felt the necessity to supplement those plans with indirect policy instruments such as taxation, tariff, subsidy and loan. The main purpose of the first policy that bore the name ‘industrial policy’, which was issued by the State Planning Commission in 1989, was to regulate market forces through indirect and direct measures such as project approval in line with the five-year plan. In 1993, the Chinese Government officially adopted ‘a socialist market economy’ as the goal of its economic reform and started to reduce the role of economic planning. In a market economy, the five-year plan would have become superfluous, but it survived – with the 13th Five-Year Plan (2016–2020) underway – by changing its nature from the government’s investment plan to the government’s visions on the direction of economic and industrial development, and also by changing its name, 11th Five-Year Plan (2006–2010) onwards, from plan ( jihua) to design (guihua). The plans are implemented in combination with various government industrial policies that aim to influence market forces through indirect and direct measures. Industrial policies in China have been expressed through several wordings, including plan (guihua), industrial policy (chanye zhengce), opinion (yijian) and action plan (xingdong jihua), without strict demarcation in their functions. In this chapter, ‘industrial policy’ refers to policy documents that express the central government’s view on guiding and adjusting the development path of a certain industry or the industrial structure as a whole. That is to say, this chapter deals only with government interventions that take the form of policy documents. A change in the tariff schedule, for example, may imply a certain governmental policy to foster or contain the development of an industry. But such a change, if it is not a reflection of a certain policy document, is not dealt with in this chapter. Recent literature on China’s industrial policy points out that, after the retreat of planned economy and reduction in government intervention in general in the 1990s, the Chinese Government became active in shaping and guiding industrial development through industrial policy documents 2003 onwards. Heilmann and Shih2 explain this resurgence of industrial policy by the formation and ascent of an advocacy coalition formed around the current Vice Premier Liu He and his former colleague Yang Weimin. Chen and Naughton3 analyse the institutionalised process of creating industrial policies and suggest that the resurgence was related to the shift in premiership from Zhu Rongji to Wen Jiabao in 2003 and the recovery of government’s budgetary income, which was in a critical situation during Zhu Rongji’s administration. Although the author does agree with these views, that the Chinese Government has been very active in drafting industrial policies since 2003, it is necessary to point out that the degree of government intervention in industries in this period is substantially lower than in the 1990s. The most obvious evidence of this can be seen in the level of import tariffs – the average tariff rate in 1995 was 36.4 per cent, but it was reduced to 11.5 per cent

The evolution of China’s industrial policy  133 in 2003 and 9.9 per cent, 2006 onwards; other types of intervention such as import quotas, restrictions on inward foreign direct investments (FDIs) and subsidies were reduced accordingly. The main reason for this is China’s entry into the World Trade Organization (WTO) in December 2001 – it pledged to curtail its intervention to a level compatible with WTO rules. The alleged retreat of industrial policies during Zhu Rongji’s premiership (1998–2003) can, therefore, be attributed to China’s accession to the WTO, and the loss of conventional industrial policy tools such as tariffs and import quotas. The alleged resurgence of industrial policies after 2003 can be regarded as a recovery in drafting industrial policy documents without the conventional tools, which had to be curtailed for the sake of entering the WTO. If that is the case, we must review China’s industrial policies in their continuity from the 1990s to the 2010s. This is what this chapter attempts to do. It focuses on two essential targets that ran through many of China’s industrial policies: increase in domestic production ratio and reorganisation of dispersed industries. It further examines the actual measures put forward in each industrial policy and their effectiveness. The remainder of the chapter is structured as follows: The second section reviews the objective, measures and outcome of the National Industrial Policy in the 1990s; the third reviews the evolution of industrial policies after China’s entry into the WTO – its focus is on the rise of nationalism, expressed in the term ‘indigenous innovation’, in industrial policies; the fourth, taking the iron and steel industry as an example, reviews Chinese Government’s attempts to reorganise dispersed industries; the fifth discusses the features of MIC2025, which represents the Xi Jinping administration’s industrial development strategy, in comparison with past industrial policies; the sixth discusses the prospects for high-tech industries targeted in MIC2025; and the seventh concludes the chapter.

The national industrial policy in the 1990s ‘The State Council’s Decision on Points of Current Industrial Policy’, which was issued in 1989, was the first government document in the People’s Republic of China having the term ‘industrial policy’ in its title. It was intended to adjust the imbalances in the industrial structure created by market forces through the allocation of investment funds and bank loans, and FDI. By demanding that local governments promulgate and implement industrial policies covering their jurisdiction, the first policy proved effective in rebalancing the allocation of investment between the overinvested processing industries and underinvested energy, transport and materials industries.4 However, the State Planning Commission officials who drafted this policy were unsatisfied with it, because it was only a passive response to the unfettered developments in the industries. What they aimed for was the creation of dynamic comparative advantages through industrial policies, as in the case of Japanese industrial policies.5

134  Tomoo Marukawa The second policy with the term ‘industry policy’ in its title was ‘Outline of the National Industrial Policy in the 1990s’ issued in 1994. It was more aggressive in creating dynamic comparative advantages than its predecessor. It designated several industries, namely machinery and electronics, petrochemical, automobile manufacturing and construction, to become the ‘pillar industries’ of the national economy. To accelerate their development, the government would draft specific policies for each, give the enterprises in these industries priority in initial public offerings (IPOs) and corporate bond issuances, impose protective tariffs and open up the domestic market to foreign enterprises in exchange for technology transfer. The second policy made better progress than the 1989 one in several aspects. First, while the 1989 policy could be regarded as a supplement to the Seventh Five-Year Plan, the 1994 one preceded the Ninth Five-Year Plan (1996–2000) in pushing forward the idea of ‘pillar industries’. Second, the promotion of some ‘pillar industries’ meant that it embraced an unbalanced growth strategy proposed by Hirshman6 – the pillar industries were expected to lead to the growth of the whole economy through forward and backward linkage effects, while the 1989 policy had looked only at rebalancing the industrial structure. Third, it envisioned a tree structure of industrial policies, i.e. a main policy (‘Outline’) and branch policies for each of the pillar industries. The tree structure, however, was only partially built. Amongst the pillar industries, the automobile industry was the only one that had its own policy. State ministries worked for several years to draft industrial policies for machine-building and electronics industries, but neither was officially promulgated. In the case of the machine-building industry, the State Planning Commission did finalise the draft and send it to the State Council but failed to get its approval.7 Besides the automobile industrial policy, the only sector-specific industrial policy that was issued under the umbrella of the National Industrial Policy in the 1990s was the one on the ‘irrigation industry’. This policy intended to introduce a market mechanism in the construction of irrigation and flood control facilities.8 The effectiveness of the National Industrial Policy in the 1990s can be examined through the case of the automobile industry. The 1994 automobile policy involved much government intervention. First, high import tariff rates were set for automobiles – 100 per cent for passenger cars and 50 per cent for small and mid-sized trucks; besides this, automobile imports were restricted by import quotas. Second, automobile producers were given strong incentive to increase the domestic production ratio of automobile parts – import tariffs on automobile parts were reduced when the domestically produced parts ratio reached 60 per cent and 80 per cent. Third, the policy aimed to reorganise the industry, which had around 120 automobile assemblers in 1994, into eight to ten big industrial groups by 2000 and three to four by 2010; it stated that the government would offer all kinds of incentives, ranging from preferential loans and tax exemption to IPOs,

The evolution of China’s industrial policy  135 to encourage the formation of big groups. Fourth, although the policy was not unfavourable to FDIs, it imposed a severe restriction on new entry – in accordance with the general policy to reduce the number of automobile assemblers, only one new foreign carmaker was allowed to enter passenger car production when the policy was effective. The only allowable way for foreign carmakers to enter the Chinese market was to establish a joint venture with a Chinese automaker, in which the foreign partner’s ownership share should be equal or less than 50 per cent. New foreign entrants were required to establish a research and development (R&D) facility inside the joint venture. This was a clause that forced foreign carmakers to transfer R&D know-how to their Chinese partners, which later triggered criticisms from the United States Government. The outcome of the automobile industrial policy can be summarised as follows: First, it proved very effective in fostering domestic automobile parts production. As of 1996, most of the domestically assembled foreign brand cars such as Santana and Jetta achieved 80 per cent or above in their parts localisation ratio. During the 1990s, the parts supplier network of China’s automobile industry was created, which enabled the rapid growth of automobile production in the twenty-first century. Second, the policy did lead to the enlargement of industrial groups formed around large state-owned enterprises such as First Automobile Works and Dongfeng Motor Corporation, or under municipal governments such as Beijing, Shanghai, Tianjin and Guangzhou. However, these groups were quite different from what was envisioned in the policy. Chinese planners had envisaged creating some integrated automobile manufacturers with one or a few proprietary brands such as Toyota and Hyundai, but what emerged was industrial groups that offered the ‘seats’ to make and sell cars in China to foreign automobile makers in exchange for ownership stakes in the joint ventures. The most extreme case is the Dongfeng Group, which, along with the production of trucks and sport utility vehicles (SUVs) by its proprietary brands, holds half or more shares in the joint ventures with Nissan, Honda, Hyundai-Kia, PSA (Citroën and Peugeot) and Renault. Third, with high protective tariffs and strict restrictions on new entry, the policy unintentionally suffocated domestic car demand. Domestic automobile sales volume had grown rapidly before the automobile industrial policy was implemented – the compound annual growth rate (CAGR) was 41 per cent during 1990–1993; but it stagnated after the policy became effective – CAGR of automobile sales during 1993–2000 was only 4 per cent. Ironically, after the automobile industrial policy became virtually ineffective in 2000 and before the new one was implemented in 2004, CAGR recovered to 26 per cent.

The rise of nationalism in industrial policies As has been discussed in the first section, China put a hold on drafting industrial policies when it was about to enter the WTO. Upon entry, it pledged

136  Tomoo Marukawa to reduce tariffs and lift import restrictions. In the case of automobiles, import tariff on cars was to be reduced to 25 per cent by 2006, and the tariff measures that incentivised the use of domestically produced parts were abolished upon entry. The government felt the necessity to replace the 1994 automobile policy with a new one, and the State Economic and Trade Commission, which oversaw industrial policies during 1998–2003, started preparatory work in 2000.9 The task was passed on to the State Planning Commission in 2003, and the new automobile industrial policy was issued in June 2004. The new policy shared several points with the 1994 version. First, it encouraged the creation of large industrial groups but offered only one type of incentive – big groups had the privilege of applying for their group’s development plan collectively to the National Development and Reform Commission (NDRC), the State Planning Commission’s successor, while in the case of smaller groups, each member had to apply for the approval of investment projects to the government separately. Second, the restriction on entry of new foreign automakers was relaxed, but they were not allowed to establish more than two joint ventures for producing cars. Third, the NDRC struggled to maintain the incentive to increase parts localisation ratio. This was problematic because differentiating tariff rates between the manufacturers with high and low localisation ratios, like in the 1994 policy, was likely to be judged as an infringement of General Agreement on Tariffs and Trade (GATT) rules. The NDRC then carefully devised a two-step strategy to protect its industrial policy from coming under fire – the first was the 2004 policy, which stipulated that a vehicle made of imported body and engine had the feature of ‘a complete vehicle’; the second was a decree issued the next year, which ruled that automobile parts facilitating the feature of ‘a complete vehicle’ would be imposed with the same tariff rate as finished vehicles (25 per cent), not the tariff rate for parts (10 per cent). However, this strategy did not work. The European Union (EU), the United States and Canada initiated WTO’s dispute settlement mechanism, and the WTO panel judged that these measures were inconsistent with the GATT in 2008.10 An important difference between the 2004 automobile policy and previous industrial policies was that the 2004 policy advocated for the development of products with ‘indigenous (zizhu) intellectual property rights’. In the policy, ‘indigenous intellectual property rights’ were defined as technologies and models developed and owned by domestic firms, including joint ventures with foreign automakers.11 This clause induced several Sino-foreign joint ventures to establish R&D facilities and develop proprietary brands for the Chinese market, such as ‘Venucia’ of Dongfeng Nissan, ‘Everus’ of Guangzhou Honda and ‘Baojun’ of Shanghai GM Wuling. The 2004 policy had an effect to force foreign partners to share their R&D know-how with their partners. Even with these efforts by the foreign partners to become a part of the ‘indigenous’ auto industry, however, in the general use of the

The evolution of China’s industrial policy  137 term in Chinese policies and media, ‘indigenous brands’ indicate only those of wholly Chinese-owned firms. The inclusion of this clause in the 2004 policy was a response to the rising criticism of the 1994 automobile policy, which had focused on the localisation of automobile parts. Lu Feng, a political scientist at Peking University, asserted that the policy was an utter failure because he believed that the emergence of indigenous manufacturers with product development capacity determined a country’s industrial competitiveness.12 He Guangyuan, a former minister in the Ministry of Machine-building Industry, also advocated for the development of indigenous manufacturers.13 In response to the rising nationalistic pressure from academics and former bureaucrats, the NDRC drafted the 11th Five-Year Plan for the Automobile Industry, which set the market share target of indigenous brand cars to 60 per cent or more by 2010, a very ambitious one as their share in 2006 was only 27 per cent. Perhaps because it was too nationalistic and ambitious, the draft plan was never officially promulgated. The 2004 automobile policy preceded general industrial policies in embracing the idea of ‘indigenous technology’. The 11th Five-Year Plan designated ‘the improvement of indigenous innovation capability’ as one of the three main goals, along with ‘stable and high-speed economic growth’ and ‘the transformation of growth pattern to a sustainable and resource-saving one’. Indigenous innovation became the main theme of the Medium- and Long-Term Programme of Science and Technology, which was also promulgated in 2006. The result of the promotion of indigenous brand cars was mixed. Their market share reached its peak in 2005 and then started to stagnate (Figure 6.1). Its rise in 2009 and 2010 was mainly due to the reduction in purchase tax on small cars, which induced low-income households to buy cheap indigenous brand cars. After the tax reduction was stopped, indigenous brands’ share started to decline. Its rise in 2015 and 2017 was again the result of a temporary reduction in purchase tax on small cars, discontinued in 2018. The solid line in Figure 6.1 represents indigenous brand cars’ shares in the market of conventional sedans, while the dotted line represents their shares in the broader car market, which includes SUVs and multi-purpose vehicles (MPVs). As several indigenous manufacturers are competitive in SUVs and MPVs, indigenous brand cars’ share is higher in the broader car market. There were some other minor industrial policies that turned out to be effective in promoting the growth of indigenous manufacturers. One such was on mobile phone manufacturing. Until 1998, China’s mobile phone market was dominated by foreign brands. The government organised a research project to develop mobile handsets at an institute under the Ministry of Electronics Industry (MEI), and the technologies developed there were transferred to some domestic electronics manufacturers. When these domestic makers started selling their indigenous brand handsets, the Ministry

138  Tomoo Marukawa 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 2018




















Figure 6.1 Market share of indigenous brand cars. Source: China Automobile Yearbook, China Automotive Industry Association.

of Information Industry (MEI’s successor) and the State Planning Commission tried to protect them from the competition, i.e. foreign manufacturers. ‘Opinion on Accelerating the Development of Mobile Communications Industry’ drafted in 1998 by these ministries stipulated that entry of new foreign manufacturers and imports of mobile phone components would be strictly restricted, and only licensed manufacturers’ products were allowed to enter the telecommunication network. The Opinion stipulated that the government would oversee whether the foreign-invested manufacturers were abiding by their contracts on production volume, share of exports in their sales and parts localisation. Chinese media reported that the government required the foreign-invested manufacturers to export more than 60 per cent of their products.14 The Opinion proved quite successful in supporting indigenous manufacturers. The share of indigenous brands in the Chinese mobile phone market soared from 3 per cent in 1999 to 53 per cent in 2003. Although the top indigenous manufacturers that emerged under the Opinion’s protection, such as Bird, TCL and Konka, are no longer competitive today, the policy did lay the groundwork for the subsequent rapid development of domestic mobile phone manufacturing. Another policy effective in promoting indigenous manufacturers was that on wind power generation equipment. In 2000, the State Economic and Trade Commission issued ‘Opinion on Accelerating the Domestic Production of Wind Power Generation Equipment and Technology’, which stipulated that wind power stations using domestically produced equipment would enjoy interest subsidies and priority in project approval and grid connection. The policy issued by the NDRC in 2005 was even more powerful.

The evolution of China’s industrial policy  139 It  stated that only the wind power stations equipped with 70 per cent or more domestically produced equipment could get approval for construction. Although the requirement on domestic production ratio was rather loosely enforced,15 domestic manufacturers such as Goldwind did grow in the period the policy was effective. Faced with pressure from the United States, the Chinese Government discontinued the provision in 2010.

Policies on industrial reorganisation Almost all industrial policies since the first in 1989 had industrial reorganisation as one of their main goals. Government officials and academics in China regarded the Chinese industries as too dispersed, having too many minor manufacturers and too few internationally competitive enterprises. As shown in the case of the automobile industry in the second and third sections, the government employed several measures to promote industrial reorganisation and the formation of large enterprise groups. This section examines the effectiveness of reorganisation policies, focusing on the case of the iron and steel industry. Since the 10th Five-Year Plan (2001–2005) of the Iron and Steel Industry, all five consecutive policies on the industry had targets of consolidating it, which were expressed in the share of top 10 enterprises in total crude steel production, or C10 (Table 6.1). In the case of the 10th Five-Year Plan, the target was to raise C10 from 50 per cent in 2000 to 80 per cent or more in 2005. As per the Development Policy of the Iron and Steel Industry issued in 2005, the C10’s target for 2010 was 50 per cent or more and that for 2020 was 70 per cent or more. In the 12th Five-Year Plan (2011–2015) of the Iron and Steel Industry, the target for 2015 was 60 per cent or more. So far, none of the targets have been met. Between 2001 and 2005, when the 10th Five-Year Plan was effective, C10 dropped significantly (Figure 6.2).16 The 2005 Development Policy reversed the trend towards dispersion. From 2005 to 2010, C10 increased continuously and went quite close to meet the 2010 target. The Policy employed the same incentive as the 2004 automobile industry policy – large steelmakers had the privilege of making the development plan for the group as a whole and apply to the NDRC or the State Council; this clause provided an incentive to smaller manufacturers to join large enterprise groups and save the transaction cost for negotiating with the government. The Policy also stipulated that unapproved projects would not be allocated land or bank loans. These provisions proved quite effective in urging mergers between state-owned enterprises. The other industrial policies listed in Table 6.1, including the current Adjustment and Upgrading Plan of the Iron and Steel Industry (2016–2020), lacked such incentive; thus, they were not as effective as the 2005 policy. In 2016, the government launched an initiative to reduce production capacities in the steel and coal industries to solve the overcapacity problem.

140  Tomoo Marukawa 90% 80%


70% 60%





40% 30% 20% 10% 2019















Figure 6.2 The share of top 10 enterprises in total crude steel production. Sources: 1993–2005 – Takashi Sugimoto, ‘The Iron and Steel Industry’, in Tomoo Marukawa (ed.), Handbook of Chinese Industries. Sososha, Machida, 2007, pp.127–145.

Table 6.1 Reorganisation targets of iron and steel industry policies Issued year Name of the policy


Target year

2001 2005

80%+ 50%+ 70%+ 60%+ 60%+

2005 2010 2020 2015 2025



2011 2015 2016

10th five-year plan Development policy of the iron and steel industry 12th five-year plan Adjustment policy of the iron and steel industry (draft) Adjustment and upgrading policy of the iron and steel industry

Note: C10 indicates the share of top 10 enterprises in total crude steel production.

It prepared a fund of RMB 100 billion yuan to compensate the workers who would lose their job after the closure of steel mills and coal mines. It was reported that in 2016 and 2017, 120 million tons of steel production capacity was shut down, and virtually all illegal induction furnaces were closed.17 Even with this initiative, C10 in the iron and steel industry increased only marginally.

Made in China 2025 MIC2025, which was announced by the State Council in May 2015, is the most important industrial policy implemented under Xi Jinping’s rule. It was preceded by the 12th Five-Year Plan, which advocated for the development of seven ‘Strategic Emerging Industries (SEIs)’. The SEIs largely overlap

The evolution of China’s industrial policy  141 Table 6.2 The SEIs and key industries in MIC2025 SEIs in 12th five-year plan Energy conservation and environmental protection industry Next generation information technology industry Biotechnology industry Precision and high-end machinery industry

New materials industry New energy vehicle industry New energy industry

Key industries in MIC2025

Next generation information technology industry Biopharmaceuticals and high-end medical machinery High-end numeric control machine tools and robots aerospace equipment Marine engineering equipment and high-tech ships Advanced railroad equipment New materials Energy-saving and new energy vehicle Power generation equipment Agricultural equipment

with the 10 Key Industries proposed in MIC2025 (Table 6.2). While the SEIs were given equal treatment along with several conventional industries in the 12th Five-Year Plan, the MIC2025 and its numerous branch policies are centred on the development of the 10 Key Industries. The comprehensive list of high-tech products and technologies included in the Key Industries is what led to Vice President Pence’s criticism that China was trying to control ‘90% of the world’s most advanced industries’. A frank reading of MIC2025, however, suggests a more modest ambition. MIC2025’s recognition of China’s manufacturing industry is that it is ‘big but not strong’ with weak indigenous innovation capacities; high dependence on imports of key components, core technologies and high-end equipment; lack of internationally-recognised brands; low efficiency in resource utilisation; and serious pollution problems. MIC2025 aims to strengthen China’s manufacturing through three steps: by 2025, China will be one amongst world’s manufacturing superpowers; by 2035, China will reach an intermediary position amongst the superpowers; and by 2049, China will be on the front line of manufacturing superpowers. There is no clear definition of ‘manufacturing superpower’. Since it is a group of countries, it must at least include the United States, Japan and Germany. The numerical targets of MIC2025 also seem modest. R&D expenses as a percentage of sales will be increased from 0.95 per cent in 2015 to 1.68 per cent in 2025; patent applications per CNY 100 million yuan of sales will be increased from 0.44 to 1.1 cases; and energy consumption, emission of carbon dioxide, and water consumption per unit of manufacturing added value will be reduced by 34 per cent, 40 per cent and 41 per cent, respectively. China’s realisation of these targets will not harm the interests of other countries.

142  Tomoo Marukawa MIC2025 proposes nine strategic tasks: (1) Improving innovation capability; (2) deepening the connection between informatisation and industrialisation; (3) strengthening basic industrial capabilities; (4) improving quality and establishing brands; (5) promoting the ‘greening’ of manufacturing; (6) developing the 10 Key Industries; (7) promoting structural adjustment of manufacturing; (8) developing service-oriented manufacturing and manufacturing-oriented services; and (9) improving the level of internationalisation. Compared with the industrial policy of the 1990s, which mobilised various measures to promote the development of the pillar industries, MIC2025 refers to only a limited number of preferential policies to foster the development of its 10 Key Industries. First, policy loans will be utilised to support the development of some Key Industries such as information technology, high-end equipment and new materials. Second, the government’s budget will be spent on the promotion of smart manufacturing and the strengthening of basic industrial capabilities and high-end equipment. The government will establish dozens of ‘manufacturing innovation centres’ for the development of Key Industries and components. Barring these intervention measures, MIC2025 proposes only neutral ones such as the reform of public administration and enhancement of fair competition, not protective import tariffs and priority in IPOs, measures often found in past industrial policies. The two essential themes that ran through most of China’s past industrial policies – industrial reorganisation and increase in localisation ratio – reappear in MIC2025. With regard to reorganisation, however, MIC2025 puts more emphasis on the development of small and medium-sized enterprises compared with the previous industrial policies, which advocated for the creation of big enterprises. It advocates to activate the innovative potentialities of small and medium-sized enterprises and start-ups. By contrast, very few remarks are made on large and state-owned enterprises.18 The localisation of high-tech products and technologies is the most important target of MIC2025, which is, in its essence, an import substitution strategy of high-tech industries19. It requires Chinese industries to catch up with advanced countries’ high-tech industries. The target of domestic production ratio is expressed only vaguely in MIC2025. It states that the ‘indigenous guarantee’ (zizhu baozhang) of ‘basic core components and important basic materials’ should be raised to 40 per cent by 2020 and 70 per cent by 2025. At first glance, these targets do not seem to mean anything because none of these terms are defined in MIC2025. However, reading through MIC2025’s subsidiary policies, one will understand that these targets represent its core concept. Similar to the National Industrial Policy in the 1990s, MIC2025 forms a tree structure in which it is supplemented by numerous branch policies. For example, for six of the nine strategic tasks, there are ‘action plans’ or ‘guides’ that describe the actual policy measures to accomplish these tasks. There

The evolution of China’s industrial policy  143 are also action plans dedicated to the development of each key industry. Several local governments have also made their action plans for MIC2025. The ‘Technology Roadmap of Key Industries’, which is one of the branch policies of MIC2025, offers a detailed description of the implication of ‘indigenous guarantee of basic core components and important basic materials’. It is a very detailed list of products and technologies in the 10 Key Industries that Chinese industries should localise in the near future, ranging from integrated circuits (ICs), routers and switches, software, industrial robots and energy-saving vehicles to rechargeable batteries for electric vehicles. In the case of ICs, for example, the targets are specified ‘to start mass production using 16/14 nanometre technology’, ‘to develop single/double core CPUs for servers and desktop PCs’ and many others. The Roadmap sets numerical targets for 56 products – for ICs, it states that their domestic production ratio must be raised from 41 per cent in 2015 to 49 per cent by 2020 and 75 per cent by 2030. For items in which Chinese industries already have a comparative advantage, such as mobile handsets, computers and servers and ships, the targets are expressed in Chinese products’ share in the global market. For products that are produced in large volumes by foreign enterprises in China, such as industrial robots, the targets are expressed in terms of indigenous brand products’ share in the domestic market. Although the government insists that the Roadmap is merely experts’ scientific vision drafted with no policy implication,20 it is likely to make foreign enterprises doing business in China quite uneasy, because increase in domestic production ratio means decrease in foreign products’ share in China.

The prospects for industrial robots and IC industries In this section, I focus on two of the Key Industries – industrial robots and ICs – and discuss the effect of government policies. China has been the largest market for industrial robots in the world since 2013. As shown in Table 6.3, its sales volume of industrial robots accounted for 37 per cent of the global sales in 2018. With the steep rise in wages, shortage of labour, and increasing demand for high quality, many workshops in China are introducing industrial robots. Table 6.3 Industrial robot sales volume (in units)

World Japan South Korea China Chinese firms






220,571 29,297 24,721 57,096 17,000

253,748 35,023 38,285 68,556 22,000

294,312 38,586 41,373 87,000 29,141

381,335 48,566 39,732 137,920 37,825

422,271 55,240 37,807 156,000 43,600

Sources: Executive Summary World Robotics 2016–2019 Industrial Robots; Robotics Industry Development Plan (2016–2020); 21st Century Economic Herald, July 11, 2016, August 24, 2018.

144  Tomoo Marukawa The Chinese Government has been very active in developing domestic and indigenous robot production. In March 2016, the Ministry of Industry and Information Technology, NDRC, and the Ministry of Finance issued the Robotics Industry Development Plan for 2016–2020. This plan’s target for indigenous robot production volume in 2020 is 100,000 units. This, however, contradicts the Technology Roadmap’s target that forecasts the 2020 sales volume of robots as 150,000 units and indigenous robot share as 50 per cent, implying that the target volume of indigenous robots is 75,000 units. Although Chinese robot manufacturers are growing rapidly, their rise has fallen short of the government’s expectations. Table 6.3 reveals that Chinese firms’ share in domestic robot sales rose slightly from 30 per cent in 2014 to 33 per cent in 2016 but fell to 28 per cent in 2018. It should be noted that their share will be much lower than this if it is calculated in value terms, because their main products are low-end robots. In 2015, indigenous robots’ share in value terms was only 8 per cent.21 Japan’s Fanuc and Yaskawa, Germany’s Kuka and Sweden’s ABB accounted for 57.5 per cent of the Chinese market in the same year, while the other foreign makers accounted for 34.5 per cent. These foreign makers provide high-end robots such as the six-axis articulated robots, which are used in welding, assembling, and painting, while Chinese makers focus on robots for transportation and packaging.22 One reason why Chinese makers lag behind is their inability to produce high-quality components such as reduction gears, servo motors and controllers; they rely on Japanese and European suppliers for these. In addition, the suppliers are often robot makers themselves, such as Fanuc, Yaskawa and Panasonic; so they are unlikely to offer these items to their potential rivals at favourable prices. Another reason for Chinese makers’ weakness is the excessive support provided by the government. Not only the central government but also 28 provincial and municipal governments have prioritised the industrial robot industry in their development strategies and given manufacturers subsidies and preferential treatment. Even top indigenous robot maker Siasun received subsidies that amounted to 32 per cent of its profits. Excessive supports by the government have negatively influenced the robot makers’ behaviour – to cheat NDRC out of more subsidies that it provided to robotics start-ups, it was reported, a single robot firm established 10 or more ‘start-ups’.23 China is also the world’s largest market for ICs, accounting for 36 per cent of the global market in 2015 and 43 per cent in 2020, according to the Technology Roadmap’s forecast. The Roadmap sets the goal of increasing the domestic production ratio of ICs, as previously mentioned, but this seems unrealistic, because its recognition of the current status of localisation ratio (41 per cent in 2015) is questionable. According to the estimation of Semiconductor Equipment and Materials International (SEMI), China’s domestic IC production accounted for only 14.6 per cent of the domestic demand in value terms in 201524. Thus, with domestic production falling far short of the domestic demand, China runs a huge trade deficit in ICs every

The evolution of China’s industrial policy  145 year – from $ 144 billion in 2013 to $ 166 billion in 2015, and further to $ 227 billion in 2018. The import value of ICs in 2018, which was $ 312 billion, was far greater than China’s import of crude oil. Although trade deficits of individual items should not pose a problem for China, which runs a huge trade surplus as a whole, the Chinese Government has been quite anxious to reverse its dependence on IC imports. That is because Chinese leaders regard ICs as strategic items that relate to national security. In 1990, the Chinese Government began its endeavour to localise IC production; the same year, the Ministry of Machinery and Electronics Industries launched the first IC localisation project named ‘908 plan’, erecting an IC manufacturer in Wuxi through state investment, with technology introduction from AT&T. However, the project ended up creating an ‘out-ofdate IC manufacturer’, according to one of the project’s leaders.25 In 1996, the second localisation project named ‘909 plan’ was launched. To avoid introducing obsolete technology, Japan’s NEC was involved as an investor as well as the source of technology for the project. A joint venture named Huahong NEC, invested in by NEC and a state-owned enterprise controlled by MEI, was created and started operation in February 1999. Huahong NEC’s main product at the beginning was a 64MB DRAM, a state-of-the-art product at the time. It exported all of its products for lack of a domestic demand for such an advanced item then. The bursting of the dotcom bubble in 2001, however, led to a serious deficit at Huahong NEC. The company decided to cease production of the memory chips and switch to a semiconductor fabrication plant that received orders from ‘fabless’ semiconductor designers. A plant specialised in producing ICs based on the orders from ‘fabless’ designers is a model that originated in Taiwan Semiconductor Manufacturing Company. At the start of the ‘909 plan’, Chinese bureaucrats thought of introducing the Taiwanese model of IC fabrication plant (‘fab’) and ‘fabless’.26 However, they had to put the idea aside because Huahong NEC’s Japanese partner insisted on making DRAMs in the joint venture. After the failure of DRAM production, Huahong NEC changed itself into a fab. Several other fabs were created in Shanghai then, and the Taiwanese model of fab and fabless became the dominant structure of the IC industry in Mainland China. With the rapid rise in demand for ICs in China, several domestic fabless firms emerged, such as Spreadtrum, which designs baseband ICs for mobile phones; Vimicro, which designs web camera ICs; and RDA, which designs radio frequency ICs. From 2013, the government resumed its involvement in the IC industry through a state-owned enterprise controlled by Tsinghua University, Xi Jinping’s alma mater, named Unigroup. In 2013 and 2014, Unigroup acquired Spreadtrum and RDA, and turned them into its subsidiary called Unisoc. In 2015, Unigroup tried to acquire stakes in Micron Technology, a USbased memory chip manufacturer, but got rejected by the US Government. In 2016, Unigroup launched a NAND flash memory project with a total

146  Tomoo Marukawa investment of $ 24 billion, and in 2019, it started building a DRAM factory in Chongqing. Unigroup’s abundant financial resources, while its main business remains obscure, suggests a strong backing from the government. A powerful vehicle for the government to support the IC industry’s development is the National IC Industry Investment Fund, or the ‘Big Fund’, established in 2014 by the Ministry of Finance, the State Development Bank, China Tobacco and several other investors. The Big Fund amassed RMB 139 billion yuan and invested in more than 70 enterprises; Unigroup’s Yangtze Memory and Unisoc are amongst its beneficiaries. As shown in Table 6.4, the Big Fund covers smaller firms in the upstream, such as IC designers (fabless) and equipment and material manufacturers, to the downstream, such as Yangtze Memory and packaging companies. The Big Fund is trying to give a big push to the whole value chain of the Chinese IC industry. Most of these enterprises are listed on stock exchanges, including four (AMEC, Piotech, Anji and NSIG) that have recently been listed or are in the process of it in the STAR Market of Shanghai Stock Exchange, a National Association of Securities Dealers Automated Quotations (NASDAQ)-style tech board. The Big Fund is planning to raise RMB 200 billion yuan in the second phase of investment. It plans to invest in memory, SiC/GaN compound semiconductors, and IC design.27 Table 6.4 Enterprises that received investments from the National IC Industry Investment Fund Enterprise


Investment amount (RMB billion)

SMIC HHGrace Yangtze Memory (YMTC) Hangzhou Silan Sanan Optoelectronics Changjiang Electronics (JCET) Tongfu Microelectronics Huatian Technology (TSHT) Unisoc Sanechips Goke Microelectronics Centec AMEC NAURA Changchuan Piotech NSIG Jiangsu Xinhua Anji Microelectronics

Fab Fab NAND flash Fab GaAs, GaN Packaging Packaging Packaging Fabless Fabless Fabless Fabless Equipment Equipment Equipment Equipment Wafer Polysilicon Liquid abrasives

9.4 2.6 19.0 0.4 6.4 2.9 0.6 0.5 1.0 2.4 0.4 0.3 0.6 0.04 0.5

Sources: Fang Chen and Ruifeng Dong (eds.), To Dream Is to Make Things Happen, Renmin youdian chubanshe, Beijing, 2018; Toutiao Zhineng Neican, May 11, 2019.

The evolution of China’s industrial policy  147 With these new enterprises and their fundraising through IPOs and investments from the Big Fund, the Chinese IC industry is likely to grow at a very fast pace. However, increasing the localisation ratio still remains a big challenge, because the demand for ICs will also grow rapidly both in volume and level.

Concluding remarks MIC2025 and its related policies are unprecedented in the history of China’s industrial policies in their broad and detailed description of priority industries, technologies and products. Compared to the ambitious targets, however, the measures available to the government are relatively limited than they were in the 1990s. For the IC industry, the government seems to have prepared abundant funding through the establishment of a government guidance fund and a new stock exchange for high-tech start-ups. However, the case of industrial robots suggests that government subsidies may end up inducing rent-seeking behaviour amongst the firms. It is also questionable whether all the prioritised industries and technologies listed in MIC2025 and its Technology Roadmap can receive funding, like in the case of the IC industry. With so many ‘action plans’ and ‘guides’ that aim to influence investors and financial institutions, it is likely that the resources allocated to each industry will fall far short of the ambitious plans. Close scrutiny reveals contradictory targets between the branch policies of MIC2025, as in the industrial robot industry, or unrealistic ones based on questionable recognition of the current status, as in the IC industry. With these shortcomings, the MIC2025 may end up being a pie in the sky. In 2016, a debate on industrial policy between two prominent economists, Justin Lin and Zhang Weiying, had attracted Chinese economists.28 Lin contended that industrial policies are indispensable for latecomer countries to successfully catch up with richer countries. He argued that a developing country should promote the growth of the industries in which countries with 100 per cent higher per capita income than its own have comparative advantage; in this way, developing countries can build the comparative advantage of the future.29 Zhang rebutted that since the government’s ability to foresee the leading industries of the future is limited, industrial policies are destined to fail. He argued that new industries originate from innovation; and innovation, by its very nature, is not foreseeable. Strangely enough, neither of them touched upon MIC2025 in their debate. Zhang’s criticisms on industrial policy are highly relevant to high-tech industrial policies like MIC2025. Government’s efforts to guide high-tech industrial development are likely to suppress potential innovations in non-priority sectors. Lin’s advocacy of industrial policy will not justify MIC2025 either – he emphasised the ‘comparative-advantage-following strategy’, which means that developing countries should choose the industries that fit their comparative advantage. The precondition for a country

148  Tomoo Marukawa to develop its comparative advantage is, of course, to join the international division of labour, which MIC2025 is denying by aiming to minimise the reliance on imports of technologies and products. Its antagonism towards international division of labour is shown in its insistence on increasing the domestic production ratio of all high-tech products. It is natural that an anti-globalist policy like MIC2025 will sound an alarm in other industrialised countries. MIC2025 and its branch policies such as the Technology Roadmap present ambitious targets that are likely to frighten all of China’s potential competitors. With mounting pressure from the United States and growing criticism from other industrialised nations, China must soften the all-encompassing character of MIC2025 and become more selective in choosing its Key Industries.

Notes 1 Mike Pence, ‘Vice President Mike Pence’s Remarks on the Administration’s Policy towards China’, Hudson Institute, October 4, 2018, at https://www.hudson. org/events/1610-vice-president-mike-pence-s-remarks-on-the-administration-spolicy-towards-china102018 (accessed November 5, 2018). 2 Sebastian Heilmann and Lea Shih, ‘The Rise of Industrial Policy in China, 1978–2012’, Harvard-Yenching Institute, Working Paper Series, 2013. 3 Ling Chen and Barry Naughton, ‘An Institutionalized Policy-Making Mechanism: China’s Return to Techno-Industrial Policy’, Research Policy, 45, 2016, pp. 2138–2152. 4 He Liu and Liang Xue, ‘Research, Drafting, and Implementation of the First Industrial Policy of Our Nation’, in He Liu and Weimin Yang (eds.), China’s Industrial Policy, Theory and Practice, Zhongguo jingji chubanshe, Beijing, 1999, pp. 77–89. 5 Sebastian Heilmann and Lea Shih, no. 2. 6 Albert O. Hirshman, The Strategy of Economic Development, Yale University Press, New Haven, CT, 1958. 7 Shousheng Li, ‘Thoughts on Some Problems of the Industrial Policies during the First Decade of the 21st Century’, Guanli shijie, 4, 2010, pp. 49–58. 8 He Liu and Weimin Yang, ‘An Explanation on the Irrigation Industry Policy’, in He Liu and Weimin Yang (eds.), no. 4, pp. 109–110. 9 Yuichi Takayama et al., ‘Automobile Industrial Policy’, in Tomoo Marukawa and Yuichi Takayama (eds.), Chinese Automobile Industry in an Era of Global Competition, Sososha, Tokyo, 2005, pp. 60–81. 10 ‘DS342: China – Measures Affecting Imports of Automobile Parts’, World Trade Organisation, at htm (accessed April 1, 2019). 11 Qing Li and Zijian Lu, ‘Indigenous Innovation Should Be Encouraged Regardless of the Firm’s Lineage’, Jingyang wang, August 5, 2006. 12 Feng Lu, Towards Indigenous Innovation: in Search of the Origin of China’s Power, Guangxi shifa daxue chubanshe, Guilin, 2006. 13 Guangyuan He, ‘Old Leader Advises the Eleventh Five-Year Plan for the Automobile Industry’, Sohu qiche, May 21, 2006, at n243333416.shtml (accessed January 6, 2020). 14 Hao Xiong, ‘Ministry of Information Industry Said that Document No.5 Did Not Terminate, Licensing of Mobile Handsets Would Not Be Liberalized in the Near Future’, Nanfang dushi bao, April 16, 2003.

The evolution of China’s industrial policy  149


Xi Jinping’s ‘China Dream’ and the future graph of Chinese economy Sriparna Pathak

Introduction Xi Jinping delivered his idea of the ‘Chinese Dream’ for the first time not as a policy pronouncement at some state- or national-level political meeting, rather during his visit to the National Museum’s ‘Road to Revival’ ( fuxing zhilu 复兴之路) exhibition on November 29, 2012. This was merely two weeks after he was elected the general secretary of the Chinese Communist Party (CCP). Two things stand out in this context: The first is the emergence or the first utterance of the term Chinese Dream during a visit to an exhibition in the National Museum, on the theme of revival. The concept of revival of the Chinese nation, which forms the crux of Xi Jinping’s idea, therefore is not surprising. At the same time, the museum is also of pertinence. The National Museum has a permanent collection of 1.4 million historical items and covers history from the Yuanmou Man of 1.7 million years ago to the end of the Qing Dynasty – the last imperial dynasty in Chinese history as the Middle Kingdom, before forces of imperialism plunged it into economic disarray.1 Thus, the stress on history within the concept of the Chinese dream is also not surprising. The second pertinent point is the short time period between Xi’s election as the general secretary of the CCP and his announcement of the Chinese Dream. All Chinese leaders in the past, including Mao Zedong, Deng Xiaoping, Jiang Zemin and Hu Jintao, have used catchphrases or grand strategy slogans as guiding policies for the country. However, none of the guiding ideologies during their respective tenures were announced as early, as has been the case with Xi Jinping and his Chinese Dream. Xi Jinping’s Chinese Dream evokes China’s glorious past as the Middle Kingdom, where people were happy and prosperous. The revival of China’s glorious history was sure to find mass resonance – something required for ensuring domestic stability, which has been difficult to maintain since Xi’s coming to power, given declining rates of growth, widespread unemployment, inequality, calls for independence in Hong Kong, etc. A quick look at Xi’s last two predecessors, namely Hu Jintao and Jiang Zemin and their associated catchphrases reveals that Hu became the general

Xi Jinping’s ‘China Dream’ and economy  151 secretary of the CCP in 2002, while his concepts of ‘Harmonious Society’ (Hexie Shehui 和谐社会) and ‘Scientific Development’ (Kexue fazhan guan 科学发展观) were developed in the mid-2000s and reintroduced by the administration during the 2005 National People’s Congress. Jiang Zemin became the general secretary of the CCP in 1989, while his ‘Three Represents’ (Sange Daibiao 三个代表) was adopted at the 16th Party Congress in 2002. There was a gap of at least a year between these leaders assuming charge as general secretaries and official promulgation of their guiding ideologies. Xi Jinping had identified the need for a rejuvenation or a revival of the Chinese nation, possibly, from the time he was not even identified as a potential candidate for the post of the general secretary. The early identification works well for a country which now is in the throes of economic chaos arising from various fronts. All the guiding ideologies of all Chinese leaders so far have taken into cognisance prevailing realities of their respective contemporary Chinese societies and formulated the ideologies in accordance. The Chinese Dream is no different. According to Xi Jinping, the Chinese Dream consists of the following components:2 1 A powerful and rich state (guojia fuqiang 国家富强). 2 Renewal of the nation (minzu fuxing 民族复兴). 3 Happiness of the people (renmin xingfu 人民幸福). The point to note is that none of these three components is quantifiable, and more than anything else, they create an emotional appeal and the perception that the Chinese Dream is an attempt to create a life for ordinary Chinese people which is more than mere numbers; an attempt to retain the Middle Kingdom’s lost glory. In order to have a powerful and rich state, to ensure the happiness of the people and to rejuvenate the nation, China identified poverty, unemployment and growth, among others, as ills that need to be eradicated before the country celebrates its centennial anniversary. All of this was necessary so that China could regain what it sees as its lost glory – its glory of the Middle Kingdom. The question that arises is, why now? China’s stature as the Middle Kingdom was disrupted by the experiences it had with Western and Japanese imperialism, followed by a bloody Civil War, years of bad economic decisions exemplified by the Great Leap Forward and the Cultural Revolution. However, as compared to that epoch of history, Xi Jinping’s China clearly has arrived on the world stage owing to its political and economic clout; and it is now deemed apt that there is a revival and China gains its lost glory as the Middle Kingdom. The attempt to regain that glory is visible in the form of increasingly aggressive foreign and economic policies to tackle poverty, unemployment, corruption, etc. This was also visible in Xi Jinping’s speech at the 19th Party Congress in 2017: Xi unprecedentedly espoused China’s

152  Sriparna Pathak development path as a model for the world, especially for developing countries.3 Re-emergence as a leader, in the way that China was as the Middle Kingdom, is an important tenet of the Chinese Dream. However, China’s growth rates are no longer the astounding two-digit growth rates, as it has entered the stage of what Xi Jinping in 2014 termed as the ‘new normal’ – an acknowledgement of China’s lower rates of growth. Nonetheless, in order to fulfil the Chinese Dream, it is essential that China retains the economic wealth acquired post-reforms in 1978. The goal for China is not just to be a wealthy country that is strong and prosperous, but also to be a wealthy country with the world’s highest Gross Domestic Product (GDP) that has a wealthy population. Therefore, the Chinese Dream sees the necessity of a rich and powerful state that will be able to provide wealth and power to its citizens. An important prong of the Chinese Dream is people’s happiness. As stated by Chai and Chia, the fulfilment of China’s top national priorities requires a renewed focus on happiness.4 To fulfil the Chinese Dream, Xi inherited two lofty economic targets from the previous leadership. The first centennial goal, as stated by Xi, is the building of a moderately prosperous society by wiping out poverty by the year 2021 – which is also the 100th anniversary of the founding of the CCP. The second goal is to turn China into a fully developed nation by 2049 – which is the 100th anniversary of the establishment of the People’s Republic of China (PRC).5 The building of a moderately prosperous society by 2021 entails the doubling of the 2010 GDP per capita incomes by 2020. The CCP has fleshed out this general economic goal by promising the completion of a set of projects (e.g. attaining a 60 per cent urbanisation rate, becoming an internet power and transitioning to clean energy).6 Economics forms a very integral aspect of the Chinese Dream – be it in the form of the revival of the rich, powerful nation that China once was; finding happiness and economic prosperity for Chinese citizens; or eradication of poverty. The Dream has great implications for China’s economic future. It certainly has many lofty aspirations, and the government has even unleashed a host of economic programmes aimed at fulfilment of the ideals espoused by the Dream. Nevertheless, the implementation of all programmes and policies remains a question, and what is also to be seen is what the Chinese people really understand of the Dream. In order to understand where the Dream is headed and what it could mean for China’s economic future, the following sections of this chapter study some of the economic plans and policies announced and currently underway in the realm of poverty alleviation, wiping out inequality, job creation, people’s happiness and income distribution.

Poverty alleviation China has made several strides in poverty alleviation, and as stated by the World Bank, more than 700 million people have lifted themselves out of

Xi Jinping’s ‘China Dream’ and economy  153 7

poverty since 1980. China, thus, accounts for about 70 per cent of those brought out of poverty worldwide.8 China also was the first developing country to meet the Millennium Development Goals (MDGs) of reducing the population living in poverty by half, ahead of the 2015 schedule. Poverty in China primarily refers to poor inhabitants in rural areas, with urban poverty largely reduced.9 China’s poverty rate fell from 88 per cent in 1981 to 0.7 per cent in 2015, as measured by the percentage of people living on an equivalent of US$ 1.90 per day.10 At the end of 2018, the number of people living below China’s national poverty line of ¥ 2,300 per year was 16.6 million, which roughly translates into 1.7 per cent of the total population.11 Figure 7.1 shows the population living in poverty in China from 2012 to 2018. China’s goal is to raise the poverty line to an annual income of ¥ 4,000 (US$ 595) by 2020, up from ¥ 2,300 in 2011.12 Party secretaries and governors of 22 provinces in central and western China, where the bulk of China’s impoverished population is located, have signed pledges regarding their poverty alleviation responsibilities and have been subject to performance reviews by inspectors from Beijing every year. Relocation of the poor from poverty-stricken regions to more developed urban areas is also being implemented as part of the holistic plan to tackle rural poverty. As per guidelines on poverty alleviation, the Chinese Government identified that China’s poverty reduction should guarantee access to food and clothing for poor populations and a nine-year compulsory education for children from low-income families. The programmes also mention the need for meeting basic medical needs and good living conditions for the population. Beijing has dispatched about 775,000 party officials to drive the antipoverty campaign. Many officials even go door to door to work out what

120 100 80 60 40 20 0 2012







Population living in poverty

Figure 7.1 Chinese population living in poverty from 2012 to 2018 (unit: million). Source: National Bureau of Statistics, People’s Republic of China.

154  Sriparna Pathak the government can do to help. As per state media, those officials who fail in their mission to alleviate poverty could even face career oblivion.13 Extreme poverty, as defined by the World Bank is an income of US$ 1.90 or less per day. What needs to be pointed out here is that China’s US$ 1.90 per day benchmark is lower than the internationally accepted poverty line for an upper-middle income nation like China. What is also important to point out in this context is that more than half of the rural poor population resides in the western region. By the end of 2018, even though China’s national poverty headcount ratio, i.e. the proportion of a population living below the poverty line, dropped to 1.7 per cent, there were seven provinces or provincial regions with a poverty headcount ratio higher than 3 per cent (see Table 7.1). Poverty eradication has been a goal since the 1950s. Under Xi Jinping, the goal has only taken a more serious form, and a year for complete alleviation has been decided upon. In fact, one of the main claims of the CCP to remain in power has been the fact that it has succeeded in lifting hundreds and millions out of absolute poverty. What needs to be pointed out here is that the removal of a province from the list of provinces with poverty headcount ratio lower than 3 per cent does not mean that poverty relief efforts will end. The 2020 goal only indicates elimination of absolute poverty. The crux of the anti-poverty programmes is to empower poor villagers to lift themselves out of poverty, by developing local industries, engaging in e-commerce and boosting rural tourism. In 2019 alone, the Xi administration has spent US$ 19 billion on a variety of projects for infrastructure creation to enable people to lift themselves out of poverty. More than 200,000 kilometres of roads were built or renovated in 2018 and 94 per cent of poor villages were connected to the internet as per government figures.14 According to the National Bureau of Statistics (NBS), PRC, the main means to increase revenue for rural residents in poverty-stricken areas are wage and transfer payments. Data showed in 2018 that wage income for each rural resident in poverty-stricken areas was ¥ 3,627, up by 13 per cent from a year earlier; net income from transfer payments on average was ¥ 2,719, Table 7.1 Chinese provinces with poverty headcount ratio higher than 3 per cent at the end of 2018 Province/autonomous region

Headcount ratio (in per cent)

Xinjiang Uyghur autonomous region Tibet autonomous region Gansu province Yunnan province Guizhou province Guangxi Zhuang province Shaanxi province

12.71 8 5.6 5.39 4.3 5.7 3.2

Source: CGTN (2019).15

Xi Jinping’s ‘China Dream’ and economy  155 16

up 17 per cent year on year. However, the question that remains to be answered is whether this is adequate. In 2017, South China Morning Post (hereafter SCMP) reported that rural income has been in decline since 2014.17 A major hurdle in the path of improving farm income is the fact that farmers do not possess the land they till. All land in China is state-owned, and farmers have the right to use it under a renewable 30-year lease. Ownership is non-negotiable, and the farmers do not have the right to sell the plots of land they till. This diminishes their financial security. Han Changfu, minister of agriculture and rural affairs, has stated that it is crucial to develop industries to increase the income of poor rural residents and to provide them with more employment opportunities, so that they can be prevented from slipping back into poverty again.18 Based on statistics from the office of Liu Yongfu, director of State Council Leading Group Office of Poverty Alleviation, some 684,000 people fell back into poverty in 2016; 208,000 in 2017; and 58,000 in 2018.19 Therefore, clearly, the goal of poverty elimination is far away from realisation. Poverty alleviation in rural areas, in any case, rests immensely on agricultural production, which in turn faces the dangers of produce and price fluctuations caused by factors such as weather and changes in the international markets. Changes in international markets have taken place recently after the eruption of the US–China trade war. In fact, owing to the US–China trade war, poverty alleviation programmes, too, have taken a hit, which Liu also admitted at a news conference held on the sidelines of the annual meeting of the National People’s Congress in 2019. Employment in China’s impoverished areas has suffered, because enterprises have cut jobs in the face of lower Chinese exports to the US due to high rates of tariffs slapped by the Donald Trump administration on China. Nevertheless, according to Liu, the government is trying to keep the impact of the trade war to a minimum so that China can attain its target of poverty alleviation.20 Besides the problems of fluctuations that may hurt the poverty alleviation programmes, another issue is that of the reach of the programmes. A study conducted by SCMP in a village in Hebei province – Xiaoguanchang  – reveals that people have been waiting for the poverty alleviation efforts to reach them, in vain. Xiaoguanchang had been earmarked to receive government support as a part of the government campaign, and the SCMP team first visited in 2018. In 2019, it found that little had changed in Xiaoguanchang and that conditions had even become worse for some families.21 In scenarios wherein people living in difficult geographic terrains do not have jobs, the local government resettles villagers. As per announced government guidelines, the new settlers go through a job training programme and are given a basic job so that they can survive in the new location.22 However, the relocation scheme has been mired in controversy because the relocated residents are forced to give up their lands in exchange for extremely scarce compensation. A significant number also end up moving back to their villages, as they are unable to find work in cities or are

156  Sriparna Pathak not able to afford high living costs in the city. Furthermore, what also becomes a push factor for the relocated villagers to go back to their homes is the government’s crackdown on poor migrant workers in big cities such as Shanghai or Beijing.23 Such thriving megacities have officially capped their populations, following existing residents’ worries that an influx of migrants could drown out their access to superior schools and hospitals.24 This is a clear contradiction of the relocation policies which are part of the larger poverty alleviation scheme. In order to keep the numbers of the rural transplants low in major cities, officials often encourage and even force rural residents to move to the outskirts of second- and third-tier cities such as Liaocheng, Zhengzhou and Ankang, which often lack critical infrastructure.25 Residents of these new towns in less developed regions have limited access to basic services like healthcare and education due to a severe shortage of medical staff and teachers. This again becomes a push factor for the rural transplants to return to their original hometowns. Another major problem is corruption. As per first-hand media accounts, villagers were initially promised homes with shop fronts so that they could start businesses. Nevertheless, prime street-level housing was monopolised by well-connected residents of better off villages; house prices were 40 per cent higher than expected.26 This has happened in the past as well during the relocation of residents who lived near the controversial Three Gorges Dam: local officials appointed to check how the relocated families were settling in often did not follow through, and no stock was taken of how many people returned home. In all probability, history is going to repeat itself as the numbers of people relocated under the poverty alleviated schemes will be the only numbers that will be considered to assess the success of poverty alleviation schemes, not other parameters! Nonetheless, Xi Jinping has come down heavily on corruption since 2012, post the 18th Party Congress and is even credited with organising the largest anti-graft effort in the history of the CPC. Yet, as facts on the ground reveal, lower-level officials have indulged in corruption, which ensures that common Chinese people are left high and dry.

Inequality The legitimacy of the CCP was established years ago as it successfully led the uprising of rural peasants and factory workers against imperial forces to lay the foundations of an independent China. The very base of the CCP comprised peasants and workers who were promised a better life but got left behind as the country made economic strides post reforms and opening up in 1978. In late 1992, Deng Xiaoping, the architect of socialism with Chinese characteristics, stated, ‘Let some people get rich first.’ While maintaining China’s long-term commitment to broad-based income growth, he insisted that in the short run equity should be subordinate to economic

Xi Jinping’s ‘China Dream’ and economy  157 27

construction. It was hoped that a trickle-down effect would take place, and the others left behind initially would soon catch up and become rich like the rest. However, that never happened, and as acknowledged by Xi Jinping, in 2015, when he was addressing the Global Poverty Reduction and Development Forum in Beijing, ‘Despite the achievements, China remains the world’s biggest developing country and to narrow the urban–rural gap remains a big challenge.’28 Despite the growing wealth of China’s major cities such as Shanghai or Beijing, parts of rural China live without electricity, fresh water and adequate clothing and food. Inequality in China is interregional as well as intra-regional. Figure 7.2 shows the per capita income levels in rural and urban households in China in 2017. As seen in Figure 7.2, the gap between urban and rural incomes is huge. In 2013, a survey by Peking University found that the top 5 per cent of the country’s households took home 23 per cent of the total household income in 2012, while the bottom 5 per cent earned just 0.1 per cent.29 Figure 7.2 also illustrates that the incomes of both rural and urban households are increasing. Between 2002 and 2007, the income ratio of China’s richest 10 per cent and the poorest 10 per cent increased from 19:1 to 25:1, as stated by the World Bank.30 Some of the contributing factors to this inequality are policies favouring cities, heavy industries and the creation of special economic zones in coastal areas. Inequalities between provinces is another big source of concern. Figure 7.3 shows the gross regional product in China in 2017. As seen in Figure 7.3, the western provinces and autonomous regions of Xinjiang, Ningxia, Qinghai, Gansu, Tibet, Yunnan and Guizhou have the lowest gross regional products in the country. As compared to the western provinces, eastern coastal provinces of Guangdong, Shandong, Shanghai and Zhejiang, among others, fare excellently. In order to boost the western

40000 35000 30000 25000 20000 15000 10000 5000 0 2013

2014 Rural Households




Urban Households

Figure 7.2 Comparison of rural and urban household incomes in 2017 (unit: yuan). Source: China Statistical Yearbook, 2018.

100000 90000 80000 70000 60000 50000 40000 30000 20000 10000 0

Beijing Tianjin Hebei Shanxi Inner Mongolia Liaoning Jilin Heilongjiang Shanghai Jiangsu Zhejiang Anhui Fujian Jiangxi Shandong Henan Hubei Hunan Guangdong Guangxi Hainan Chongqing Sichuan Guizhou Yunnan Tibet Shaanxi Gansu Qinghai Ningxia Xinjiang

158  Sriparna Pathak

Figure 7.3 Gross regional product, PRC, 2017 (unit: millions). Source: China Statistical Yearbook, 2017.

provinces, the western development policy was put in place in 2000. The policy covers the six provinces of Gansu, Guizhou, Qinghai, Shaanxi, Sichuan and Yunnan; the five autonomous regions of Guangxi, Inner Mongolia, Ningxia, Tibet and Xinjiang; and the municipality of Chongqing. However, the western provinces still lag behind the others, 20 years after since the western development strategy was put in place. In the two largest autonomous regions in the western part of China, namely in Tibet and in Xinjiang, the primary development challenge for the state has been that of security. Therefore, despite the existence of the western development strategy, the attempt has been to pump in resources to create infrastructure and institutions that will cater to the security needs of the government. The Xinjiang autonomous region has suffered from sociopolitical problems associated with aspirations of ethnic Uyghurs who seek independence from the state, while the Tibet autonomous region suffers a similar fate due to Tibetan aspirations for independence. Income inequality is another facet which affects overall prosperity. China’s goals of building a moderately prosperous nation in the 2020s and fulfilling the Chinese Dream cannot be achieved until it addresses the problem of inequality. The biggest drivers of income inequality are differences in education, income differentials in rural and urban China (see Figure 7.2) and China’s Hukou system of household registration which restricts migration to urban areas where wages are higher.31 Due to the strides China has made in industrialisation, there is now a demand for highly skilled workers. However, the Hukou registration system restricts people born in rural areas and in possession with rural Hukous to migrate to cities where educational standards are better. In the absence of better education, people from rural

Xi Jinping’s ‘China Dream’ and economy  159 areas do not get white-collar jobs, which in turn means lower pay than urban areas. This vicious cycle permanently keeps people from rural areas trapped in a situation of inequality as compared to their urban counterparts. Some of the policies China has implemented to reduce inequality include raising minimum wages and the minimum threshold for income taxes on multiple occasions, abolishing agricultural taxes, improving public services and social protection in the countryside. However, these have not been adequate so far in addressing the ever-widening chasm between the urban and the rural populace in China. According to a study undertaken by Piketty, Yang and Zucman, the share of national income earned by the top 10 per cent of the population increased from 27 per cent in 1978 to 41 per cent in 2015, while the share earned by the bottom 50 per cent dropped from 27 per cent to 15 per cent. The bottom 50 per cent of the population used to have about the same income share as the top 10 per cent, while their income share was about 2.7 times lower in 2015. Over the same period, the income of the middle 40 per cent has been roughly stable.32 Steps taken by the PRC to address inequality The International Monetary Fund (IMF) has conducted an in-depth study of the policies undertaken by the PRC to address the problem of inequality. Some of the key steps taken are outlined as follows: 1 Personal income tax reform: An income tax has been in place since 1980, and the government raised the minimum threshold for personal income tax multiple times, from ¥ 800 per month before 2005 to ¥ 3,500 per month in 2011. The threshold remained in place as of 2017 and is now equivalent to 78 per cent of GDP per capita.33 However, it is estimated that a minuscule percentage of income earners pays taxes. Various studies have found the redistributive effect of the personal income tax to be very limited. Detailed income tax data is unavailable, and researchers have to rely on household surveys, based upon self-reported information. 2 Labour market policies: China has extensive human resources, which is why labour policies gain even more importance. Increases in minimum wages since 2010 have been a constant. By 2015, the average ratio of the minimum wage to average wage had increased to 31.2 per cent in the non-private sector and 51.2 per cent in the private sector.34 However, in the face of ever-increasing living costs, wage increases have not been able to address the issue of inequality. 3 The minimum wage policy and the Dibao system: The minimum living standard guarantee programme is known as the Dibao system in China. The Dibao is a non-contributory cash transfer to help those in poverty purchase necessities such as food, clothing and shelter. Under Dibao,

160  Sriparna Pathak direct payment is provided to households equal to the difference between average income per person in the household and a minimum income threshold.35 By 2016, the Dibao system covered 45.8 million rural residents (7.8 per cent out of the total rural population). Another 4.97 million rural residents received relief assistance for extreme poverty. In contrast, 14.9 million urban residents, approximately 1.9 per cent of the urban population, participated in the programme. Empirical studies find that while the Dibao programme did not have a significant impact on reducing income inequality, it has been effective in alleviating poverty.36 4 Policies to reduce rural-urban income gaps: China has implemented a series of agricultural policies to reduce urban-rural income gaps. The agricultural tax was abolished in 2006. China has also undertaken steps to improve the availability of public services and social protection. The government also put in place the plan to ‘Build a New Socialist Countryside’, which was officially promulgated in March 2006. This initiative requires local governments to promote comprehensive rural development, including infrastructural and agricultural modernisation linked to ecological sustainability, and the provision of public goods such as social welfare and basic education.37 5 Medical care policies: Under its New Rural Cooperative Medicare, China expanded its medical care coverage, achieving significant coverage for rural residents. The Urban Employee Basic Medical Insurance and the Urban Resident Basic Medical Insurance covers urban dwellers. However, the existing public plans available to the public only reimburse a portion of medical fees, which often leaves individuals saddled with a significant amount of Out-of-Pocket (OOP) payments.38 High OOP expenses financially stress households, which can result in impoverishment and negatively affect health outcomes. Also, because of differences in the scope and level of coverage among different groups, it is not clear to what extent the advances in the social security system have narrowed inequality nationwide. Despite the laudable steps taken by the government including the western development strategy, the Dibao system and the attempted medical coverage, a huge chasm of inequality remains in China, which has become chronic over the years. About three decades of spectacular economic growth rates enabled China to raise incomes, but growth has not benefited all sections of the society equally; and China has moved from being moderately unequal in 1990 to being one of the world’s most unequal countries.39 This is going to have implications for China’s efforts in becoming a moderately prosperous nation by 2021. Prosperity also includes having steady sources of income. This leads to the question of employment in China. The following section delves into

Xi Jinping’s ‘China Dream’ and economy  161 issues of employment and job creation in China, which will have an impact on the fulfilment of the Chinese Dream.

Unemployment in China Post reforms of 1978, as elements of capitalism got introduced in what had hitherto been an economy organised on the basis of communes, the scope for employment increased. As the Chinese economy relied on an export-­ oriented growth model along with catapulting itself to the position of the manufacturing platform of the world, the labour force found it increasingly profitable to engage in manufacturing, retail, import and export. Figure 7.4 shows the number of people engaged in the various segments of the Chinese economy in 2017. The industry contributed to 40.5 per cent of the Chinese GDP in 2017, and in 2015, the manufacturing industrial sector alone contributed to 40 per cent of the Chinese GDP. The manufacturing sector overlaps with other sectors such as import-export, retail and wholesale trades. Overall, the segments of manufacturing, construction, import-export trade contribute 40 the most to the economy and employ the maximum number of people (see Figure 7.4). However, post the onset of the global financial crisis, as China’s prime export destinations in the West, i.e. the US and the EU no longer had the capacity to absorb Chinese exports, massive layoffs in producing units in China started taking place. An estimated 20 million Chinese workers were laid off in the first few months after the global financial crisis began.41 120 100 80 60 40 20 0

Figure 7.4 Percentage of people employed in various segments of China’s economy, 2017 (unit: 10,000 persons). Source: China Statistical Yearbook, 2018.

162  Sriparna Pathak A closer look at sector-wise employment from 2013 onwards reveals decreasing employment levels in the overall manufacturing industry. Figure 7.5 shows employment in the three inter-related segments of manufacturing, construction, import-export trade and wholesale during 2013–2017. Out of these three related segments on the economy, construction has been on an uptick owing to China’s Belt and Road Initiative (BRI), which has allowed Chinese companies to undertake infrastructure creation across the world. However, on the whole, unemployment has been a major issue in China. China’s unemployment rate has soared largely since the mid-1990s, and continues till date. China’s unemployment rate was 3.61 per cent in September 2019.42 According to the NBS, China’s urban unemployment rate increased by 0.2 percentage points to stand at 5.3 per cent at the end of July 2019.43 A spokesperson for the NBS attributed the most recent jump in unemployment primarily to the large number of college graduates entering the job market. China Labour Bulletin reported that the total number of graduates in 2019 was a record 8.3 million.44 A 5.3 per cent unemployment rate is already high enough; in addition, official figures often under-report real unemployment rates. As per a study undertaken by the National Bureau of Economic Research (NBER), the actual unemployment rate in 2002–09 in China averaged nearly 11 per cent, while the official rate averaged less than half of that.45 The government has taken steps to address the issue, as its unemployment policy since 2007 has been focussed on helping towns and cities register the unemployed and laid-off workers through unemployment insurance, re-employment service centres and training and employment 60 50 40 30 20 10 0 2013

2014 Manufacturing

2015 Construction




Figure 7.5 Employment in manufacturing, construction, import-export and wholesale, 2013–2017 (unit: 10,000 persons). Source: National Bureau of Statistics, People’s Republic of China.

Xi Jinping’s ‘China Dream’ and economy  163 assistance. These efforts are aimed at controlling the layoffs and creating jobs in State-Owned Enterprises (SOEs) by stimulating economic growth.46 This has continued under Xi Jinping as well. In 2018, under Xi Jinping, China pledged ‘employment first’ policies to create jobs. It was to go hand in hand with the promotion of entrepreneurship. Authorities looked upon new growth engines such as technology and services to support job creation. The attempt was to create a policy environment that supports the digital economy and will promote big data, artificial intelligence and industrial internet sectors. The National Development and Reform Commission (NDRC) is also a part of the efforts to improve policies to support the growth of private firms, building on examples of successful policies from around the country.47 According to a Boston Consulting Group (BCG) report, China’s digital giants have led job creation over the past few years, and will continue to do so. It forecast that the e-commerce giant Alibaba alone has created some 31 million job opportunities, while the ride-share giant DiDi – China’s Uber – has employed more than 13 million drivers. The report adds that the digital economy will add more than 400 million jobs in China in the next few years.48 Xi Jinping’s ‘Made in China 2025’, announced in 2015, deserves mention in this context. Made in China 2025 is part of an architecture of plans and policies aimed at generating innovation-driven development. It intrinsically aims at transforming China into a manufacturing superpower, from being just a platform of cheaply manufactured goods. The plan highlights 10 priority sectors, which include new-generation information technology; advanced numerical control machine tools and robotics; aerospace technology, including aircraft engines and airborne equipment; and biopharmaceuticals and high-performance medical equipment.49 At a time when China’s economy is slowing, the embrace of such emerging industries and technologies is seen as a critical means to sustain and upgrade growth. These sectors will also help in addressing unemployment to a certain extent. These, however, are the expectations. In the first quarter of 2019, China’s job market performed at its worst level in six years. The China Institute for Employment Research at the Renmin University of China in Beijing even called for the government to introduce more stimulus measures to boost demand while continuing to cut taxes.50 Unemployment persists as a major headache for the government, and in the face of the US–China trade war, in which Chinese exports are suffering at the hands of US tariffs, more layoffs and industrial shutdowns are taking place, only adding to the already existing problem.

China and gross national happiness Happiness or xingfu (幸福) is an often-repeated term in China’s policy pronouncements. At the 19th Party Congress, while delivering his report, Xi

164  Sriparna Pathak Jinping stated that it was the CCP’s aspiration and mission to seek happiness for the Chinese people. In the words of Gerda Wielander, the CCP is intent on promoting continuity and stability; and promoting happiness is the ‘key to this because happiness facilitates acceptance and seeks consensus on shared values’.51 However, so far, despite the emphasis on people’s happiness, China fared as the 93rd happiest country in the world in a list of 156 countries complied by the United Nations’ Sustainable Development Solutions Network. The document, titled World Happiness Report, analyses countries’ happiness in terms of income, life expectancy, social support, freedom, trust, generosity and the absence of corruption. China ranked 83rd in 2016, 79th in 2017 and 86th in 2018. As noted by the Lowy Institute, China’s Gross National Product (GNP) has multiplied five times in the past 30 years, but its reported levels of well-being are lower today than in 1990. According to Richard Easterlin, professor of economics at the University of Southern California, one of the founders of the field of ‘happiness economics’ and namesake of the Easterlin Paradox, despite an unprecedented rate of economic growth, Chinese people are less happy overall than they were two decades ago.52 The research undertaken by Easterlin (first published in 2012 in the Proceedings of the National Academy of Sciences) highlights that 68 per cent of those in the wealthiest income bracket and 65 per cent of those in the poorest bracket reported high levels of satisfaction in 1990. It states that the percentage of the poorest Chinese who say they are satisfied with their lives has fallen more than 23 percentage points. This is largely due to a growing unease about employment prospects and the dissolution of the state-sponsored social safety net.53 For the ordinary Chinese people, particularly the less educated and ones with lower incomes, jobs and income security; reliable and affordable health care; and provision for the children and elderly are of critical importance to life satisfaction. All of these are either unequally distributed in the Chinese society or simply out of the reach of the vast majority. Therefore, the building of a prosperous society and ensuring happiness for the Chinese people, in other words, fulfilling the Chinese Dream will require a lot more steps than have been taken by the Chinese Government in the past.

BRI and the Chinese Dream The BRI, just like the Chinese Dream, is a signature project of Xi Jinping. Through its two components, the Maritime Silk Road and the Silk Road Economic Belt, the BRI envisions connecting Asia with Africa and Europe via land and maritime networks along six corridors with the aim of improving regional integration, increasing trade and stimulating economic growth, emphasising particularly on large-scale infrastructure projects. The goals and aspirations of the China Dream and the BRI are not too different. In the words of Dylan M.H. Loh, the two grand projects are ‘intertwined’ such that ‘the BRI echoes the so-called “China Dreams” of the great revival of

Xi Jinping’s ‘China Dream’ and economy  165 54

the Chinese nation’. Beyond the rejuvenation of the Chinese nation, economically, the BRI has the potential to yield benefits which might then add to the economic prosperity of the Chinese people, which is a central tenet of the Dream. Potential gains for China through the BRI include greater diplomatic clout, access to more markets, creating of jobs, investment opportunities for Chinese people and companies overseas and an easing of the problem of oversupply which affects some of the most important industries in the Chinese economy. As stated previously, there has been a spurt in the construction sector caused by the BRI’s infrastructure building. This can help in easing the oversupply in the sector, as well as create jobs for the Chinese people in BRI countries when companies undertake infrastructure creation in those countries. China’s SOEs could be among the biggest beneficiaries of the initiative. In terms of ownership, SOEs play a leading role in China. Therefore, the companies that have been investing in BRI countries have been predominantly SOEs, which have a clientelist relationship with the Chinese Government. The logic behind the state ownership of companies in strategically important industries which would be investing in BRI countries is a simple one: state ownership facilitates government control and takes away the power from the enterprises to decide whether a particular investment is a profit-making one or not. Such enterprises, more often than not come under pressure to make economic decisions that reflect Beijing’s larger sociopolitical and economic objectives. Beijing exerts regulatory and political influence over SOEs through shareholder control as well as personnel appointments. The question that then arises is: where does that leave the SOEs? Many of the developing countries along the route of the BRI are economically weak and politically unstable. A study by Xiaojun Li and Ka Zeng shows that both SOEs and private firms identify the poor and unfamiliar investment environment and political risks in host countries as their biggest challenges.55 Capital infusion alone cannot ensure stability or provide the guarantees which are essential to seeing the projects through to their fruitful completion; nor can capital guarantee that China’s BRI counterparts will keep to their side of the bargain. To date, more than 90 per cent of China’s investments have been made through SOEs, and because these enterprises enjoy state financial support, there has been little incentive for them to assess costs, benefits and risks carefully. Waste and inefficiencies have resulted from the de facto subsidies given by the government to the SOEs. Far from providing a benchmark, such creditbased supply-driven projects have only continued to encourage a lack of accountability in addition to immensely distorting the Chinese economy. However, this keeps appearances of investment promotion and job creation high, both of which are essential for the fulfilment of the Dream.

166  Sriparna Pathak Despite all the fanfare, the initiative had actually begun slowing by 2018. This was due, in part, to a decline in Chinese funds available for investment. Chinese state banks had become more cautious about lending as the trade war with the US commenced.56 Estimates for China’s BRI-related spending range as high as US$ 8 trillion. And yet a closer look reveals that not even US$ 1 trillion of infrastructure creation beyond China’s borders has been achieved yet. In the steel sector alone, as revealed by Caixin, China’s steel production rose 8.1 per cent in 2018 to a record 928 million tons, despite the industry’s plans to shed excess capacity. In the cement sector, China has the greatest excess capacity with 895 million tons, representing 45 per cent of global overcapacity. Expectations of BRI being a solution to overcapacity have yet to be realised.57 Therefore, the BRI now stands reduced to mere propaganda which can be used by the Chinese Government to create fantasies of increased Chinese prosperity and economic clout on the world stage.

Conclusion Since Xi Jinping came to power in 2012, the Chinese Government has promised its citizens a return to the grandeur of China’s past. In doing so, the attempt has been to tap into the historical consciousness of the Chinese people, and the concept of the Chinese Dream has fit in perfectly. Rejuvenation is a central theme of the Chinese Dream. This rejuvenation narrative, as stated by Callahan, 58 is more of a moral narrative that seeks to correct what is seen as historical injustice of the century of national humiliation and is an attempt to return China to its rightful place at the centre of the world. In order to do that China has to emerge as the most powerful country in the world, be it in terms of economy, military, culture or science and technology. Therefore, the Chinese Dream is actually an amalgamation of several aspirations of the Chinese nation. However, the legitimacy in the eyes of the common Chinese people is acquired only through promises of stability, prosperity and happiness. None of these terms have been clearly defined by the leadership, but there is frequent mention of all of these terms, in attempts to make the common person’s dream the Chinese Dream. With respect to the two centennial goals that have become closely intertwined with the Chinese Dream, namely complete poverty eradication and building a moderately prosperous nation, China has surely drawn up ambitious plans, as the existing plans for poverty eradication have a large range covering direct cash transfers for the absolute poor, relocation of the poor and places where chances of earning better livelihoods might exist, among others. All of these have the potential to fulfil the Chinese Dream. However, the plans have also been mired in several controversies as the ever-increasing chasm between the rich and the poor has continued to increase; and China has become among the most unequal countries in the world.

Xi Jinping’s ‘China Dream’ and economy  167 The closer China gets to the zero-poverty target, the harder it becomes to reach it due to the high marginal costs, as the remaining poor who have not been brought into the ambit of the poverty eradication programmes are spread out in even further remote and marginal areas with impossible physical access, limited natural assets along with limited development opportunities. Added to this is the problem of corruption, due to which the benefits of the poverty eradication programmes either get unevenly distributed as per the biases of the distributing officials, or they never reach the poorest of the poor. While China has succeeded in lowering the absolute numbers of the poor, what remains questionable are the numbers. To add to the already existing problems, the US–China trade war has been impacting China’s poverty alleviation programmes, as acknowledged by the Chinese officials, too.59 Employment in China’s impoverished areas has suffered, because enterprises have cut jobs in the face of lower Chinese exports to the US due to high rates of tariffs slapped by the Donald Trump administration on China. Therefore, China’s prosperity which hinges on lower poverty, stable employment opportunities and exports, among others, also rests on international relations beyond domestic economics. The problem of unemployment is another issue that China needs to address if it wants to ensure the prosperity of the Chinese people and emerge as a moderately prosperous nation. Chronic inequality between and among provinces is another issue that needs to be urgently addressed. Besides, institutionalised forms of discrimination between the rural and the urban populace in the form of the Hukou registration system need an overhaul as well. Due to the Hukou which registers the birthplace of individuals, children must attend school where they are born, no matter where their parents are living. Educational opportunities are vastly inferior in rural areas. Most children with rural Hukou do not end up going to college, while urban children do.60 A large portion of the income gap is actually the result of the education gap. The BRI which is closely intertwined with the Chinese Dream is now dwindling, too, as more and more countries across the world are stalling BRI projects on grounds of impending debt traps, corruption, environmental degradation and fears of cultural and linguistic changes brought in by the influx of Chinese workers. Nevertheless, the pomp around the BRI is still kept high by the state media, because it fulfils the purpose of keeping the hopes of the ordinary Chinese high – hopes of the revival of the lost glory of China as the centre of the world as it connects to every country and region through its connectivity linkages. As mentioned earlier, the Chinese Dream echoes similar hopes – the resurgence of China as the Middle Kingdom on the world stage. This, along with other forms of propaganda, deflects attention from the lack of actual prosperity or the actual effect of the poverty alleviation programmes. Nevertheless, the Chinese Dream has initiated the process of changes in China’s domestic economy and society – which, even though might not take

168  Sriparna Pathak place overnight or even within the time frame mentioned, will slowly propel the country towards incremental changes. Beyond that, as stated by Katrina S. Navallo of Kyoto University, in China, much of the success of the CCP is actually hinged on populism.61 Once the discourse has a populist appeal, the CCP evokes affinity with social needs and problems of the people, and directs attention to the CCP as the legitimate entity that has the authority to resolve these issues. This legitimises the CCP as the sole governing body in China’s polity and creates the stronghold essential for the maintenance of power. The Chinese Dream is no different from most other populist appeals made by the party. Nevertheless, the policies that exist under the ambit of the Chinese Dream, or that will be undertaken to fulfil the Chinese Dream, are worth watching out for as they will surely impact China’s economic future in myriad ways, including, inter alia, less poverty-stricken Chinese people, bigger strides in space research, possibly bigger subsidies and SOEs that will enable them to export more to foreign markets – in turn causing more trade frictions and more negotiations – all of which will impact international relations for better or for worse.

Notes 1 ‘Introduction to the National Museum of China’ (Guóbó jiǎnjiè国博简介), National Museum of China, at (accessed October 30, 2019). 2 Natalia P. Koptseva, ‘The Chinese Dream: Through the Mirror of Modern Social Research’, Journal of Siberian Federal University. Humanities and Social Sciences, 9 (2), 2016, pp. 374–393. 3 Bonnie S. Glaser, ‘Xi Jinping’s 19th Party Congress Speech Heralds Greater Assertiveness in Chinese Foreign Policy’, Center for Strategic and International Studies, 2017, at (accessed October 24, 2019). 4 Winberg Chai and May-Lee Chai, ‘The Meaning of Xi Jinping’s Chinese Dream’, American Journal of Chinese Studies, 20 (2), October 2013, pp. 95–97. 5 Ehizuelen Michael Mitchell Omoruyi, ‘China’s March towards a Moderately Well-Off Society’, China Daily, March 16, 2018, at cn/a/201803/16/WS5aab21d6a3106e7dcc142020.html (accessed October 30, 2018). 6 William A. Callahan, ‘China 2035: From the China Dream to the World Dream’, Global Affairs, 2 (3), 2016, pp. 247–258. 7 Rob Schmitz, ‘Who’s Lifting Chinese People Out of Poverty?’ NPR, January 17, 2017, at (accessed February 18, 2020). 8 ‘Xi Pledges to Do All to Rid China of Poverty by 2020’, China Daily, October 16, 2015, at (accessed October 31, 2019). 9 Ehizuelen Michael Mitchell Omoruyi, ‘China’s Last Lap in Eradicating Poverty by 2020’, China Daily, March 14, 2019 at a/201903/14/WS5c89b8dea3106c65c34ee93a.html (accessed November 2, 2019). 10 ‘Poverty Headcount Ratio at $ 1.90 a Day (2011) PPP’, World Bank, at https:// (accessed June 1, 2019).

Xi Jinping’s ‘China Dream’ and economy  169 11 ‘Latest Data Reveal How Far China Is from the 2020 Poverty Elimination Goal’, CGTN, March 1, 2019, at 6333566d54/share_p.html (accessed June 1, 2019). 12 Zhuang Pinghui, ‘Trade War with U.S. Is Hindering China’s Efforts to Combat Poverty, Beijing Admits’, South China Morning Post, March 7, 2019, at https:// (accessed November 12, 2019). 13 Ben Westcott and Serenitie Wang, ‘Xi Jinping Is Determined to End All Poverty in China by 2020. Can He Do It?’ CNN, April 20, 2019, at https://edition. (accessed November 1, 2019). 14 ‘China Focus: Rural roads Important to Poverty-Relief in China’, Xinhua, January 15, 2018, at htm (accessed November 3, 2019). 15 ‘Latest Data Reveal How Far China Is from the 2020 Poverty Elimination Goal’, no. 11. 16 Tan Xinyu, ‘War on Poverty Continues in 2019’, China Daily, February 22, 2019, at html (accessed November 1, 2019). 17 Elaine Chan, ‘China’s Countryside ‘Returning to Poverty’ as Lack of Reforms Help Fuel Urban-Rural Divide’, South China Morning Post, October 26, 2019, at side-returning-poverty-lack-reforms-help-fuel (accessed February 18, 2020). 18 Tan Xinyu, no 16. 19 Zhuang Pinghui, no. 12. 20 Ibid. 21 Lea Li, ‘Forgotten: A Village Unreached by China’s Poverty Relief’, South China Morning Post, March 7, 2019, at chinese-villagers-who-fear-they-can-never-escape-poverty-trap (accessed November 3, 2019). 22 Tao Yuan, ‘China Footprint: Efforts to Relocate the Rural Poor Encounter Headwind’, CGTN, September 9, 2017, at 33557a6333566d54/share_p.html (accessed October 31, 2019). 23 Fatoumata Diallo, ‘China’s Anti-Poverty Efforts: Problems and Progress’, Focus Asia, Institute for Security Development and Policy, March 2019, p. 4, at (accessed November 13, 2019). 24 Eugene K. Chow, ‘China’s War on Poverty Could Hurt the Poor Most’, Foreign Policy, January 8, 2018, at (accessed January 22, 2019). 25 Ibid. 26 ‘China Drive to Relocate Millions of Rural Poor Runs into Trouble’, Financial Times, June 12, 2017, at 963e998b2 (accessed November 3, 2019). 27 Barry Naughton, ‘Deng Xiaoping: The Economist’, Special Issue: Deng Xiaoping: An Assessment, The China Quarterly, 135, September 1993, pp. 491–514. 28 ‘Xi Pledges to Do All to Rid China of Poverty by 2020’, no. 8. 29 Edward Wong, ‘Survey in China Shows a Wide Gap in Income’, The New York Times, July 20, 2013, at (accessed June 10, 2018). 30 Nan Wu, ‘Income Inequality in China and the Urban- Rural Divide’, Journalists’ Resource, August 19, 2014, at national/china/income-inequality-todays-china/ (accessed June 9, 2018).

170  Sriparna Pathak 31 The Hukou system is a family registration programme in China which serves as a domestic passport for regulating the distribution of population and rural to urban migration. It is a tool for social, geographic and migration control that enforces a rigid structure of rights enforcement. People with different types of Hukou (urban or rural) enjoy different types of rights and privileges in terms of access to public services. 32 Thomas Piketty, Li Yang and Gabriel Zucman, ‘Income Inequality Is Growing Fast in China and Making It Look More like the U.S.’, USAPP– American Politics and Policy, April 6, 2019, at income-inequality-is-growing-fast-in-china-and-making-it-look-more-likethe-us/ (accessed November 9, 2019). 33 Sonali Jain-Chandra, Nini Khor, Rui Mano, Johanna Schauer, Philippe Wingender and Juzhong Zhuang, ‘Inequality in China: Trends, Drivers and Policy Remedies’, June 5, 2018, IMF Working Paper, 18/127, p. 10. Ibid. 34 35 ‘Is China’s Health Care Meeting the Needs of Its People?’ China Power, August 29, 2018, at (accessed October 31, 2019). 36 Sonali Jain Chandra et al., no. 33. 37 Yixiao Zhou and Ligang Song, ‘Income Inequality in China: Causes and Policy Responses’, China Economic Journal, 9 (2), 2016, pp. 186–208. 38 ‘Is China’s Health Care Meeting the Needs of Its People?’ no. 35. 39 Sonali Jain-Chandra, ‘Chart of the Week: Inequality in China’, IMFBlog, September 20, 2018, at (accessed November 8, 2019). 40 Huileng Tan, ‘China’s Economy Grew 6.6% in 2018, the Lowest Pace in 28 Years’, CNBC, January 20, 2019, at (accessed November 1, 2019). 41 Wayne Morrison, ‘China and the Global Financial Crisis: Implications for the United States’, Congressional Research Service, 2009, at row/RS22984.pdf (accessed October 5, 2019). 42 ‘China Unemployment Data’ (ZhongguoShiyelu中国 失业率), CEIC, 2019, at (accessed November 8, 2019). 43 ‘Statistics Bureau States that the Cause of Rising Unemployment Is the Graduation Season’ (Tǒngjì jú huíyīng 7 yuè diàochá shīyè lǜ shàngshēng: Shòu bìyè jì dàolái yǐngxiǎng 统计局回应7月调查失业率上升:受毕业季到来影响), Sina, 2019, at (accessed November 12, 2019). 44 ‘China’s Unemployment Rate Jumps in July as Graduates Enter the Job Market’, China Labour Bulletin, August 14, 2019, at china%E2%80%99s-unemployment-rate-jumps-july-graduates-enter-job-market (accessed October 30, 2019). 45 Shuaizhang Feng, Yingyao Hu and Robert Moffitt, ‘Long Run Trends in Unemployment and Labor Force Participation in China’, NBER Working Paper No. 21460, August 2015, at (accessed October 30, 2019). 46 J. Duckett, and A. Hussain, ‘Tackling Unemployment in China: State Capacity and Governance Issues’, Pacific Review, 21 (2). 2008, pp. 211–229. 47 ‘China Pledges ‘Employment First’ Policies to Create Millions of Jobs’, CNBC, February 11, 2018, at (accessed February 19, 2020).

Xi Jinping’s ‘China Dream’ and economy  171 48 Fang Ruan, Regina Tsai, Katharina Zhang and Tiffany Zheng, ‘Year 2035: 400 Million Job Opportunities in the Digital Age’, Boston Consulting Group, 2017, at http:// (accessed February 18, 2020). 49 Elsa B. Kania, ‘Made in China 2025 Explained’, The Diplomat, February 01, 2019, at (accessed February 18, 2020). 50 Sidney Leng, ‘China’s Economic Growth Unable to Boost Employment as Job Market Drops to Six-Year Low, Says Think Tank’, South China Morning Post, April 20, 2019, at 3006905/chinas-economic-growth-unable-boost-employment-job-market (accessed February 18, 2020). 51 Gerda Weilander, ‘Happiness and the “China Dream”’, The Interpreter, March 23, 2018, at (accessed November 3, 2019). 52 Dan Southerland, ‘Explaining China’s Low and Falling Ranking on the UN World Happiness Report’, Radio Free Asia, April 26, 2019, at https://www.rfa. org/english/commentaries/happiness-ranking-04262019155134.html (accessed October 31, 2019). 53 Ibid. 54 Dylan M.H. Loh, ‘The “Chinese Dream” and the “Belt and Road Initiative”: Narratives, Practices, and Sub-State Actors’, International Relations of the Asia-Pacific, lcz018, 2019, pp. 1–33. 55 Xiaojun Li and Ka Zeng, ‘Beijing Is Counting on Its Massive Belt and Road Initiative. But Are Chinese Firms on Board?’ The Washington Post, May 14, 2019, at (accessed February 21, 2020). 56 Daniel Wagner, ‘China’s Dreams of World Leadership Are Fading as Its Belt and Road Projects Start to Sour’, South China Morning Post, February 5, 2020, at (accessed February 21, 2020). 57 Sriparna Pathak, ‘Can the BRI Solve China’s Economic Woes?’ Asia Dialogue, February 19, 2020, at (accessed February 21, 2020). 58 William A. Callahan, no. 6. 59 Zhuang Pinghui, no. 12. 60 Jolie Myers, Alisa Chang, Mallory Yu and Sam Gringlas, ‘Communist China Turns 70. Who Shares Its Economic Growth?’, NPR, October 1, 2019, at https:// (accessed October 29, 2019). 61 Katrina Navallo, ‘The Chinese Dream: China’s New Rhetoric and Its Implications in China’s Development Path’, Working Paper, Academia, at https://www. Implications_in_Chinas_Development_Path?auto=download (accessed October 30, 2019).


Xi Jinping’s financial gamble Will it succeed? Priyanka Pandit

Introduction The 19th Chinese Communist Party (CCP) National Congress held in October 2017 signalled that China’s economy would open further to the world and accelerate the process of structural reform as envisioned by Chinese President Xi Jinping in 2012.1 Opening up of the financial sector to attract foreign investments and expanding the entry of foreign financial institutions in China were the major initiatives in this direction. The liberalising measures for the financial sector, which are the most crucial of the reform initiatives, include free convertibility and overseas movement of the renminbi, market-determined interest rates and access to foreign finance institutions for establishing foreign as well as joint venture banks in China.2 Alongside, China under President Xi has put a lot of emphasis on creating a network of China-led regional and global financial entities which would act as means to further Beijing’s immediate and long-term economic ambitions. While the objective to open up the financial sector has been made clear by the Chinese president, ambiguities about the extent of the same remain. The Chinese Government has been cautious about reforming its financial sector since the early days of its economic experiment. Infact, China was alarmed by the financial crisis of 2008, which revealed the weaknesses of the global financial system, particularly exposing how interlinked markets created domino effects and caused a slowdown worldwide. Although China remained largely unaffected by the crisis, its exports slowed due to the slump in global demand. Thus, to avoid such a situation in the future, the current Chinese Government has underlined ‘rebalancing’ as one of the ideological principles underpinning financial reform.3 In its view, rebalancing entails maintaining a balance between modernity and CCP-led socialism. While China has displayed conservatism vis-à-vis its domestic financial reform, its activities in the regional and global context present a different picture. China not only has been an active proponent of reform in the current global financial institutions, but has also spearheaded the creation of new financial bodies. The debate around their creation is about whether these institutions are an attempt to create alternative global financial order

Xi Jinping’s financial gamble and success  173 through a set of new norms, rules and principles. This has attracted much scholarly attention, leading to a number of theories both in support of and against the proposition. Three key aspects of the scholarship are as follows: First, a noticeable shift is discerned in China’s current engagement with the international financial institutions as it grows economically and militarily. From being a cautious participant, Beijing emerged as an active player and is currently a mature stakeholder in these institutions, which raises questions about its intentions vis-à-vis the global financial system. A careful examination of the empirical evidence relating to China’s engagement with the international organisations points to all of the above in China’s approach to these organisations. Second, China’s rise within the extant financial system has occurred in conjunction with the rise of other emerging markets such as India, Brazil, South Africa and Turkey. These countries along with China had undertaken several attempts to redistribute the decision-making structures, trying to make the global rules and norms more inclusive and attuned with the realities of the developing world. Although these instances point to a coalition-led approach to reform, they sometimes reveal the absence of commitment amongst the actors of the same coalition, making consensus difficult to achieve. In such instances, singling out China as a ‘spoiler’ or ‘rule-breaker’ becomes difficult. Third, the activities of these new institutions offer a decent window to China’s objectives in the international system. An analysis of their activities reveals that the reformist agenda perceived during their creation has gradually weakened, and that they are instead adapting themselves to the working of the existing global order. Much of the existing literature, thus, situates its explanans in the functioning of the Chinese state, system and material power. There is, in addition, a paucity of attention to studying the personality characteristics or cognitive aspects of individual human agency, in order to explain the logic behind China’s choices in its domestic financial reform as well as regional/global financial initiatives. Against this backdrop, the chapter seeks to explore the decisions made by President Xi Jinping vis-à-vis financial reforms on both domestic and global fronts. The chapter presupposes that, under Xi, there has been a renewed focus on China’s economic reform and an increase in professionalism in Chinese economic diplomacy along with its global assertion as a responsible power.

Theoretical framework The role played by leaders has long been recognised as a key variable influencing foreign policy outcomes. Thucydides in his description of the Peloponnesian War between Athens and Sparta discussed how differences in the nature of the leaders and their strategies can lead to success or failure in similar kinds of activities. Similarly, Machiavelli in his famous work The

174  Priyanka Pandit Prince highlighted the importance of individual actions which ensured their success in statecraft or warfare. From this early focus on ‘great men’, the study has evolved and become more nuanced in its understanding of the roles leaders’ play and the choices they make in foreign policymaking. It has also been treated differently by various disciplines. For example, the theories built around the subject have insights from economics, psychology, political science and sociology.4 Within this, the popular frameworks are wide-ranging, including the rational choice model with focus on cost– benefit analysis common, the realist and power politics tradition and the cognitive approach treating leaders’ personalities and belief systems influencing their choices and responses to particular events. In the Cold War years, the rational choice model deemed fit to explain the behaviour of the two major powers, namely the United States of America and the Soviet Union. With its origins in economics, particularly in the utility maximisation approach to microeconomic analyses, it found a lot of support amongst the political scientists of the 1950s.5 The framework presumes that individuals make reasoned choices with a goal to maximise their preferences. It also takes into account the setting in which the choices are made by reasoned individuals; the strategies that rational individuals would employ in such circumstances; and the net result of such strategies on foreign policy outcomes.6 But with the end of the Cold War and the emergence of multipolar, multilateral world order, the rational choice approach proved inadequate to explain how leaders’ personality traits and belief systems influence their foreign policy choices and make them resistible to changes in the external environments.7 The shortcomings of the rational choice model popularised the cognitive approach in foreign policy analysis, which looks at the beliefs systems of the leaders and examines the cognitive biases as well as heuristics to explain their foreign policy behaviour.8 It emphasises on individual experiences and opposes generalisations by treating leaders as separate units of analyses. This chapter, however, does not get entangled in the rationality versus cognitive debate; and instead pursues a polyheuristic approach by drawing variables from both the theoretical strands, weaving them into an integrative framework.9 The approach proceeds through two stages: The first comprises of cognitive and political factors guiding the preliminary analysis to risks, threats, opportunities or challenges; while in the second stage, the choices are influenced by the expected utility maximisation goals. In the case of China, the intuition of the theory is as follows: President Xi uses positive heuristics for processing information consistent with his ideological belief of Mao Tse-tung thought and Chinese socialism. He places utmost preference to his political ideology than any other dimensions, which in turn reduces the choice set for his analysis of particular situations or activities. This ‘non-compensatory’ behaviour, as Mintz argues, is that strong leaders do not weigh other dimensions to compensate on their political beliefs.10 For instance, while Xi encourages financial reform and opening up,

Xi Jinping’s financial gamble and success  175 he does it along the lines of Mao-era exercise than that of Deng Xiaoping’s methods. He has abandoned Deng’s idea of ‘collective leadership’, and upholds ideology over bold liberalisation policies, particularly in the domestic context.11 However, in the global/regional arena, Xi follows rational maximisation rules of decision-making without deviating much from his belief systems. In other words, the foreign policy choice that he adopts is based on the alternatives (permitted within the political dimension) and their order of importance.

Approach to domestic financial reforms Despite achieving extraordinary growth for decades, the Chinese economy is different in many respects from the typical set of ‘good economic institutions’ prescribed by the Western economics model, such as well-functioning free markets, clearly defined property rights, sound legal system, liberalised financial sectors and independent monetary policymaking. In China, while prices of almost all products are determined by free markets, markets for production factors, including labour, capital, land and resources, remain heavily distorted. For instance, even after years of reform, China’s financial system still exhibits all typical features of what Ron McKinnon defined as ‘financial repression’, which refers to heavy regulation of interest rates, frequent adjustments of reserve requirement, state intervention in credit allocation and controls of the capital account.12 It is true that the financial institutions hardly existed 30 years ago; and it is only after the reform that China has a wide range of financial institutions, including banks and securities companies.13 Moreover, the nature of central government control has fluctuated from regime to regime. The control can be seen primarily through two means: First, the activities of State-Owned Commercial Banks (SOCBs) have changed slowly, in that most of their lending continues to be directed towards the state sector. Second, the interest rates that SOCBs levy on loans and offer on deposits are still controlled by the People’s Bank of China (PBOC).14 The State-Owned Banks (SOBs) not only form a key pillar of Chinese state capitalism but also act as a conglomeration of enterprises that are highly regulated. Besides, the institutional and regulatory arrangements for banking in China have been different from the banking systems of other countries. After liberalisation, the single central bank was replaced with a diversified portfolio of partially or fully state- or publicly owned financial institutions.15 Although these financial institutions operate under distinct institutional incentives and constraints, they are however dominated by the SOBs, which account for more than half of the banking industry assets in China. The Chinese banking sector is characterised by a diversified portfolio of institutions with different degrees of state and public ownership. The top four banks in China are State-Owned Enterprises (SOEs) administered by the China Banking Regulatory Commission (CBRC). The organisational

176  Priyanka Pandit structure is similar to the administrative mechanism of the centralised SOEs and represents a parallel corporate and Communist Party hierarchy.16 The SOBs in China, being the primary financier of the SOEs, have accumulated a large volume of Non-Performing Loans (NPLs), which could very well threaten the solvency of the main commercial banks in China.17 This meant that SOBs, too, have been on a soft budget basis. There are several factors which have contributed to the NPLs since the pre-reform period. First and the most important is bank-directed finance, on which the Chinese Government primarily depends for financing industrial development and infrastructure.18 In that case, the role played by capital markets is very small. Second, the banks lack appropriate risk‐control procedures and suffer from poor management skills which lead to a lower quality of loans originated. Third, the absence of a transparent credit‐rating system makes it difficult for banks to evaluate the credit risks when making lending decisions. Fourth, China’s NPL problems are further exacerbated by the stateparty influences on bank lending which are directed towards favouring inefficient and loss-making SOEs. In the post-crisis years, along with the injection of stimulus programme in 2008, the Chinese Government under Hu Jintao also resorted to credit expansion and lowered interest rates to stimulate growth and employment in industries. These measures not only cushioned China’s economy from the negative effects of crisis but also helped it to recover quickly from the crisis and maintain its high growth rates. However, these recovery measures have exacerbated the already existing problem of NPLs in the banks. Finally, the interest rate has experienced some liberalisation though not that much.19 At present, overall interest rates remain highly regulated in China, although the authorities have already made considerable progress in the interest rate reform. The remaining regulations on deposit and lending rates generate at least two types of consequences: One, ceilings for deposit rates and two, floors for lending rates essentially ensure minimum interest spreads for commercial banks.20 This enables the commercial banks to capture high returns, which is helpful for absorbing the bad assets created in previous decades. Under Xi Jinping, China has pledged to open the domestic economy to international capital flows and to shift towards market-determined interest rates and other financial prices in a gradualist manner with significant limitations and constraints. This infact sets the tone of current financial reform in China. Despite his speeches about opening up China’s capital accounts and reducing policy interventions in setting interest rates, exchange rate and prices for other assets and financial services, the timeframe is not decided yet; nor does the government have a clear path to that end. Also, capital account opening and interest rate liberalisation cannot succeed in China without implementing corporate governance and regulatory reforms in China’s state and private sectors.21 The other tension identified by the International Monetary Fund (IMF) is how risky lending has moved away from banks to the less-regulated parts

Xi Jinping’s financial gamble and success  177 of the financial system, commonly known as the ‘shadow banking’ sector.22 This has added to the complexity of the financial sector, making it more difficult for authorities to supervise activities in the system. While the Xi administration has accepted the IMF suggestions about the shortcomings of its financial system, it disagrees on the point that Chinese banks lack the ability to withstand shocks. Some of the steps currently undertaken to address the shortcomings include the setting up of a ‘super financial regulator’ to coordinate the oversight of the banking, securities and insurance sectors.23 The Chinese Government has further proposed prohibiting issuers of wealth management products from offering implicit guarantees to investors. At the Fifth National Financial Work Conference in 2017, President Xi flagged the setting up of a Financial Stability and Development Committee (FSDC) under the State Council to strengthen the macro-prudential functions of the PBOC, to ensure financial stability and to prevent any kind of systemic financial risks from occurring.24 The idea behind the FSDC was to create a supra-financial authority which would regulate the roles of banking, insurance and security industries. In another move, the Chinese leadership carried out the merger of two commissions, CBRC and China Insurance Regulatory Commission (CIRC), in 2018.25 This is an effort to curb risky investments in financial sector as well to promote efficiency under their joint supervision. These mergers and new committees although signify steps towards financial liberalisation, but ‘stability’ remains the primary motive behind these reforms. To attract foreign investments in China’s bond and stock markets, one of the major announcements by President Xi has been that the foreign firms can own up to 51 per cent stake in securities brokerage joint ventures, and the cap would be removed after three years.26 China has faced long-standing criticism for its discriminatory rules vis-à-vis foreign firms. The Trump administration had highlighted this in its critique of China’s economic policies during its tariff dispute with China. Following the relaxation, the Swissbased UBS Group became the first foreign bank to hold the majority stake in its securities joint venture. Early in 2020 JPMorgan Chase has received the final approval from Chinese regulators to set up a majority-owned securities venture in the country.27 However, the green light comes with caution. First, it is still not clear whether the majority ownership would allow the foreign firms to secure control over the entities. Second, it will not be easy for the foreign players in China’s securities markets to secure competitive advantages over their much larger local rivals.

The new financial institutions China’s increasing influence in the international economic order is well understood in its attempt to create new financial bodies. The two prominent ones are the Asian Infrastructure Investment Bank (AIIB) and the New

178  Priyanka Pandit Development Bank (NDB). Through these institutions, Xi has chartered a new discourse on development finance. The origin can be traced to the 2008 global financial crisis. To mitigate the effects of the downturn, the Chinese Government under Hu Jintao provided the stimulus to deepen financial reform and create an economic structure in China led by both internal and external demand, which would allow China to reap benefits from international businesses while cushioning it from the worst excesses of external shocks. However, for an export-led and labour-intensive economy like China’s, the effects of the 2008 global economic downturn were felt more strongly than is often realised. With its economic growth rate slowing, labour costs climbing and a rapid expansion of credit-to-Gross Domestic Product (GDP) ratio, the need to adopt a sustainable model of development intensified over the last several years. In 2013, Xi proposed the Silk Road Economic Belt and the twenty-first Century Maritime Silk Road through his Belt and Road Initiative (BRI). The BRI has re-established its significance after the 19th CPC decided to enshrine it in the Chinese constitution.28 It is widely agreed upon that the scope of the BRI – which aims to connect Asia, Europe, the Middle East and Africa with a vast logistics and transport network using roads, ports, railway tracks, pipelines, airports, transnational electric grids and even fibre optic lines –is quite impressive and ambitious. Understood primarily as an infrastructural initiative with more than 100 projects, the lending is done through Chinese state-owned policy banks, China Development Bank (CDB)and the Export-Import Bank of China (China Exim Bank), as well as the AIIB and the NDB, among other financial institutions (see Table 8.1). AIIB With 26.06 per cent of voting rights and a 30.34 per cent or US$29.78 billion stake of the US$100 billion capital base, China possesses a de facto veto in the AIIB.29 In 2013, President Xi, during a meeting with his Indonesian counterpart, Susilo Bambang Yudhoyono, put forward the proposal to establish an Asian infrastructure investment bank. He floated the idea amidst talks of creating a development bank among the BRICS countries (Brazil, Russia, India, China, South Africa). A host of Southeast Asian countries immediately came on board, along with countries across Europe and the Middle East. Despite initial reluctance, India also became part of the AIIB project; but Japan and the US have remained hesitant.30 In all, 50 founding members have signed the AIIB Charter and drawn up its design and guidelines. Marking a new phase in China’s economic statecraft under Xi, the AIIB reflects a soft-power tool to secure both financial support and diplomatic support for China’s BRI projects. The ability of President Xi to ramp up support from the Asian and European countries for the AIIB provided the necessary legitimacy towards its creation. Despite speculations over the

China Investment Corporation (CIC)


China-Eurasian Economic Cooperation Fund (CEF) China Exim Bank













China-Central and Eastern Europe (CEE) Fund



Afro-Asian Economic Egypt Council (AAEC) AIIB China


S.No. Name of the institution Headquarters

Table 8.1 List of institutions funding the BRI


AAEC founded in 2017, launched a development project to link Egypt, Kuwait and other North African countries to China’s BRI. AIIB is a multilateral development bank headquartered in Beijing, which began operations in January 2016 and now comprises 97 approved members worldwide. CEE Fund, established in 2012, was incorporated in Luxemburg in the form of limited partnership with a total commitment of US$ 435 million, is sponsored by China Exim Bank and Hungarian Export-Import Bank along with an investment advisor team appointed by the Fund. Its vision is to become an outstanding private equity fund in Central and Eastern Europe, and contribute to the sustainable development of the economies in this region. CIC, founded on September 29, 2007, was established as a vehicle to diversify China’s foreign exchange holdings and seek maximum returns for its shareholder within acceptable risk tolerance. CDB was founded in 1994 as a policy financial institution under the State Council. It has a registered capital of RMB 421.248 billion. Launched in 2014 during a Shanghai Cooperation Organisation (SCO) summit, the CEF is an important equity investment vehicle to advance development along the Silk Road Economic Belt and raise the level of economic cooperation between China and the Eurasian countries. China Exim Bank is a state-funded and state-owned policy bank with the status of an independent legal entity. It is directly under the leadership of the State Council and dedicated to supporting China’s foreign trade, investment and international economic cooperation. Established at the sixth BRICS Summit in Fortaleza (2014), the NDB aims to supplement the efforts of multilateral and regional financial institutions for global development. The summit’s final declaration stated that the NDB shall have an initial authorised capital of US$ 100 billion. The initial subscribed capital shall be US$ 50 billion, equally shared among founding members.


Xi Jinping’s financial gamble and success  179





Russia and China

RCIF is a private equity fund established jointly by the Russian Direct Investment Fund and the CIC in October 2011 to stimulate the bilateral investment and generate strong risk-adjusted return for investors, taking advantage of rapid development of economic cooperation, fast growing trade and the increasing purchasing power of the middle class in Russia and China. SRF, which became active in February 2015, is backed by the CIC (China’s sovereign wealth fund), the CDB, China Exim Bank and the State Administration of Foreign Exchange (SAFE). It is considered the largest source of funding for the BRI projects. SAFE functions as a bureau with vice-ministerial rank under the PBOC. It operated as an independent organisation until the 1998 government restructuring, when it was folded into the PBOC as part of a movement to strengthen the latter as a central bank. SAFE manages China’s gold reserves and foreign currency assets and also approves foreign exchange once a proposed overseas project is finalised.


Source: Data gathered from various sources:; institutions-and-mechanisms/ & websites of the individual institutions.

Silk Road Fund (SRF)

Russia-China Investment Bank (RCIF)



S.No. Name of the institution Headquarters

180  Priyanka Pandit

Xi Jinping’s financial gamble and success  181 bank acting as an alternative to the World Bank and an emerging parallel global financial institution, Xi has clearly emphasised the complementary nature of the bank, characterising it as an extension of the established Multilateral Development Banks (MDBs). Also, most of its practices are borrowed from the World Bank; and some of the former officials from the established MDBs are also part of the AIIB. Unlike the social sector focus of the MDBs, the AIIB is infrastructure centric. This defines the rationale behind its creation which is mostly to finance infrastructure projects along the BRI. Another area where China’s preponderant leadership remains intact is in the appointment of the AIIB president: Given China’s current voting power at over 25 per cent, its approval is a key factor in the appointment. The modalities of the AIIB have also been worked out within a sound legal framework. Although the mandate talks about rigorous standards in project approvals, questions related to environmental standards and financial viability of the projects still remain. The AIIB is currently addressing this by taking up joint projects with the World Bank where the latter’s technical experts are conducting reviews in borrower countries. Thus, AIIB’s scope and role fits well with Xi’s economic diplomacy initiatives. Despite its reform-centric mandate, the bank emulates the traditional MDBs in their functioning and approach. This, in fact, brings the efficiency of the bank under scanner. NDB The idea of the NDB is rooted in a similar rationale. But its creation is more of a multilateral initiative of the BRICS and cannot be ascribed to China in particular. Initiated at the Fourth BRICS Summit in 2012, the NDB came into existence as part of the 2013 Durban Summit Declaration. Its primary objective is to financially assist the developing countries in their infrastructure projects. The modalities of each loan differ based on borrower’s preferences. The key features of the new bank include equal voting rights of the five founding members, and the ability of the non-BRICS countries (emerging and developing as well as developed ones) to contribute capital, provided the BRICS countries always have a minimum of 55 per cent of the total capital share. These features imply an important shift in the international financial architecture, with the NDB as the new platform of BRICS to advance reforms that favour developing and emerging countries, in general. Although, China’s capital contribution remains the same as that of the other BRICS nations, China’s economic performance continues to surpass its BRICS counterparts regularly. Most succinctly, China’s GDP is over $ 1.5 trillion larger than the combined economic output of the other BRICS members. Given the power disparity, the non-China BRICS members, therefore, are unable to prevent the new financial institution from being a Chinese- dominated one. Beijing, on the other hand, has long-term plans vis-à-vis the new

182  Priyanka Pandit bank. Alongside the AIIB, the BRICS bank is also one of the financers of China’s Belt and Road programme that involves constructing a chain of infrastructure projects across the world. In this way, Xi’s government is able to secure contracts for Chinese companies in the NDB-funded projects.

Xi’s policy choices: an analysis A growing trend of changes and continuities can be discerned in the financial sector under Xi Jinping. Xi, being at the epicentre of power, has attempted to set a new precedence in his approach to reform. His policy pronouncements in 2012–2013 promised bold new round of reforms and placed ambitious goals for the next few decades.31 But the empirical evidence points to a complex picture. His commitment to reform is highly instrumental and reflects his conception of power and statecraft. Infact, it is different from the ‘reform’ pursued by Deng Xiaoping or Hu Jintao. It was then more of a process of strategic actions by state business interests, bureaucrats, party leaders and other state actors who are engaged in the process of managing and restructuring state commercial activities. Today, when Xi has become the president for life after carrying out a constitutional change and elevated himself to the stature of Mao, any reform process has become a top-down activity, with little or no efforts in securing consensus amongst the fellow party cadres. Thus, popular buzzwords like tuanjie (团 结), tuanjieduidi (团结对滴) and tuanjiexiezuo (团结协作), which stand for unity or consensus amongst fellow workers, unity to oppose the enemies and the process of reaching consensus, respectively, have gradually disappeared in Xi’s China.32 His anti-corruption campaign, which cracked down on a large number of party workers, has helped him to get rid of his rivals from the political landscape of China. Domestically, while Xi emphasised the growing role of the market in financial sector reforms, he noted that ‘the comprehensive deepening of reforms necessarily requires strengthening and improving party leadership’.33 He has invoked the hard line of Mao-era socialism as a guide to the economic reform and as means to ensure continuity with his set of beliefs and ideas. His emphasis on ‘stability’ in any reform process reflects his reluctance to give a free rein to the market principles especially after the lessons drawn from the 2008 global financial crisis. The Chinese economy has been facing a continuous slowdown and other problems of overproduction and less demand over the past few years. The prevailing ‘new normal’ conditions of the economy, under which Xi assumed leadership, have made him doubly cautious vis-à-vis the financial reform. He is therefore more interested in promoting the Chinese style of reform to the world, which means gradual opening of the financial institutions under tight supervision of the government. This further arises from his notions of statecraft. For him, legitimacy of his leadership lies in creating a ‘strong’ and ‘prosperous’ China. His ways and means of managing Chinese society resemble Mao’s political

Xi Jinping’s financial gamble and success  183 campaigns, which put ‘politics in command’ at the helm of all activities. He asserts party discipline amongst the party cadres and warns them of committing errors in the reform process. This is also evident in the way he carried out the change of personnel in the key financial institutions of China. In fact, the effects of his anti-corruption campaign have been strongly felt in China’s financial sector. Not only were the heads of the China Securities Regulatory Commission (CSRC), CBRC and CIRC removed but some key figures of China’s insurance and securities industries were also ousted.34 It is also clear from the functioning of the new financial institutions that they do not represent a ‘rebel mindset’, instead they emulate the extant MDBs while trying to pursue certain procedural or product reforms. Infact with regard to international or regional level policy choices, President Xi has been quite conscious of China’s image and global status. The activities of these new entities reveal that Xi has gone for a risk-averse approach vis-à-vis the creation of these institutions. The rationale is twofold: first, Xi is aware that China has gained immensely from its membership in these MDBs and Bretton Woods institutions. Also, Beijing’s status has evolved from being a borrower to a constructive partner of the international financial order.35 Second, his mega economic diplomacy initiatives like the Belt and Road projects have won him both support and criticism across the globe. To project these initiatives as ‘win-win outcomes’, he has resorted to many softpower strategies. One of them is the creation of new financial bodies whose objectives of reform in no way clash with the functioning of the MDBs or pose any direct threat to their existence. On the contrary, Xi argued that the ‘AIIB and existing multilateral development banks may complement each other for mutual strength’ and that ‘it [AIIB] should learn from the experience and best practices of existing multilateral development banks’.36 The new financial initiatives Xi took in the international sphere are quite bold compared to the domestic context. These initiatives have long-term foreign policy purposes and indicate effective instruments of political power.37 But they are not without challenges. One of the major setbacks facing China’s growth and exports is its trade war with the United States. The dispute began with Trump initiating a ‘Section 232 investigation’, for reasons of national security, on the import of steel and aluminium from China in late 2017.38 The tensions escalated after the Office of the US Trade Representative (USTR) conducted ‘Section 301 investigation’ on a list of Chinese items and found them engaging in forced technology transfer and unfair trade practices. It led to President Trump imposing tariffs on a host of Chinese imports along with placing sanctions against Chinese firms like ZTE and Huawei.39 In a retaliatory bid, the Chinese Government levied tariffs on US imports. Tit-for-tat moves continued, with the final instalment of tariffs taking effect in September 2019, affecting both American and Chinese businesses to a large extent.40 Rounds of high-level negotiations were held between the two countries which finally led to the signing of the ‘phase one agreement’ on January 15, 2020.41 As part of the negotiation, the

184  Priyanka Pandit Xi administration has agreed upon certain conditions. One of them is the Foreign Investment Law, introduced in 2019, which promises to ban forced technology transfers of the foreign firms operating in China, and to provide them with a fair business environment.42 This law was also passed to encourage foreign investors in China who had long been critical of Chinese laws and regulations. The other is vis-à-vis currency management– Beijing’s PBOC has assured competitive devaluation of renminbi and no direct intervention into its exchange rates.43 However, ambiguities abound in all these new steps towards financial reforms that Xi’s government has proposed. Firstly, challenges relating to the implementation of policies or laws remain a problem in China due to the asymmetry of information between the central and local governments. In most cases, the enforcement personnel in China remain free of the judicial accountability.44 Secondly, with regard to PBOC’s role in currency management, nothing new has been announced. It is the reiteration of the previous position in which markets decide renminbi rates and its upward or downward movement. Thirdly, the Trump administration has objected to the Special and Differential Treatment (S&D) provisions enjoyed by China under the ‘developing country status’ in the World Trade Organization (WTO).45 According to the US, given China’s economic metrics, it no longer qualifies for the concessionary privileges under the S&D mechanism. Also, Washington’s call for reform of the WTO is rooted in the tensions arising out of China’s economic policies, particularly the ones related to subsidies and competition rules.46 All these challenges have turned President Xi more cautious, as he tries to carve out a diplomatic identity for China. Although Beijing’s agenda behind the domestic financial reform and continuity remains the same, the reforms at the global and regional level proceed from an assumption of utility maximisation in the face of external constraints.

Conclusion An overall assessment of Xi’s reform initiatives in the financial sector, global or domestic, clearly reveals elements of change and continuity. The institutional and policy changes brought in by the Xi leadership in the domestic financial sector have been long overdue and require deeper reforms. However, given Xi’s approach, one is not sure whether he would at all push economics above politics in the years to come.47 His style of reform resembles Mao’s hard-line approach and lacks Deng Xiaoping’s flexibility. For Xi, any kind of reform, financial or economic, should ensure his political dominance and be in line with his ideological underpinnings. The changes he introduced in the Chinese financial sector served a dual purpose: They not only became a useful tool for Xi to get rid of any of his political rivals but also proved helpful in terms of securing support of the Chinese people. He has been shrewd in carrying out reshuffling or replacement of personnel

Xi Jinping’s financial gamble and success  185 in the key financial bodies under the pretext of inefficiency or corruption. This also resonated well with the public, who misunderstood his political agenda as economic success. Despite the claims made by Xi, his soft power rhetoric vis-à-vis the new financial bodies and the BRI has caused considerable unease amongst China’s neighbours as well as global powers. They are not convinced with the ‘headline opening’ of the financial sector and are unsure about the multitude of unwritten rules and regulations which would prevent foreign firms from entering or expanding their operations in China.48 Although the revisionist hypothesis does not hold true about the new financial institutions, their unbridled support for any kind of China’s state-sponsored activities undermine their reformist agenda, thereby turning them into the stooges of Chinese leadership. Doubts have also been cast about the viability of the BRI-linked investments, owing to the various kinds of challenges the projects face in the partner countries. Thus, Xi’s financial choices raise questions about their viability in the rapidly changing world. Although Xi has been trying to keep his domestic financial matters separate from his international financial overtures, most of the criticisms about his actions at the global/regional levels however trace their roots back to the domestic policies. Given his ambition to become the unquestionable leader in China, it remains to be seen how President Xi is able to deal with the contradictions of ‘global versus local’ and resist the changes pushed by the major powers.

Notes 1 David Dollar, ‘Reading the Tea Leaves of China’s 19th Party Congress’, Brookings, October 25, 2017, at 2017/10/25/reading-the-tea-leaves-of-chinas-19th-party-congress/ (accessed March 10, 2019). 2 ‘Road to the Chinese Dream? Xi Jinping’s Third Plenum Reform Plan’, Knowledge@Wharton, December 10, 2013, at article/road-chinese-dream-xi-jinpings-third-plenum-reform-plan/ (accessed March 7, 2014). 3 ‘Full text of Xi Jinping’s report at 19th CPC National Congress’, no. 1. 4 David Brulé and Alex Mintz, ‘Foreign Policy Decision Making: Evolution, Models, and Methods’, Oxford Research Encyclopaedia of International Studies, December 22, 2017, at acrefore/9780190846626.001.0001/acrefore-9780190846626-e-185?print=pdf (accessed November 12, 2019). 5 Kaare Strom, Minority Government and Majority Rule, Cambridge University Press, New York, 1990; Keith Krehbiel, Information and Legislative Organization, University of Michigan Press, Ann Arbor, 1991; Bruce Bueno de Mesquita, and David Lalman, War and Reason: Domestic and International Imperatives, Yale University Press, New Haven, CT, 1992; James D. Fearon, ‘Domestic Political Audiences and the Escalation of International Disputes’, American Political Science Review, 88 (3), 1994, pp. 577–592. 6 Miles Kahler,‘Rationality in International Relations’, International Organization, 52(4), 1998, pp. 919–941.

186  Priyanka Pandit 7 Margaret G. Hermannand and Joe D. Hagan, ‘International Decision Making: Leadership Matters’, Foreign Policy, 110, Special Edition: Frontiers of Knowledge, Spring 1998, pp. 124–137. 8 Aaron Rapport, ‘Cognitive Approaches to Foreign Policy Analysis’, Oxford Research Encyclopaedia of Politics, March 2017, at view/10.1093/acrefore/9780190228637.001.0001/acrefore-9780190228637-e-397? print (accessed April 7, 2018). 9 Raymond Dacey and Lisa J. Carlson, ‘Traditional Decision Analysis and the Poliheuristic Theory of Foreign Policy Decision Making’, TheJournal of Conflict Resolution, 48(1), 2004, pp. 38–55.

21 Yongding Yu, ‘Why China’s Capital-Account Liberalization Has Stalled’, Project Syndicate, October 31, 2017, at china-capital-account-liberalization-on-hold-by-yu-yongding-2017-10 (accessed March 16, 2020). 22 Charlotte Gao, ‘IMF Warns China of 3 Financial Stability Risks’, The Diplomat, December 8, 2017, at (accessed March 16, 2020). 23 Nee Yen Lee, ‘China’s Financial System Has Three Important “Tensions,” the IMF Says’, Yahoo Finance, December 7, 2017, at china-apos-financial-system-three-020712936.html (accessed March 16, 2020). 24 Damian Tobin and Ulrich Volz, ‘The Development of the Financial System in the People’s Republic of China’, ADB Working Paper Series, No 825, 2018, at (accessed March 16, 2020). 25 Angelito P. Bautista Jr, ‘China Merges Its Banking and Insurance Regulators’, The Asian Banker, April 25, 2018, at (accessed March 16, 2020).

Xi Jinping’s financial gamble and success  187

188  Priyanka Pandit


42 43 44 45

46 47


business/2019/sep/01/us-and-china-begin-imposing-new-tariffs-as-trade-warescalates (accessed March 16, 2020). ‘Remarks by President Trump at Signing of the U.S.-China Phase One Trade Agreement’, The White House, January 15, 2020, at briefings-statements/remarks-president-trump-signing-u-s-china-phase-onetrade-agreement-2/ (accessed February 16, 2020). Maurits Elen, ‘What’s Missing in China’s Foreign Investment Law?’ The Diplomat, January 22, 2020, at (accessed February 16, 2020). Shan Weijian, ‘A Delicate Truce in the U.S.-Chinese Trade War’, Foreign Affairs, January 13, 2020, at (accessed March 16, 2020). Omar Serrano, ‘China and India’s Insertion in the Intellectual Property Rights Regime: Sustaining or Disrupting the Rules?’ New Political Economy, 21 (4), 2016, pp. 343–364. Priyanka Pandit, ‘Losing the ‘Developing Country’ Status in the World Trade Organization: Responses from India and China’, ICWA Issue Brief, October 10, 2019, at lid=2594 (accessed November 17, 2019). Joshua P. Meltzer and Neena Shenai, ‘The US-China Economic Relationship’, Brookings Policy Brief, February 2019, at uploads/2019/02/us_china_economic_relationship.pdf (accessed March 16, 2019). Arthur R. Kroeber, ‘Xi Jinping’s Ambitious Agenda for Economic Reform in China’, Brookings, November 17, 2013, at xi-jinpings-ambitious-agenda-for-economic-reform-in-china/ (accessed January 17, 2017). Martin Chorzempa, ‘Did the US-China Phase One Deal Deliver a Win for US Financial Services?’ Peterson Institute for International Economics, January 27, 2020, at (accessed 16 February, 2020).

Part III

Xi Jinping and China’s security and foreign policy posturing


China’s foreign policy under Xi – reappraisal of China’s partnership diplomacy Meng-Chun Liu, Po-Kuan Wu and Chia-Hsuan Wu

Introduction A state’s strategic interactions with the other actors, either cooperative or conflictive, have been substantially studied in the field of international relations. The recent scholarly work has been focusing on strategic partnerships between countries,1 as the so-called ‘partnership’ is regarded as an important mechanism of cooperation in the polycentric world. Moreover, across the world, a government in the framing of its foreign policy may devise a number of ‘special relationships’ with other countries and even with multilateral organisations. Strategic partnerships have gradually covered the areas of foreign affairs, security issues and international challenges, such as climate change and global economic governance. In essence, the basic elements of strategic (comprehensive) partnerships between powers are governed by shared interests in global and regional issues as well as by common and diversified approaches.2 Therefore, a strategic partnership policy may reflect a broader shift in their diplomacy paradigms. In a similar vein, the notion of ‘partnership’ has become the critical element of Chinese diplomacy since the end of the Cold War. The Chinese first performed its ‘partnership’ diplomacy with its non-alliance principle. Then, China’s strategic partnerships gradually serve as a comprehensive diplomatic framework for governing a wide range of policy areas. Furthermore, a strategic partnership regime has been used to some extent to harmonise as well as regulate China’s relations with other international actors.3 In other words, China regards international society as an open process of complex and dynamic networks. It believes that rules, regimes and institutions may not only be set to govern or restrain the behaviour of individual actors in international society, but also to harmonise relations among these members. Therefore, China’s international partnerships not only reflect a set of its own norms and values but also reveal its changing roles in international society. Building strategic partnerships with other countries have been one of the notable dimensions of Chinese diplomacy. Yet, China’s diplomatic partnerships remain largely unexplored in academic literature and policy debates.

192  Meng-Chun Liu et al. This chapter, therefore, addresses the question of whether China’s rise on the global stage reflects a broader shift in its development path and diplomacy paradigm, namely its diplomatic partnerships. For that, we compile a dataset and examine the empirical data to elucidate China’s partnership diplomacy efforts. This chapter also aims to explore the critical factors in the formation of China’s strategic partnership. First, the distinctive characteristics of China’s strategic partnerships are illustrated. Then, we use the dataset pertaining to China’s partnerships during two time periods, namely 2005–2012 and 2012–2019, in order to further adopt a multivariate regression based on survival analysis for the comparative analysis. The empirical evidence from the comparative study points out significant structural shifts in China’s partnership diplomacy in these two periods, i.e. before and under Xi Jinping’s presidency. (Xi became the general secretary of the Communist Party of China [CPC] Central Committee, and the fifth-generation supreme leader, at the First Plenary Session of the 18th CPC Central Committee in November 2012.) It is worth noting that China’s partnership portfolio shows a substantial increase under Xi’s regime: strategic partnerships increased from 65 in 2013 to 103 in 2019. Moreover, almost all strategic partnerships have been established or upgraded during the state visits of Xi and China’s other top leaders. The proliferation of China’s partnerships under Xi’s leadership has shown a new pattern of diplomacy, which was highlighted in his address to the CPC’s Central Conference on Work Relating to Foreign Affairs in November 2014: ‘China will develop a distinctive diplomatic approach befitting its role of a major power.’

Characteristics of China’s partnership diplomacy In China’s diplomatic terms, ‘strategic’ cooperation refers to long-term and stable relations, with an eye to the larger visions of China and its partner country. The cooperation may transcend the differences in ideology and social system. The aim of the partnership is to share an equal and mutually beneficial relationship, a win–win scenario for all parties concerned. In other words, the partner countries must build on the foundation of mutual respect and trust, and further expand the ties by exploring common grounds on major issues while bypassing the differences on minor ones. While the grouping of China’s partnerships remains tentative in literature, our categories follow the same rationale as some of the earlier scholarly work. For instance, Strüver classified China’s partnerships into three types, namely (1) comprehensive strategic partnership, (2) strategic partnership and (3) other partnerships.4 Similarly, we group China’s partnerships into three categories based on the titles of its partnership statements, regardless of the context of the agreement per se. The first category is ‘comprehensive strategic partnership of cooperation’. The second category is ‘strategic

China’s partnership diplomacy reappraisal  193 partnership’, ‘strategic cooperation partnership’ and ‘strategic collaboration partnership’, which includes the term ‘strategic partnership’ in the title of formal documents. The third category is other partnerships, i.e. ‘cooperative partnership’, ‘comprehensive partnerships’ and the like. China has maintained its partnership diplomacy since it established the first strategic partnership with Brazil in November 1993 as the bilateral ‘long-term and stable strategic partnership based on mutual benefit’. Figure 9.1 presents a breakdown of China’s partner countries in the three aforementioned partnership categories over the period from 1993 to 2019. As shown in Figure 9.1, the number of China’s partner countries has steadily increased since its first partnership with Brazil in 1993. Its partnership portfolio has grown particularly rapidly since 2013, under Xi’s regime. In 2012, the number of China’s partner countries was 52. Under Xi’s leadership, the number shows a drastic increase from 65 in 2013 to 103 in 2019. In fact, China has not only expanded its diplomatic partnerships in quantity, but also enhanced the quality of its partnerships. First of all, the comprehensive strategic partnership of cooperation is regarded as the highest level of diplomatic closeness among all types of China’s partnerships. China started pursuing this type of cooperation with some allies since 2008. The nature of this diplomatic category was illustrated when Wen Jiabao (溫家寶), during China’s partnership diplomacy with Russia in 2010, highlighted the term ‘comprehensive’ to include all-dimensional, wide-ranging and multi-layered cooperation. To date, China has established 110

103 102

Comprehensive strategic partnership of cooperation Strategic cooperation partnership Other partnership




83 74 65



41 41 43

49 46 47


36 26



1 2 2



13 13

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019


19 16 17 17

Figure 9.1 China’s strategic partners (number, by year). Sources: Authors’ calculations based on data from the website of the Ministry of Foreign Affairs, PRC ( and various sources of news.

194  Meng-Chun Liu et al. this type of partnership based on good-neighbourliness and mutual trust with eight other countries, including Belarus (2016), Thailand (2012), Myanmar (2011) and Vietnam (2008). Second, in terms of China’s ‘diplomacy closeness’, a strategic partnership of cooperation/collaboration is regarded as less than a comprehensive strategic partnership of cooperation. In recent years, China has established a few strategic cooperation/collaboration partnerships as follows: In 2018, the ‘Sino-Austria friendly strategic partnership’ and the ‘Sino-the Republic of Bulgaria strategic partnership’ were announced. China also built a ‘collaborative partnership for the 21st century’ with South Korea in 1998 and a ‘strategic and cooperative partnership for peace and prosperity’ with India in 2005. As mentioned earlier, the number of China’s partnerships has increased significantly since Xi took office in 2013 was 16. In contrast, the number of strategic partnerships of cooperation/collaboration increased to 42 in 2019. Finally, a cooperative partnership is deemed less significant than a cooperation/collaboration strategic partnership. Both the ‘Sino-Finland new-type cooperative partnership’ and the ‘Sino-Israel innovative comprehensive partnership’ in 2007 are regarded as typical cases of China’s cooperative partnerships. Unlike other more advanced partnerships, this kind of cooperative partnership may look more diverse by name, but mainly focuses on economic cooperation. China’s strategic partnerships in Asia and ASEAN It is particularly worth noting that in the official documents delineating China’s strategic partnership with Asian states, it is often stated that neither side will join any military or political alliance against each other, nor allow a third party to use its territory against the other.5 China has entered into such partnerships with its neighbour countries, such as Mongolia (2011), Uzbekistan (2012), Tajikistan (2013) and Kyrgyzstan (2013). China’s partnership with its neighbour countries may have the geopolitical implications that the peace and security at the border is China’s top priority with the strategic partners. Figures 9.2 and 9.3 demonstrate the number and type of China’s partnerships in Asia and with the countries of the Association of Southeast Asian Nations (ASEAN). China had its first strategic partners in Asia, including Indonesia and Kazakhstan were signed in 2005. Again, China’s partnership portfolio shows a significant increase under Xi’s leadership. In 2013, the partnerships numbered 24; and in 2019, China had 37 partnerships. In respect to ASEAN states, in particular, eight out of the ten nations were China’s partners in 2013, excluding Singapore and Brunei. More importantly and so far, four of the nine partner countries (Thailand, Vietnam, Laos, and Myanmar) have already established comprehensive strategic partnerships of cooperation with China, indicating that China’s strategic partnerships in the ASEAN region are of geopolitical significance.

China’s partnership diplomacy reappraisal  195 40

36 37

Comprehensive strategic partnership of cooperation Strategic cooperation partnership Other partnership


33 34 30


27 24

25 20 17 17 18 15 15 16

20 13

















10 3




















Figure 9.2 Number of China’s partner countries in Asia (1996–2019). Sources: Authors’ calculations based on data from the website of the Ministry of Foreign Affairs, PRC ( and various sources of news. 10 9 8

Comprehensive strategic partnership of cooperation Strategic cooperation partnership 8 Other partnership 7















3 2



2 1

1 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Figure 9.3 Number of China’s partner countries in ASEAN (2004–2019). Sources: Authors’ calculations based on data from the website of the Ministry of Foreign Affairs, PRC ( and various sources of news.

From China’s perspective, ASEAN plays a pivotal role in the regional multipolar power configuration, as it enjoys the tacit support of the major powers in the region as a balancer. The Chinese leaders believe that there are no fundamental conflicts of strategic interest between China and ASEAN, even though China has territorial disputes with some ASEAN countries.6

196  Meng-Chun Liu et al. Geopolitically, China’s partnership building in the ASEAN region aims to relieve bilateral tensions and to improve its regional security via peacebuilding efforts. For example, the China-Vietnam joint statement declaring the comprehensive strategic partnership in 2008 particularly posited on the need to seek solutions to the South China Sea dispute via peaceful negotiations.7 Moreover, the ‘China-Cambodia strategic partnership’ outlined China’s interest in this region. Since China lacks an external marine hub for global military deployment, China has shifted its strategic attention to Cambodia’s coastal line. The China-Cambodia partnership has primarily built on China’s improved military capacity in Cambodia’s coastal stretch of the Gulf of Thailand. Therefore, China’s interest in Cambodia can be easily linked to its security and oversight issues in the South China Sea.8 China’s strategic partnerships in Latin America Figure 9.4 shows the number of China’s partnerships in Latin America for 1993–2019. While Latin America is remote from a geographic perspective, Brazil became China’s first strategic partner worldwide in 1993. Since 2013, China has endeavoured to intensify its political relations and strategic cooperation with both Latin American and Caribbean states. China initiated the creation of a ‘China–Latin America community of common destiny’ with an aim towards ‘common development, shared prosperity and collective security’, by intensifying economic integration and mutual trust. Later, Beijing proposed to establish a China-Community of Latin American and 25 Comprehensive strategic partnership of cooperation Strategic cooperation partnership 20

20 20

Other partnership 17 14



10 5 5

6 6 6

18 18


10 10 10 10 10 10 10


4 4 4 1 1 1 1 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019


Figure 9.4 Number of China’s partner countries in Latin America (1993–2019). Sources: Authors’ calculations based on data from the website of the Ministry of Foreign Affairs, PRC ( and various sources of news.

China’s partnership diplomacy reappraisal  197 Caribbean States (CELAC) Forum and a regular China-CELAC summit meeting as the institutional underpinnings of a comprehensive strategic partnership.9 In short, China’s diplomatic strategy with the Latin American and the Caribbean countries has focused mainly on economic and commercial dimensions, in order to avoid treading on the toes of the United States by accessing the US’ ‘backyard’.10 China’s strategic partnerships in Africa China has formal ties with the African countries in the United Nations (UN) and other multilateral organisations, and has been steadily building its strategic partnerships there. One of the major goals is to limit Taiwan’s diplomatic space in the continent. The Forum on China–Africa Cooperation (FOCAC) in October 2000 provided the institutional configuration of the strategic partnership in economic and political affairs.11 However, some tensions exist between the African states and China, particularly in the fields of trade and investment, since local manufacturers and businessmen are unable to compete due to the flood of cheap Chinese imports at home.12 China is also eager for a greater partnership with Africa, in order to take advantage of its geopolitical benefits, from market access and expansion of alternative sources of energy to the enhancement of strategic space against the US’ increasing engagement. Figure 9.5 shows China’s partnership diplomacy in Africa during 2000–2019. In Africa’s case, too, since Xi became president, the number of China’s partners in Africa has increased rapidly, from 7 in 2013 to 20 in 2019. The Africa–China strategic partnership provides legitimacy to the ruling political elites in Africa. It is in their interest to embrace the alternative 22 20 18 16 14 12 10 8 6 4 2 0

19 19

Comprehensive strategic partnership of cooperation Strategic cooperation partnership Other partnership


16 13 9

7 1













Figure 9.5 Number of China’s partner countries in Africa (2000–2019). Sources: Authors’ calculations based on data from the website of the Ministry of Foreign Affairs, PRC ( and various sources of news.

198  Meng-Chun Liu et al. development paradigm proposed by China – the so-called ‘China development model’. The features of the development paradigm include noninterference in state sovereignty, freedom from Western hegemony and absence of any conditions in giving aid.13 Likwise, the partnership is beneficial for China, too, as ultimately, the country will be able to leverage its position and further improve its bargaining power in international institutions.14 China–Egypt partnership China’s strategic partnership with Egypt is based on economic and geopolitical rationales. China promoted its diplomatic relations with Egypt to the level of ‘strategic partnership’ in 1999, and furthered the bilateral relations to ‘comprehensive strategic partnership’ in December 2014. Economically, given its strategic location, Egypt has provided Beijing with the gateway to not only the natural resources in Africa, but also a potentially huge market. Chinese investments in Egypt, particularly in infrastructure, could provide a springboard for exports of goods to Europe. Indeed, Egypt was one of the first to collaborate with China on the Belt and the Road Initiative (BRI) projects. Geopolitically, China views the deeper strategic ties with Egypt as part of its global agenda to expand its political influence and commercial connections. A deeper Sino-Egyptian strategic partnership may signify the decline of the US’ influence in Egypt, and perhaps in the entire North African region.15 In fact, Egyptian President Mohammed Morsi chose Beijing for his first official trip outside the Middle East and Africa in August 2012, signalling his strategic intention to reduce Cairo’s reliance on Washington. The same intent was reiterated during the first state visit of Egyptian President Abdel Fattah el-Sisi to China in December 2014, when a joint declaration promoting the two countries’ relations to the level of ‘comprehensive strategic partnership’ was signed. China’s partnerships in Europe As shown in Figure 9.6, the number of China’s partner countries in Europe increased significantly after 2005; during the period under Xi’s leadership, the number increased from 20 in 2013 to 27 in 2019. Since 1996, China’s partner countries in Europe have been exceeded by its counterparts in Asia in number. China and Russia achieved a strategic partnership in 1996, further establishing their comprehensive strategic partnership of cooperation in 2010. In 2001, China and the European Union (EU) first established a full strategic partnership. Both sides decided to develop an ever closer consultation and fruitful cooperation in political, economic, trade, scientific, cultural and educational fields. Then, in 2003, China established a comprehensive strategic partnership with the EU, consolidating the bilateral

China’s partnership diplomacy reappraisal  199 30

Comprehensive strategic partnership of cooperation Strategic cooperation partnership




27 27

23 23

Other partnership 20

20 16 16 15

13 13




11 10

8 4

5 1 1 1

4 4 4 4 4


1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019


Figure 9.6 Number of China’s partner countries in Europe (1994–2019). Sources: Authors’ calculations based on data from the website of the Ministry of Foreign Affairs, PRC ( and various sources of news.

relations. It is in 2013 that China and the EU established the ‘EU-China 2020 Strategic Agenda for Cooperation’, which covered the areas of peace and security, prosperity, sustainable development and people-to-people exchanges. Under the umbrella of the strategic partnership, over 70 bilateral consultations and dialogue mechanisms have been established, covering a broad policy area in politics, trade, technology, energy, environment and so forth. In the early twenty-first century, the considerations underpinning China’s strategic partnerships reflected the changing requirements of sustaining its economic development and its evolving role in the world. Thus, China welcomed the European capital and technology, as well as the European role in a multipolar world.16 At the global level, China and the EU share the similar strategic agenda, particularly in areas such as security and defence, fight against terrorism, illegal migration, transnational crime, nuclear nonproliferation, global and regional security, cyber security, weapons of mass destruction, energy security, global financial sector and market regulation, climate change as well as urban development, aid and development and sustainable development.17 However, the EU and China remain divided over political values and geopolitical interests, in particular, their conceptions of world order: China and the EU have their own visions of the world order and own priorities in the development and international affairs. The main strategic and security interests of the EU and China do not overlap; and in some cases, today, their preferences and priorities are increasingly divergent.18 Moreover, concerns

200  Meng-Chun Liu et al. over economic security are growing in the EU, and the fundamental differences in ideologies and cultural backgrounds still exist. Consequently, cooperation between China and the EU has become more challenging. In other words, building a sustainable strategic partnership in the future will not be easy.19 China–Russia partnership Russia and China formally signed the ‘China-Russia Treaty of GoodNeighbourliness and Friendly Cooperation’ in 2001. According to this treaty, neither China nor Russia would resort to the use of force, or use nuclear weapons against each other. At the same time, the two countries pledged to upgrade their relationship, and cooperate in broad policy areas such as trade, economics and energy. Energy cooperation, in particular, has played a significant role in their bilateral relations. Since 2001, energy cooperation, mainly in crude oil and natural gas, between the two has increased significantly, expanding the trade in energy from resources to energy-related investments, equity ownerships, infrastructure development and technology exchanges. In 2014, the two countries signed a major gas deal worth US$ 400 billion for a period of 30 years, making Russia China’s leading natural gas provider. Consequently, in December 2015, Russia became China’s largest crude oil supplier, overtaking Saudi Arabia.20 The energy deals between China and Russia take a central place in their strategic interaction and have also constituted a significant base for realistic cooperation, overlooking disagreements and policy divergence. Furthermore, the energy deals symbolise their diplomatic relationship – an alliance that is based on geopolitical and economic considerations. They reveal a new stage in the China-Russia coordinated diplomacy in the face of major global challenges. They also demonstrate the two states’ willingness to achieve mutual strategic support by leveraging their spatial proximity and resource-market compatibility. To some extent, it can be understood that under economic sanctions from the US and the EU, Russia would be more likely to seek closer security cooperation with China, in the form of entente or ultimately alliance. As Williams argued, the primary driver of Russian security cooperation with China is not a Western threat, but rather a mutual vision of multipolarity that would remain, regardless of Western restraint or rapprochement.21 Further, as China has expanded its influence in Central Asia and Eastern Europe under the BRI umbrella, it has also faced geopolitical disputes; some scholars regard the China-Russia strategic partnership as a solution to these disputes, too.22 On June 6, 2019, China upgraded its partnership with Russia to the ‘comprehensive strategic partnership of coordination for a new era’ category. The strategic agreement was heralded as a milestone for both countries to strengthen closer ties implicitly against the US dominance on the global stage.23

China’s partnership diplomacy reappraisal  201

China’s motivations for strategic partnership building China’s partnership building is multifarious, including economic, scientific, technological, political and cultural fields, and also contains both bilateral and multilateral dimensions.24 This section examines the rationale behind China’s strategic partnership building based on economic motivations, diplomacy manoeuvres and the need to upgrade its manufacturing sector. Economic motivations China’s relations with its partner countries are economically strong and highly institutionalised at the highest levels of governments on both sides. On the economic front, there has been a convergence of interests between the traditional partners and the emerging economies. For China, its selected partners act as the gateway to a specific region, as the cooperation between China and Ethiopia exemplifies its economic engagement across the region.25 For instance, Kazakhstan, the only Central Asian state that established an ‘all-round strategic partnership’ with China, is not only an invaluable supplier of energy and key mineral resources to China, but now also a vital transit corridor linking China to Europe. In addition, Kazakhstan’s active participation in the Shanghai Cooperation Organisation (SCO) as an interregional organisation allows China to claim a greater Eurasian identity, too, which is regarded as a way of promoting geopolitical expansionism alongside economic globalisation.26 In a similar vein, Switzerland also acts as a gateway for China to access the European market. Despite not having an EU membership, Switzerland has nevertheless maintained a healthy and promising relationship with China. Both countries have projected their priorities in the strategic partnership through various institutions, and focused their cooperation in areas such as trade, economy and innovation. On the one hand, China has earned recognition from a major Western economy, namely Switzerland, and fresh impetus to drive the industrial upgrade. On the other hand, Switzerland has been able to maintain its status as a financial centre for China in the European continent.27 Diplomatic manoeuvres Partnership diplomacy is regarded as the commitment to ‘muting disagreements about domestic politics in the interest of working together on matters of shared concern in international diplomacy’. The interests and topics at stake cover various areas. Generally, partnership frameworks comprise ‘cooperation between and among states around, primarily, non‐military elements, such as fostering people-to-people contacts, business cooperation, economic, cultural and scientific cooperation and/or health and welfare cooperation and could, though not necessarily, include security

202  Meng-Chun Liu et al. cooperation’. Therefore, a strategic partnership is seen as a ‘goal‐driven’, rather than a ‘threat-driven’, alignment; in other words, a partnership can be seen as a manifestation of the participating actors’ willingness to commonly pursue joint interests and mutual goals while leaving aside more conflictive issues.28 In short, China has established various types of partnerships with other international actors. From a geopolitical perspective, China seeks to secure a peaceful, stable international environment in favour of its national interests. It also aims to promote global multipolarisation to further upgrade its status as an important stakeholder in the multipolar system. Need to upgrade the manufacturing capacity With its low labour, land and raw material costs, China has turned itself into the world’s factory. However, China’s industrialisation remains labourintensive and low-tech, with a relatively lower profit margin. Since 2000, China has endeavoured to achieve industrial and technological upgrading, in particular, in the global manufacturing chain, with an aim to develop ‘the strategy of manufacturing power’. In order to improve its industrial structure and upgrade industrial technologies, China launched its master plan, the ‘Made-in-China 2025’ (MIC 2025) initiative, in May 2015. The purpose of the MIC 2025 is to cultivate China’s new industrial competitiveness by not only upgrading the traditional industries but also pursuing technology-based industries. MIC 2025 is regarded as an important industrial strategy to transform China from a manufacturing powerhouse into a manufacturing giant by 2025. Proposed by the State Council of China, the Chinese Government showed its intention to expand its role in the economy to support strategic industrial sectors under an umbrella of comprehensive support measures. In accordance with this master plan, China expects to achieve industrialisation by 2020, and further surpass the most advanced industrial economies, such as Germany and Japan, by 2025. It is worth noting that the key to the industrial upgrade is the development of cutting-edge industrial technologies through international technology cooperation. Though a latecomer, the Chinese Government has nonetheless played a crucial role in innovation and technological development by investing heavily in it. China has leveraged the gigantic scale of its domestic market as a bargaining chip for international technology transfers from multinational corporations. Furthermore, China has aggressively backed its domestic firms (i.e. the national champions), and supported them in their overseas ventures involving cutting-edge technology and brand hunting. Likewise, China has taken a few steps to promote international technology cooperation, too. Through science and technology cooperation with industrial states, China’s industrial capacities will be gradually enhanced and achieve its industrial goals.

China’s partnership diplomacy reappraisal  203

A multivariate analysis of China’s partnership diplomacy Survival analysis is the analysis of time-to-event data, which describes the length of time from a time origin to an endpoint of interest. As the survival analysis is used to analyse the length of time until the occurrence of an event, for this study, the event time is defined as the length of time until China establishes a partnership with a specific partner country during the observation period. The time origin in this study is specified such that all observed China’s partner countries are chosen on the same observed years, 2005 and 2012. The length of time from the time origin to the endpoint in this study may be regarded as the extent to which China prioritises to approach the countries as its partners. Thus, survival analysis is used to quantitatively explore a partner country’s features that have a higher priority in terms of partnership building with China. The event time is restricted to be positive and has a skewed distribution. The ‘hazard’ function, S(t), used for regression in survival analysis, can lend more insight into the partnership-building mechanism than the ordinary linear regression, where t refers to year t. We assume the time-toevent follows a specific distribution, where h(t) = λ and S(t) = exp(−λt). In this study, the hazard function of survival analysis is referred to as the possible function of China’s success to achieve a partnership with its specific partner country. Given that China’s diplomatic partner follows the same survival function (no covariates or other individual differences), we can estimate S(t). This study estimates the survival distribution by making parametric assumptions. In doing so, two popular types of parametric functions, exponential and Cox proportional hazards model, are chosen in order to make sure that the empirical outcomes are of high robustness. By using survival analysis, this study aims to explore which countries are more likely to upgrade their diplomatic relations to a strategic partnership with China. In the model-setting for the periods 2005–2012 and 2012–2019, some determinant factors are summarised in Table 9.1. The variable AGE refers to the duration of China’s established diplomatic relations with its partner country in 2005 and 2012. The longer China’s diplomatic relations with a specific country, the more stable the relations. We presume that the longer a state has diplomatic ties with China, the more likely China will prioritise building a partnership with it. The variable LGDP refers to its diplomatic partner’s economic scale in terms of the latter’s Gross Domestic Product (GDP) for 2005 and 2012. We presume the larger the partner’s economic scale, in terms of the GDP, the more likely the bilateral diplomatic relations will escalate to a partnership. The variable NET denotes the number of international forums, organisations, conferences both China and its partner country have participated in. Based on the nature of such international venues, we further divide into two groups – one relates to international security and political cooperation, and the other one relates to economic cooperation. This study looks at 17

204  Meng-Chun Liu et al. Table 9.1 Determinant and expected outcomes Variable


The duration (in years) of China’s established diplomatic relations with its partner country LGDP * The partner country’s economic scale in terms of GDP in 2005 and 2012, taken in natural logarithm NET The number of international forums/ organisations/conferences both China and its partner country have participated in NETNE The number of international forums/ organisations/conferences dealing with security/political cooperation both China and its partner country have participated in NETEO The number of international forums/ organisations/conferences dealing with economic cooperation both China and its partner country have participated in PATENT The number of patents in force owned by China’s partners Number of Observation AGE



Mean (STD)

Mean (STD)

Expected outcome

22.18 (18.39)

25.86 + (20.15)

22.83 (2.00)

23.27 + (2.07)

1.12 (1.54)

1.09 + (1.23)

1.01 (1.30)

0.96 + (1.11)

1.05 (1.36)

1.04 + (1.12)

1,932 (8,186) 179

2,800 (12,395) 162


Source: Authors.

such international forums: Group of 20 (G20), BRICS (Brazil, Russia, India, China and South Africa), Asia-Pacific Economic Cooperation (APEC), ASEAN plus Three (APT), East Asia Summit (EAS), ASEAN Regional Forum (ARF), Asia Cooperation Dialogue (ACD), Lancang-Mekong Cooperation (LMC), Greater Mekong Sub-region Economic Cooperation Program (GMS), China-Arab States Cooperation Forum (CASCF), Forum on China-Africa Cooperation (FOCAC), SCO, Cooperation between China and Central and Eastern European Countries (CEEC), Forum for East Asia and Latin America Cooperation (FEALAC), China-Japan-South Korea (CJK) Trilateral Summit, South Centre, and Central Asia Regional Economic Cooperation (CAREC). Most of the above-mentioned international forums were established before 2005, apart from CJK (2008), BRICS (2009/9), CEEC (2012/4) and LMC (2016). However, some international cooperation organisations with specific technical or professional functions, such as Bank for International Settlements (BIS), International Committee of the Red Cross (ICRC) and

China’s partnership diplomacy reappraisal  205 International Criminal Police Organisation (Interpol), are purposely excluded from this study for statistical analysis. The variables NETNE and NETEO refer to the number of international forums, organisations, conferences dealing with ‘political and security cooperation’ and ‘economic cooperation’ both China and its partner country have participated in. In this chapter, we assume the partner countries of these organisations participating in the same international venues with China may share more common ideologies and interests, and have a closer relationship with China. We presume the coefficients of NET, NETNE and NETEO to be positive and statistically significant. The variable PATENT refers to the number of patents in force owned by China’s partner countries in 2005 and 2012. More recently, since its technological take-off, China has performed outstandingly in terms of the knowledge outputs as well. For instance, China moved into the second position as a source of international patent applications filed via the World Intellectual Property Organization (WIPO) in 2017. Nonetheless, China continues to seek advanced industrial technologies from partner countries for upgrading its manufacturing capacity. This study mainly draws on various data sources, including the website of China’s Ministry of Foreign Affairs, the World Development Indicators of World Bank and the patent statistics of WIPO to examine the determinants of China’s strategic partnership. In addition, the study employs the use of STATA, a statistical analysis software. Empirical findings and discussion The study discussed here looks at two time periods: 2005–2012 refers to the pre-Xi regime period and 2012–2019 is the period under Xi’s leadership. Tables 9.2 and 9.3 present the empirical evidence related to the determinants of China’s partnership building during 2005–2012 and 2012–2019, respectively. As a robustness test, models (1)–(6) and models (7)–(12) in the two tables further present the empirical outcomes of the exponential parametric functions and the Cox proportional hazards model, correspondingly. The findings and discussion are summarised as follows: The coefficients of the variable AGE are positive, with statistical significance at 1 per cent in Tables 9.2 and 9.3. The countries with a longer diplomatic history with China have a higher priority in terms of partnership building. The diplomatic trust can thus be a foundation of China’s partnership building. To some extent, the diplomatic relations between China and its allies might strengthen mutual trust on both sides and hence enhance the diplomatic partnership. Further, as shown in Tables 9.2 and 9.3, the coefficients of the variable NET are positive, with statistical significance at 1 per cent in models (1) and (7). The empirical evidence suggests that the countries interacting more with

206  Meng-Chun Liu et al. Table 9.2 Survival analysis (2005–2012) An exponential parametric function








0.039** (2.11) 0.142 (0.92) 0.260** (2.50)

0.038** (1.99) 0.168 (1.07)

0.039** (2.06) 0.150 (0.96)

0.044*** (2.80)

0.044** (2.47)

0.045** (2.48)


0.271* (1.74)

PATENT*10– 4 _cons N Chi-squared Log lik.

−9.272*** (−2.79) 168 21.884 −60.502

−9.807*** (−2.91) 168 15.936 −61.443

0.290** (2.25)

0.322*** (2.59)

−9.462*** (−2.82) 168 19.696 −60.815

−6.172*** (−9.21) 179 18.047 −62.052

0.324** (2.51) 0.014 (0.06) −6.171*** (−9.13) 179 19.634 −62.050

0.294* (1.73) 0.003 (0.01) −6.110*** (−8.97) 179 14.859 −62.952

A Cox proportional hazards model








0.040** (2.31) 0.141 (0.99) 0.261** (2.53)

0.039** (2.24) 0.168 (1.17)

0.040** (2.28) 0.149 (1.04)

0.045*** (2.76)

0.045*** (2.65)

0.045*** (2.69)


0.271** (1.99)

PATENT*10– 4 N Chi-squared Log lik.

168 19.968 −77.218

168 15.149 −78.158

0.291** (2.34)

0.325** (2.56)

168 18.149 −77.527

179 16.606 −78.755

0.327** (2.50) 0.015 (0.06) 179 18.066 −78.753

0.293** (1.98) 0.005 (0.02) 179 14.545 −79.666

t statistics in parentheses; * p < 0.10, ** p < 0.05, *** p < 0.01. Source: Authors.

China in the form of the participation in international organisations, conferences and forums are prioritised in China’s partnership diplomacy. Some scholars, too, have argued that in China’s diplomacy system for partnership, foreign countries are evaluated according to their degree of ‘closeness’ to China in the hierarchical international structure.29 That is, China’s partnership diplomacy would gradually help build an international social network with its self-centre.

China’s partnership diplomacy reappraisal  207 Table 9.3 Survival analysis (2012–2019) An exponential parametric function








0.018*** (2.64) 0.155* (1.80) 0.311*** (4.66)

0.017** (2.52) 0.173** (2.02)

0.017** (2.54) 0.165* (1.92)

0.022*** (3.31)

0.018*** (2.65)

0.018*** (2.59)


0.324*** (4.09)

PATENT*10– 4 _cons N Chi-squared Log lik.

−7.257*** (−3.64) 150 53.477 −151.217

−7.629*** (−3.81) 150 43.712 −151.826

0.330*** (3.75)

0.430*** (4.73)

−7.466*** (−3.74) 150 40.373 −152.030

−3.927*** (−14.14) 162 41.427 −159.068

0.473*** (5.86) 0.175*** (3.34) −3.914*** (−14.35) 162 61.061 −156.722

0.444*** (5.50) 0.170*** (3.12) −3.837*** (−14.67) 162 57.471 −157.654

A Cox proportional hazards model








0.018** (2.28) 0.132* (1.69) 0.282*** (3.14)

0.017** (2.18) 0.148* (1.92)

0.017** (2.19) 0.140* (1.81)

0.021*** (3.03)

0.017** (2.38)

0.017** (2.40)


0.290*** (2.84)

PATENT*10– 4 N Chi-squared Log lik.

150 28.455 −284.188

150 27.316 −284.758

0.296*** (2.77)

0.383*** (3.66)

150 27.028 −284.902

162 26.473 −291.008

0.426*** (4.16) 0.151** (2.19) 162 s30.112 −289.189

0.397*** (3.87) 0.145** (2.11) 162 28.535 −289.977

t statistics in parentheses; * p < 0.10, ** p < 0.05, *** p < 0.01 Source: Authors.

The coefficients of the variable NETNE are positive and achieve statistical significance in models (2), (6), (8) and (12). The coefficients of the variable NETEO are positive and also of statistical significance in models (4) and (10). This study suggests that ‘international political/security cooperation’ is the main driving force for China to promote its diplomatic partnerships. More interestingly, without taking the economic scale of China’s partner countries into account, our study also confirms ‘international economic

208  Meng-Chun Liu et al. cooperation’ as the main factor accounting for China’s partnership building. Also, the empirical evidence is consistent with Strüver’s argument that China seeks closer ties in particular with some countries in order to facilitate (future) collaboration in specific areas, wherein the governments of these countries share China’s views on the basic norms and visions of the global order.30 The coefficients of the variable LGDP are positive in both Tables 9.2 and 9.3, but only have statistical significance of 1 per cent in Table 9.3. This empirical finding may be in line with Strüver, who states that China seeks to formulate a partnership with the countries of significant economic and strategic power in their region and/or beyond.31 Moreover, in Xi’s regime, the partner countries with large markets and economic resources are China’s main target for its partnership building. The benefits of having powerful partners stem from the weight that these partners can contribute to China’s bargaining power in international negotiations, which is conducive to China’s international status aspirations. Furthermore, China has targeted at potential partners who can provide gateways to other actors in a region, in view of the diplomatic and economic interests. That is, Xi’s regime tends to leverage countries with abundant economic sources to realise its global strategies more aggressively. The coefficients of the variable PATENT are positive, with statistical significance at 1 per cent in Table 9.3, but statistical insignificance in Table 9.2. As shown in the empirical evidence for the period 2012–2019, some countries with more patents in force seem to have a higher priority in terms of becoming China’s strategic partners. In contrast, as highlighted in the empirical evidence for 2005–2012, the countries with advanced technology had a lower priority in setting up a partnership with China. This implies that one country’s attributes, such as the technology endowments, are more closely associated with China’s partnership building in the recent decade. After the global financial crisis of 2008, China has shifted its international partnership building in pursuit of an international science and technology (S&T) cooperation network for global technology sourcing. To some extent, China may aim to accelerate the realisation of the MIC 2025 initiative by choosing these countries with S&T advantage for its partnership building. Besides, the study suggests that China’s partnership diplomacy has significantly shifted during Xi’s regime. In contrast to the earlier studies which suggest that China’s geographical focus has broadened, especially towards the developing world,32 our study posits that China’s diplomacy has shifted from the geographical focus on the developing world towards advanced countries with abundant economic and S&T resources. In general, China’s diplomatic deployment, particularly in terms of partnership building, can be regarded as interest-driven. Its diplomatic partnerships are not only made to serve the aggregation of capabilities around traditional security concerns and military threats but also in the aggregation of economic and S&T capabilities.

China’s partnership diplomacy reappraisal  209 That is, for Xi’s regime, partnership building can be regarded as a ‘diplomatic instrument’ to hedge against other international actors.

Conclusion In the past two decades, China has rapidly expanded and upgraded its partnership networks in the world. As an emerging power, does China’s partnership diplomacy reflect a set of strategic transformation, especially during Xi’s regime? Although China’s partnership diplomacy emphasises on the nonalliance principle, its partnerships still adhere to a goal-driven rationale of alignment.33 In this connection, it can be understood that the bilateral relations usually entail closer diplomatic ties between the countries, when China intentionally elevates its diplomatic relations with the (strategic) partnership. In this study, we highlight the significant changes in China’s partnership building from the traditional geopolitical consideration towards the partner countries with abundant economic and advanced technologies resources. China’s partnership building can be regarded as a ‘diplomatic instrument’ to hedge against other international actors. This study first classifies all China’s partnerships into three categories, namely comprehensive strategic partnership of cooperation, strategic partnership and other partnerships. Then, with the information compiled from China’s Ministry of Foreign Affairs and other relevant sources, it outlines the trend of China’s deployment of its partnership diplomacy by the above-mentioned calibration since the 2000s. We summarise that China’s partnership diplomacy has three dimensions – economic motivations, diplomacy manoeuvres and its need to upgrade the manufacturing sector. This study further empirically spells out the partnership building conditions for China and its partner countries during the two time periods discussed. First, China prefers establishing strategic partnerships with countries that provide gateways to regions with economic benefits. Second, China’s partnership building seems to shape its own international social network with like-minded partners. China has facilitated cooperation with its partner countries in specific areas where they share China’s views on the norms and its visions of the global order. Furthermore, more recently, China’s partnership-building has shifted towards advanced countries with abundant S&T and economic resources, which is consistent with China’s MIC 2025 initiative. During Xi’s regime, China’s pursuit of economic and strategic assets is at the heart of its partnership diplomacy. To conclude, our findings go beyond the descriptive narratives of China’s diplomatic study and contribute to the literature by providing empirical evidence. With the emergence of China’s economic and political power, its road map of strategic partnership has shifted from geopolitical interests-driven to technology and economy-driven. This may lead to the following research agenda in the future: how and on what internal/external conditions would China have altered its diplomatic road map and its practices?

210  Meng-Chun Liu et al.

Notes 1 For instance, Strüver outlined the European Union’s ten strategic partnerships with regional actors and neighbouring countries; India has forged more than 20 strategic partnerships. See Georg Strüver, ‘China’s Strategic Partnership Diplomacy: Determinants and Outcomes of International Alignment’, GIGA: German Institute of Global and Area Studies, 2015. 2 Eva Cihelková, Hung P. Nguyen, Maria Wožniaková and Radka Straková, ‘The EU-China Comprehensive Stategic Partnership in Context of EU General Concept of the “Strategic Partnership”’, Journal of Security & Sustainability Issues, 6 (4), 2017, pp. 729–744. 3 Feng Zhongping and Huang Jing, ‘China’s Strategic Partnership Diplomacy: Engaging with a Changing World’, ESPO Working Paper No. 8, 2014, at https:// (accessed March 6, 2020). 4 Georg Strüver, no. 1. 5 Feng Zhongping and Huang Jing, no. 3. 6 China has territorial disputes with Malaysia, Brunei, the Philippines and Vietnam over the Spratly Islands as well as with Vietnam over the Paracel Islands. See Joseph Y.S. Cheng and Wankun Zhang, ‘Patterns and Dynamics of China’s International Strategic Behaviour’, Journal of Contemporary China, 11 (31), 2002, pp. 235–260. 7 Ibid. 8 Sigfrido Burgos and Sophal Ear, ‘China’s Strategic Interests in Cambodia: Influence and Resources’, Asian Survey, 50 (3), 2010, pp. 615–639. 9 The Beijing Declaration issued by the first China-CELAC Forum, held in Beijing on January 8, 2015, cast light on the exact meaning of this ‘comprehensive partnership’. Both sides committed to promoting ‘a multipolar world and greater democracy in international relations’.

15 Mordechai Chaziza, ‘Comprehensive Strategic Partnership: A New Stage in China-Egypt Relations’, MERIA Journal, 20 (3), 2016, pp. 41–50. 19 Gustaaf Geeraerts, ‘The EU and China: Modest Signs of Convergence?’ Security Policy Brief, 101, 2018, pp. 1–5. 20 Serafettin Yilmaz and Olga Daksueva, ‘The Energy Nexus in China-Russia Strategic Partnership’, International Relations of the Asia-Pacific, 19 (1), 2017, pp. 63–88. 21 Robert Williams, ‘Russo-Chinese Security Cooperation: Realities, Motives, and Responses’, 2019. 22 Serafettin Yilmaz and Olga Daksueva, no. 20.

China’s partnership diplomacy reappraisal  211

10 Xi Jinping, the US–China rivalry and Beijing’s post-COVID manoeuvres Jagannath P. Panda and Eerishika Pankaj

Introduction The relationship between the United States of America and the People’s Republic of China (PRC) is poised to be one of the biggest challenges and turning points of the ‘Asian Century’.1 In recent Chinese history, no leader has wielded as much power and support as the current general secretary of the Chinese Communist Party (CCP) and president of China, Xi Jinping. Since its inception in 1949, the PRC has had leaderships that have clearly defined domestic and international standing of the country while also promoting different beliefs about what the international order should look like. At the same time, they have been consistent in their general disdain for and disenchantment with the status quo of the post-Cold War international order. Under Xi, China’s global ambitions have only increased, which has been viewed with extreme alarm by the US, leading to a ‘pivot to Asia’ under President Barack Obama and an open critique of the Chinese state under President Donald Trump. Harkened as the most powerful Chinese leader since Mao Zedong, Xi has absolute power in China, which has only grown since he took control of the CCP in 2012. Xi’s rise to power within the CCP has been gradual; as a young party member, he spent decades working through government ranks before ultimately becoming general secretary of the party. Since becoming president in 2013, Xi has shown himself as a powerful and decisive leader who is more courageous than his predecessors and aims at not just managing but also transforming China domestically and internationally as a twenty-­first century superpower. Xi Jinping’s ascent has been such that in 2018 he was reappointed president for another five-year term while a constitutional amendment was passed to eliminate term limits for presidents, removing a 35-year-old law that had helped keep the ambitions of leaders in check and prevented another strongman rule post Mao Zedong’s tumultuous 27-year reign.2 President Xi has launched large-scale crackdowns domestically on corruption, dissent, civil society and opposition while maintaining a steadily increasing military budget and promoting his ambitious infrastructure connectivity-oriented Belt and Road Initiative (BRI) –

The US–China rivalry – Beijing post-COVID  213 launched in 2013 – which comprises the Silk Road Economic Belt (SREB) and the Maritime Silk Road (MSR). He has pursued an ambitious foreign policy to put China into the centre of the global relationship framework, within the rubrics of ‘Community of Shared Future for Mankind’.3 China’s economic growth has been nothing short of miraculous: after opening its doors to foreign trade, investment and free-market reforms in 1979, China became one of the fastest growing economies of the world. The annual Gross Domestic Product (GDP) growth rate averaged 10 per cent until 2018, and even though by then the economy started showing signs of slowdown, China has still shown ‘the fastest sustained expansion by a major economy in history’.4 Simultaneously, these have also served as factors behind growing friction between the US and China. The PRC that Xi took over as president in 2013 was unlike what his predecessors, like Hu Jintao and Jiang Zemin, had presided over. By 2013, China had already achieved its economic makeover for the better – in 2010, it surpassed Japan and became the second-largest economy in the world.5 Only a year after Xi came to power, and without many changes to the already existing economic system, China even overtook the US economy, albeit for a short time, based on the Purchasing-Power-Parity (PPP) index.6 In the US, the election of Barack Obama as president in 2008 had already marked the beginning of a new era for the Sino–US relations. Obama came to be known as America’s ‘first Pacific president’,7 espousing the view that under the Bush era little to no focus had been paid to Asia, which resulted in reduced American power in the region. Obama’s ascent to presidency and China’s twenty-first century international economic boost were simultaneously occurring events; and by 2011, as a result of developments in various geopolitical arenas, Obama had accelerated efforts to rebuild American presence and power in Asia. A decline in US military involvement in Iraq and Afghanistan, the decision to unequivocally support Seoul in 2010 when North Korea conducted nuclear tests that threatened the former and the decision to carry out naval exercises in the Yellow Sea as a warning to North Korea despite strong Chinese objections showed that for Obama, Asia had become an area of prime importance where China’s increasingly hard-edged policies were proving to be detrimental to the US interests. From Obama to Trump, the US focus on Asia has only increased with time as a response to Asia’s growing importance in the world. The US has for long viewed with caution the development and growth of China in Asia and beyond under the Communist supervision. However, with the onset of the Donald Trump administration in 2017, hostilities between the two countries, and more so, between the two presidents, have increased exponentially. The December 2016 call by President-elect Donald Trump to Taiwanese President Tsai Ing-wen was in itself a fair preview of what the Trump administration was to bring to the USChina ties. The call marked the first time since 1979 that a US president

214  Jagannath P. Panda and Eerishika Pankaj president-elect) had spoken to a Taiwanese leader, breaking decades-long US diplomatic practice of following a ‘One-China’ policy.8 In his first address to the nation as president, Xi spoke of striving to achieve the Chinese dream of ‘great rejuvenation of the Chinese nation’.9 The ‘Chinese Dream’ must be viewed in a parallel against the national ethos of the US and a long-standing intellectual aspiration for American citizens and immigrants, the ‘American Dream’. A conscious wording of the same in the context of China, as part of his first official message to the world as the Chinese state leader, showed clearly the vision Xi held for China as well as the Chinese people, encouraging the notion that the time for US dominance was slowly ending. The antagonistic ties between the US and China have shaped most of what the present-day international order looks like. At the same time, it is this very relation that also provides us the deepest insight into what the future holds for that very international order. This chapter is divided into three broad sections in an attempt to provide a holistic understanding of how the US–China relations have been moulded since Xi came to power in 2013. With Xi having dealt with two drastically different American presidents, the first section examines the Obama-Xi parity by focusing on the Obama administration’s Asia strategy and the shift it marked from the previous administrations. It studies the major events that took place under the eight-year-long Obama-Xi period, such as the birth of the Trans-Pacific Partnership (TPP) and China’s One Belt One Road (OBOR) initiative and how these events shaped the present nature of the US-China ties. It also explores the two China models which Obama dealt with under two different Chinese presidents, Hu Jintao and Xi Jinping. The second part focuses on Trump-Xi equations and the deteriorating US–China relations under the Trump administration. Increase in open hostility, a long trade war, an increasingly hostile North Korea, the age of the Indo-Pacific and a heightened degree of mistrust between the two nations are some factors that are analysed. The third part focuses on the potential future awaiting the US–China relations, keeping in mind the outbreak of the coronavirus pandemic, a looming global financial spiral and the vested interests of the international community. In the post-COVID era – the move from ‘post-Cold War’ to ‘post-coronavirus’ terminology is inevitable – how Xi manoeuvres the Chinese image will be one of the defining aspects of the Asian century.

A past narrative: America’s Asian ‘pivot’, Xi’s global gamble Five months into his first term, President Barack Obama welcomed deputies from Hu Jintao’s administration to the US/China Strategic and Economic Dialogue in Washington. In his remarks, he stated that the “relationship

The US–China rivalry – Beijing post-COVID  215 between the United States and China will shape the twenty-first century, which makes it as important as any bilateral relationship in the world”.10 As the first ‘Pacific President’, Obama signalled a ‘renewal’ of US engagement with Asia as early as 2009, which was the start of his two-term tenure at the White House – a period of eight long years. During his first four- country11 tour through the Far East – Japan, South Korea, China and Singapore  – Obama repeatedly identified the US as an “Asia-Pacific” nation, clarifying that “the United States expects to be involved in the discussions that shape the future of this region”.12 At the very onset of his presidency, Obama also began to stress heavily on the importance of ensuring US participation in regional multilateral organisations in Asia, differing from the policies of the previous Bush administration.13 Known frequently to build on his own personal history and attachment to the region, Obama said that “the Pacific rim helped shape” his worldview.14 In the joint statement post Obama’s first state visit to China to meet his counterpart President Hu Jintao, both nations ‘agreed that respecting each other’s core interests is extremely important to ensure steady progress in China–U.S. relations’.15 These core interests on the Chinese side, as highlighted previously in the three US–China joint communiques, focussed mainly on the question of Tibet, Taiwan and the Chinese autonomous region/province of Xinjiang where China’s territorial integrity and the CCP’s power were both being challenged by secessionist movements.16 However, the US’s Taiwan Relations Act of 1979 had committed US security aid to the island, which included the supply of arms. Further, the US support for the Dalai Lama and the Tibetan movement as well as relations with the Uyghur activists in the Xinjiang region made upholding these core interests difficult.17 Hence, after a comparatively smooth first year, US-China political ties under the Obama administration began to strain, even as economic interdependence between the two nations steadily grew which led to necessary, albeit cold, mutual acceptance.18 In October 2011, Secretary of State Hillary Clinton outlined Obama administration’s Asia strategy in an essay, titled ‘America’s Pacific Century’, which deduced that the ‘United States stands at a pivot point’ to Asia.19 Elaborating that the ‘future of politics will be decided in Asia’, Clinton highlighted a shift of US focus from Afghanistan, Iraq and the broader Middle East to Asia, promising that the ‘United States will be right at the center of the action’.20 The crux of this ‘pivot to Asia’ strategy essentially entailed a rebalancing of economic, military and strategic focus to the Asia-Pacific, keeping in mind the progress the region had made. A month after Clinton’s ‘pivot to Asia’ article was published, President Obama at the Asia-Pacific Economic Cooperation (APEC) announced that an agreement had been reached on the Trans-Pacific Partnership (TPP) between the US and its eight Asia-Pacific partners.21 The TPP, which Donald Trump withdrew from in 2017, was hailed as one of

216  Jagannath P. Panda and Eerishika Pankaj the most ambitious US trade proposals in decades; it facilitated deeper engagement between Washington and its Asia-Pacific allies, especially America’s longest traditional ally, Japan.22 The TPP, finally signed in 2016 after 19 rounds of negotiations, was the centrepiece of Obama’s ‘pivot to Asia’ and would have been the largest Free Trade Agreement (FTA) in the world – a distinction now held by the Association of Southeast Asian Nations (ASEAN)-centred Regional Comprehensive Economic Partnership (RCEP).23 The US focus until the advent of the Obama administration had been largely on the Middle East and Europe; during this time, Asian economies such as China, India, Japan and the ‘four Asian Tigers’24 (Hong Kong, Singapore, South Korea, and Taiwan) were on the rise. The twenty-first century was deemed as the ‘Asian Century’ due to the swift rise of the region’s economy. Asia, which houses over half of the world’s population, moved from low to middle income status within one generation.25 A 2019 McKinsey Global Institute research concluded that the region is likely to generate over half of the world’s GDP while accounting for almost 40 per cent of international consumption by 2040.26 Economically, Asia had already become the new centre for the world during Obama’s first term. Further, American rebalance also factored into account an increasingly hostile North Korea, non-state action, piracy and proliferation of Weapons of Mass Destruction (WMD). Also, the countries in the region were beginning to spend more on military advancement than any other region of the world.27 Then, by 2013, China found a new leader in Xi Jinping. The ideas which Xi brought to the fore reflected immense changes in the national economic, military and political spheres and advocated for a stronger Chinese presence in the international order. This was projected clearly in 2015 when Xi called for ‘a new type of great power relations’ during his very first official meeting with President Obama at Sunnylands in 2013 as the new Chinese president.28 Hence, at the very onset of his engagement with the US, Xi presented clear directives about the plans he had to lead his country into the future and the stage that China deserves. The ‘new type of Great Power relations’ highlighted China’s hopes for a global environment that would be more suitable for its growth and more welcoming to the power of the new Chinese nation. His use of the term ‘great powers’ elevated China to the same level as that of the US, and denoted that China now wished to be viewed as an equal. While elaborating on the meaning behind the concept, Xi proposed a three-pronged approach that entailed no conflict, mutual respect for core interests and abandoning of zero-sum game approaches to advocate for a mutually beneficial cooperative mechanism.29 Xi’s emphasis on protection of ‘core interests’ brought to the front China’s territorial claims; the same had been a focal point of discussion in Barack Obama-Hu Jintao meetings previously, but the US had continued its deep engagement with Taiwan and the Tibetan cause nonetheless. For Xi, it was

The US–China rivalry – Beijing post-COVID  217 vital to demarcate the line which he did not expect the US to cross in light of its ‘new’ relations with a power like China. Xi’s confidence in China’s ‘great power’ assertion stemmed from the fact that the China he took over was different and far more evolved compared to that of his predecessors. It was by then the second largest economy in the world due to nearly 20 years of double-digit growth, and had become the largest trading nation of the world, a manufacturing and export powerhouse that boasted of the largest foreign exchange reserve in the world comprising trillions of dollars.30 In 2013, China became one of the largest recipients of Foreign Direct Investment (FDI) amongst developing countries while its outward FDI actively grew too.31 China became the world’s largest nation of trading goods in 2013, surpassing even the US.32 This in itself was a wake-up call for the US: even the cumulative manufacturing output of its three rivals in the twentieth century, namely, Germany, Japan and the then Soviet Union, had represented only two-thirds of the US’s total trade output. Meanwhile within Asia, China had become the largest trading partner of all South-eastern and South Asian nations.33 China had also begun investing heavily in its defence expenditures; the numbers only increased under Xi. Besides, China had developed a huge fleet of coast guard vessels to patrol the South and East China Seas, developed cruise and Medium-Range Ballistic Missile (MRBM) systems and deployed its first aircraft carrier.34 All in all, Xi knew that China now had a much bigger role to play regionally and internationally; therefore, Xi’s expectations from the international order had also changed. Xi’s commitment to the ‘Chinese Dream’ and aspirations for the Chinese nation cumulated in the launch of the OBOR initiative in 2013. The most ambitious infrastructure connectivity project of the twenty-first century, it was launched at Kazakhstan and immediately became a cause of great concern for the US.35 In 2016, the initiative was renamed as the Belt and Road Initiative (BRI).36 The funding for the project is estimated to be at US$ 5 trillion – the actual official figures have never been revealed.37 The project spans across 60 nations and covers Asia, Middle East, Latin America, Africa and even Europe. While the Obama administration’s ‘pivot to Asia’ marked a strategic shift of US foreign policy and refocused it on Asia, it did not succeed it revitalising American influence in Asia to the level it had hoped for. Exclusion of China from the TPP only prompted Xi to forge ahead with agreements like the RCEP and initiatives like the BRI, both becoming defining factors of his rule. As leaders, Xi and Obama did not promote a close personal friendship but still maintained multiple lines of communication, held informal meetings and general respect for each other. Given the complexity of US– China relations, the Obama-Xi period did manage to maintain a semblance of diplomacy and mutual admiration without sacrificing national interest goals on either side. This trend has not found resonance in the Trump–Xi era.

218  Jagannath P. Panda and Eerishika Pankaj

The current narrative: missing the Trump-Xi parity China’s rise was concurrent with the early years of the Obama administration that led to a ‘pivot’ and ‘rebalance’ of the American interests into Asia; during this time, the US reinvigorated its ties with traditional AsiaPacific allies like Japan, had meetings with Indian counterparts and moved troops to Australia amid Chinese criticism.38 Xi’s ascent to power under the Obama administration heavily shaped the present-day nature of US–China relations; a clear demarcation between the Asia strategies of Obama and Trump has been visible with a withdrawal from the TPP (now the Comprehensive and Progressive Agreement for Trans-Pacific Partnership or CP-TPP), Trump’s Twitter diplomacy and the overt nature of the present administration’s disapproval of Beijing’s practices. Post the Obama era of ‘rebalance’ in order to sustain US presence in the Asia-Pacific by rebuilding economic and geopolitical ties with regional powers, Trump administration’s ‘America First’ outlook emphasises instead on the security dimensions of the Indo-Pacific with a China containment arc. On the Chinese side, Xi’s response to American moves during the Obama administration presented a ‘great power’ contention; during the Trump administration, responses from higher Chinese officials and Xi himself have rarely been reported. A deep mistrust between the US and China can be seen today, with few open lines of communication. The Mar-a-Lago estate two-day summit in Florida between Xi and Trump in 2017 was an attempt to build a personal rapport between the two leaders, like the ‘shirt-sleeves’ Sunnylands Summit between Obama and Xi in 2013.39 However, by 2018, Trump had announced sweeping tariffs on China, marking the beginning of what would be over a year-long trade war between the two leading global economies and also highlighting the hardening of Trump’s China strategy. By January 2020, when the US and China signed a preliminary phase one deal pausing economic hostilities, the former had imposed tariffs on almost US$ 360 billion worth of Chinese goods, while Chinese tariffs stood at US$ 110 billion American goods.40 The US–China trade war marked one of the most vital turning points of the US–China relationship under Donald Trump. Xi’s response to the US tariffs showed that Beijing was not threatened by the US; China’s retaliation to American tariffs was given an 11 on a scale of 10 by Wall Street analysts, as per reports by American multinational investment bank Cowen.41 The first National Security Strategy (NSS) released by the Trump Administration in 2017 labelled China, along with Russia, a ‘revisionist power’.42 China has also been accused of seeking to upend established Bretton Woods Institutions by establishing alternatives like Asian Infrastructure Investment Bank (AIIB) and threatening US’s dominance as the status quo power. US–China relations have taken on a ‘confrontationist-competitive’ thrust.43 Competition has become the driving force between the two nations, which is not likely to alter with changes to the economic, military or political systems

The US–China rivalry – Beijing post-COVID  219 in the two nations. Rather, at this juncture, the economic, military and political decisions of the two nations are measured on the basis of their respective national interests along the lines of the confrontation-competition equation. The main crux of conflict between the US and China is simple: China is rising and threatening US power prevalence in Asia and beyond, where the US has long-term vested interests. The ‘new type of great power relations’, which Xi had hoped for and received an almost positive response to, under the Obama administration, demanded an abandoning of zero-sum games between the two powers. Under Trump, the US has begun to follow a decidedly “America First” policy on the pretext that past policies had been detrimental to US interests and favoured Beijing.44 This adoption of “America First” has led to a zero-sum, protectionist and unilateral approach towards Beijing while advocating for universalism and free-trade. What Xi has focused on, especially in the past couple of years, is the realisation of goals that he has promised to Chinese people by openly revamping his approach slightly in light of resistance. Post receiving public backlash from the Chinese private sector in 2018 over his reforms of the State-Owned Enterprises (SOEs), he decided to meet those affected and even implemented policies to address some of their grievances.45 He applied the same tactic to respond to international criticism of the BRI. In 2019, at the BRI international summit, Xi accepted the shortcomings of the initiative and even promised implementation of new practices in order to avoid the same.46 Under Trump, a major method of Washington’s strategic confrontations with Beijing has been economic ‘decoupling’. Essentially, Trump believes that significantly reducing commercial ties between China and the US, built over the past 40 years, will adversely impact China’s growth. Accusing China of intellectual property theft and launching a trade war have all been attempts to achieving the same goal. It is important to note that US-China economic decoupling is a bipartisan aim and likely to occur even with changes in the White House, albeit with different approaches. But with China today being increasingly less dependent on exports for growth, the decoupling method may not have the effect on Beijing that Washington hopes for. North Korea, the only alliance partner of China, has served as a historically strong point of friction between Washington and Beijing; however, under Trump, US-North Korea ties had deteriorated at an alarming rate before the two historic summits in Singapore and Hanoi, further complicating US-China engagement. Trump has revamped China’s mediatory role vis-àvis North Korea by initially treating it as part of a solution and then as part of the problem. China is North Korea’s most important trading partner and also one of its oldest allies, helping sustain Kim Jong-un’s rule and providing North Korea some semblance of protection against international sanctions.47 China fears a collapse of the regime in North Korea and an influx of North Korean refuges via the almost 870 mile fairly porous border the two nations share.48 Hence, stability in the Korean Peninsula has weighed heavily on Xi’s mind, as North Korea provides a strong buffer between China

220  Jagannath P. Panda and Eerishika Pankaj and the democratic South Korea which has over 25,000 American troops stationed.49 Xi and Kim Jong-un have met five times since 2018, with Kim reiterating a commitment to denuclearisation at almost every meeting. Both the US and China aim at a denuclearised North Korea, but have different ways for reaching the same goal. Nonetheless, Xi hopes to play a key role in any events that take place in the Korean Peninsula in order to protect the Chinese national interests. By showing his importance to the US as one of the few leaders who has Kim’s ear, Xi simultaneously hopes to manage his relations with Washington. Post Obama’s rebalancing to Asia, Donald Trump has focused his attention on the Indo-Pacific and released a plethora of US initiatives targeted at combating rising Chinese assertiveness in the region. The 2019 US ‘Free and Open Indo-Pacific’ vision document highlighted the region as a ‘top priority’ for the US. With initiatives like Infrastructure Transaction and Assistance Network (ITAN), Asia Reassurance Initiative Act (ARIA), Better Utilisation of Investments Leading to Development (BUILD) Act, Asia Enhancing Development and Growth through Energy (EDGE) and Digital Connectivity and Cybersecurity Partnership, the US is one of the largest sources of FDI in the region.50 Attempts to balance out China’s BRI have led to the establishment of the Blue Dot Network (BDN) under the leadership of the US along with Japan and Australia. Also, increased Chinese assertiveness in the region helped re-establish the Quadrilateral Security Dialogue 2 (the Quad 2.0) among the US, Japan, India and Australia – ‘likeminded’ nations coming together to promote a free, open and rules-based order in the Indo-Pacific. Although Quad 2.0 does not intend to turn into a military grouping, it provides a platform for military discussions and maritime cooperation. Analyses of the US and its Indo-Pacific initiatives are many, but what must be paid attention to is the response of Xi and the Chinese administration to the same. Mostly, China has been silent, apart from a few articles in state-run newspapers in the country or individual comments by ministers.51 The US Indo-Pacific initiatives have much grit on paper and attempt to pacify its allies of continued US focus on the region; however, even as China’s BRI is forging partnerships across Asia, Africa and Europe, Donald Trump’s strategies seem to be more words than action. Besides, there has been an increasing degree of mistrust between China and the US: Trump’s ‘America First’ policies and Twitter diplomacy have added further animosity.

A future narrative: Beijing, COVID-19 and the United States What has come as a complete shock to the international system is the rapid spread of the COVID-19 outbreak. In the midst of the unprecedented times the coronavirus pandemic has brought about, global focus has turned sharply to China, national governments and international organisations.

The US–China rivalry – Beijing post-COVID  221 The pandemic has spread across continents, bringing to the fore how interconnected and interdependent countries really are, that too especially on China. The US gradually has become one of the worst affected nations: deaths in the state have crossed 70,000 while cases have exceeded 1,000,000 as of early May 2020.52 President Donald Trump rechristening coronavirus as the ‘China virus’ while the world battles with the pandemic goes to show a sudden and eminent drop in relations between the two countries.53 Even as the United States is coping with the pandemic amid the escalating number of COVID deaths in the country, Beijing is preparing itself for the next phase of its rivalry with the United States, having foreseen prolonged strategic hostility between the two. With countries across the globe questioning Chinese leadership over the origin, outbreak and failure to contain the virus, Xi Jinping’s foremost challenge is how to manage Beijing’s international relations, including with the United States, and how to prevent its image from deteriorating further. President Xi’s telephonic conversation with President Trump urging to build a ‘relationship based on non-conflict and confrontation’54 only points to the Chinese disposition to recover from the current disarray that the coronavirus pandemic has created for its global relationships architecture, including with its principal rival and the most affected country, the US. Beijing saw the United States as its principal strategic rival in global affairs long before the age of the Indo-Pacific and the ‘Asian Century’. The post-9/11 period witnessed Chinese leadership’s prime global strategy to be Capitol Hill-centric: how to minimise the global strategic gap existing between the United States and China. A strategic competition with the United States hence emerged as a starting point of any Chinese strategy on the regional and global podiums.55 Notwithstanding the significance of the Sino-US rivalry for the current geopolitics, it is important to emphasise that this competition or rivalry between the two premier economies of the world is going to be highly instrumental in rebuilding the current as well as the future world order. For Washington, the strategic objective is to uphold its supremacy under the current rules-based order that is threatening its authority. To Xi, such a rivalry opens a complex window for power enhancement in global affairs vis-à-vis the United States. Therefore, any Chinese disposition to rebuild the relationship with the United States in the age of the coronavirus and the Indo-Pacific need not necessarily be seen in isolation: it needs to be evaluated in terms of Beijing’s global strategy vis-à-vis challenging the supremacy of the United States while aiming to rebuild its COVID-19-induced fractured relationships across the world.

Nationalism at the core A stronger nationalist response is visible in the Chinese attitude towards the United States vis-à-vis COVID-19. The state media have been forthcoming

222  Jagannath P. Panda and Eerishika Pankaj in not only confronting the United States but also replicating a stronger voice to defend China’s image as a responsible emerging power. For instance, Xinhua released a short animation titled ‘Once Upon a Virus’ on May 5, 2020, published originally by New China TV, mocking the United States response to the pandemic by using Lego-like characters.56 It shows how China dutifully informed the world about the COVID-19 crisis in time, with the World Health Organization (WHO) acknowledging the same, but that the US chose to ignore the early warning. The video is essentially a conversation between China (represented via a doctor) and the US (represented via the Statue of Liberty). It builds on Chinese nationalism to create support for Beijing by making the American Lego representation say things that haunt the Chinese, if not the Asian, psyche; statements like ‘typical third world’ and ‘look how backward China is’ heighten public outrage towards the Americans. Likewise, the Global Times has published a number of articles since February 2020 citing China’s dedicated and timely response to the crisis, while highlighting in an article titled ‘Some countries Slow to Respond to Virus’ that other nations, especially the Western ones, have not fared well.57 More pointedly, the Global Times on May 6 published an opinion piece, titled ‘US Owes World an Explanation on COVID-19’, in retaliation against the US criticisms of China, in turn blaming Washington itself for the spread of the pandemic.58 The piece argues that the US made ‘deadly errors’, ‘wasted time’, and ‘delayed responses’ – all criticisms levied by the Trump administration on China – that resulted in ‘dragging’ the world into a ‘longer pandemic’. Importantly, frequent anti-US commentaries have appeared in the Global Times, often with a picture of Capitol Hill in the background, indicating the Chinese nationalist strategy to consolidate a base for the CCP vis-à-vis its growing rivalry with the United States.59 Chinese leadership’s assertive response to the United States during the pandemic is not anything new. Such an assertiveness draws on its longterm pledges to its security and foreign policy ambitions, visible during previous Chinese regimes too. For a long time, Chinese leaderships have understood that economic globalisation has lost its momentum, paving the way for nationalism and populism – to which the regimes have accorded utmost significance. With China reportedly reopening slowly after containing the virus within its borders,60 the country is witnessing increased nationalism and patriotism. This is being promoted by the CCP in a bid to improve the image of its national leadership while projecting itself as a global leader during the pandemic. Donald Trump’s anti-China rhetoric as well as renaming of the new coronavirus to the ‘China virus’ has angered the Chinese citizens: reports of banners being put up in restaurants in northern China celebrating the spread of the pandemic into the US have been published in New York Times.61 Besides, government propaganda is touting China’s COVID response in order to promote the

The US–China rivalry – Beijing post-COVID  223 CCP’s zest for continued power. Thus, the West’s allegations have facilitated the CCP in promoting nationalism that would serve to strengthen Xi Jinping and the CCP.

Military-maritime mainstays The pandemic has not distracted the Chinese leadership from expanding its strategic outreach in the maritime-military domain, keeping its core interests and sovereignty claims in order. The People’s Liberation Army (PLA), as the backbone of the party, has continuously engaged in military exercises in the regional pockets of Indo-Pacific theatre, particularly in the South China Sea, even while COVID-19 is raging.62 Coast Guard exercises as well as anti-submarine drills near the Spratly and Paracel Islands indicate the resoluteness of the Chinese military and display a national military preparedness in the regional theatre that seeks to take strategic advantage even during this time of crisis.63 For instance, both domestically and regionally, the PLA has maintained an ‘active posturing’ during the pandemic.64 Drawing its lessons from the earlier epidemics such as the Severe Acute Respiratory Syndrome (SARS) outbreak of 2003 and the 2015 Ebola outbreak in West Africa where the PLA was involved in medical rescue missions, the Joint Logistics Support Force (JLSF) has been active in terms of providing medical to logistical support in Wuhan.65 More than 4,000 medical military personnel from different branches of the PLA – the Army, Air Force, Navy Armed Police Force, JLSF and Strategic Support Force – were sent to Wuhan to prepare for emergency rescue and provide logistical support and infrastructure to address the pandemic.66 This exhibited how the PLA has strengthened its joint operation in rescue missions in emergency situations following the 2015–2016 reform and restructuring of the military units across the country. The PLA had seen this as a bio-threat and wanted to establish a credible image for itself in such a domestic wartime situation so that it could prove its credibility as an effective military. Regionally, the PLA has utilised this crisis as an opportunity to secure its maritime-military objectives, primarily in the South China Sea. Beijing has accorded primacy to the South China Sea disputes and has developed its military-maritime assets (like marine technologies for securing and exploring energy resources) in the disputed region. In an unprecedented drill, China staged night air exercises using its J-11 fighter jets as well as its KJ-500 airborne early warning and control aircraft; Chinese aircraft flew dangerously close to Taiwan’s Air Defence Identification Zone and increased China-Taiwan tensions during the COVID-19 pandemic.67 China’s attempts to intimidate Taiwan and its continued military drills in the region, even as the world battles the coronavirus, must also be viewed as an indirect signal to the US, a Taiwan ally. Xi wants to make it clear that even in a post-COVID order, China is not likely to be a submissive power; its

224  Jagannath P. Panda and Eerishika Pankaj ambitions and strength remain unchanged and it would be unwise to expect otherwise.

Beijing’s efforts to reinvent its image The rivalry between China and the US was already brewing much before COVID-19 became a global pandemic. The debate was to what extent Xi Jinping’s China had already challenged the US imperial edge by shortening the gap between them, and how the United States could disrupt China’s emergence as a neo-imperial power in Indo-Pacific, encouraging a direct conflict. Donald Trump’s forceful anti-China measures had brought this rivalry to the fore; whereas Xi Jinping’s assertive and non-submissive response challenging the American superiority was a highlight. COVID-19 only worsened the already simmering complications. Strategic communities in China have always maintained that the USChina relations are intertwined in a changing geo-political environment, hence, maintaining stable relations is becoming increasingly difficult. Against such a background, Beijing realises that the current global recession due the pandemic could emerge as a significant game changer in its strategic competition with the United States – like the 2008 global financial crisis contributed to its relations with Washington.68 The Chinese assert that the 2008 global financial crisis exposed the loopholes of the American soft power by revealing the drawbacks in the ‘Washington Consensus’ model, originating from a capitalist world framework. Likewise, COVID-19 is exposing the loopholes of the Chinese model of governance, which Beijing’s leadership needs to carefully handle in order to rebuild CCP’s image and outreach, within and outside China. In fact, the Chinese strategic communities have foreseen that COVID-19 might bring a watershed change to the current balance of power equations with the United States; and Beijing must stay alert for any economic and strategic eventuality. It needs to re-establish the brand image that ‘China Inc.’ or the ‘Beijing Consensus’ was trying to build all these years through the CCP’s economic success model. The coronavirus pandemic has proven to be one of the biggest and most crucial foreign policy challenges for China in modern times. With the pandemic still raging and inflicting immense losses to live and livelihood across borders, the Trump administration is coming down harder on China than ever before. Trump is not likely to give China any leeway, especially with the upcoming US presidential elections in November 2020; deaths due to COVID-19 in the US in early May 2020 crossed 70,000 and over 33 million Americans filled for unemployment benefits, even as cases increase nationwide.69 The CCP for its part is working hard to enhance its domestic power by propagating Chinese nationalism and China’s coronavirus response while also depending on its soft-power diplomacy of providing medical aid

The US–China rivalry – Beijing post-COVID  225 to maintain its image as a global health leader.70 In their attempts to rewrite the COVID-19 rhetoric espoused by the US, China is trying to protect its Beijing model by creating a ‘Health Silk Road’. This new model claims that the Chinese way of handling the coronavirus crisis is right. China claims that as the first nation to live through and survive COVID-19, it has built an extensive understanding of dealing with the same and attributes its success to the strong lockdown implemented by the Chinese Government.71 In March 2020, when the COVID-19 cases surged around the world, the curve in China began to flatten. This gave Xi the opportunity to try and resume trade with countries under soft power diplomacy aimed at providing humanitarian and medical aid. China initially donated 2,000 fast test kits to its ASEAN ally Cambodia in March;72 an additional shipment of 20,000 fast kits was further dispatched to Cambodia 10 days after.73 Serbian President Aleksandar Vucic criticised the European Union for restricting medical exports and appealed to China for help, laying his hopes with his ‘friend and brother’ Xi, after declaring a state of emergency in Serbia.74 Besides, China delivered over two million surgical masks, 200,000 N95 masks and 50,000 testing kits to Italy, further building its European outreach, presenting itself as the generous force while Trump imposed travel ban on European countries amid COVID-19 fears.75 Iran, as a result of US sanctions, has been unable to trade medical supplies; its reliance on China for the same has increased heavily. China has sent over 400,000 masks, 500 prefabricated rooms and almost 15 tonnes of medical supplies to a grateful Iran.76 However, Spain, India, the United Kingdom, Turkey, Slovakia, the Netherlands, the Czech Republic and even Italy have since complained of the kits from China being ‘faulty’, with governments seeking refunds from Chinese companies.77 Faulty test kits are derailing not just Xi’s ‘Health Silk Road’ ambitions in Europe and beyond but also efforts by China to become a global health leader.78 Thus, a rebranding of China’s image post the COVID-19 pandemic is crucial for Xi’s global ambitions. The novel coronavirus is believed to have originated in the Chinese province of Wuhan in December 2019.79 This has led to a surge in xenophobia aimed at Asians as well as a stronger national identity pursuit, even as the world at large is uniting against COVID-19. China’s initial blunder to cover up the early warning of the virus outbreak by Li Wenliang – an ophthalmologist in Wuhan who sent a private message to his colleagues about a possible outbreak of a SARS-like illness in December 2019 itself – has contributed to the mistrust and worked against the Xi-led CCP.80 China has countered this hard-line narrative with a Chinese Foreign Ministry spokesman saying that it is possible the US Army brought the virus to Wuhan, much to the ire of Trump.81 Still, Trump decided to withdraw funding from the WHO over its inadequate handling of the pandemic and for ‘covering up’ China’s mistakes in the initial days of the outbreak.82

226  Jagannath P. Panda and Eerishika Pankaj

Conclusion Domestically, China is trying to revive its image in the eyes of its people after having withheld crucial information from them. State-run media like the Global Times have begun hailing China’s response to the pandemic as a model for the world to follow while simultaneously accusing nations like the US of not being adept enough.83 ‘Mao-style’ social checks and controls have been put into place, and online influencers are claiming that only a Chinese method can stop the virus from spreading.84 As major countries like the US, India, Japan, South Korea, Germany, Italy, Spain and the UK are focusing their time, resources and energy in combating the spread of the virus in their own borders, this Chinese rhetoric has gone largely unquestioned. This rebranding of the outbreak is a testament to the will of the CCP and Xi Jinping in managing the crisis. As the virus continues to spread globally, President Xi has come under strain from allies and competing powers worldwide. Scrutiny and criticism by the international community about delaying a timely response which could have saved hundreds of lives is inevitable. In the post-COVID-19 world, China’s efforts to double back both economically and diplomatically are going to face harsh barriers, as countries like the US will not let Beijing ‘off the hook’ easily and will look to ‘seek damages’.85 The Phase-1 trade deal signed between the US and China that provided respite from their long trade war is now likely a thing of the past; future discussions over the same will be mostly pushed indefinitely. What is important to note is that for Trump pushing an anti-China narrative is no longer going to be a difficult task while promoting the claim that a pandemic of this proportion could have been stopped if only China was an open, democratic, universalist nation without revisionist aims. However, it would be unwise to expect Xi to clamp down on China’s global ambitions post the pandemic; while Chinese economic infrastructure and domestic morale have taken a huge blow during this time, Beijing is rearing to return to work. Chinese factories and plants have slowly reopened production, and Xi has informed local governments to send people back into offices.86 Free local transport and ferries to take workers to their offices and monetary incentives by large companies to make their employees return to work have begun. China, already weakened because of a trade war with the US, is eager and anxious to revive its economy, even at the risk of a fresh outbreak of the virus. As a result of the COVID-19 pandemic, Chinese economy may shrink for the first time since 1976; the United Nations (UN) estimates global economic losses to be almost US$ 2 trillion.87 Owing to a weaker economy, Xi may have to deal with a loss in popular support due to a fall in the standard of living. A major factor behind CCP’s continued power growth has been economic dependency; in the post-Mao era, overperformance in the economic zone has provided the post-Cultural Revolution generation with exceedingly high living standards. In the post-COVID order, a resultant

The US–China rivalry – Beijing post-COVID  227 mediocrity in economic performance for an extended time span can severely reduce Xi’s political standing, along with that of the CCP.88 The Chinese middle class and young professionals can be expected to lead this charge, as was seen in the mass protests that broke out in Hong Kong before the coronavirus outbreak. In this situation, Xi’s BRI focus will come under severe scrutiny; if the BRI were to receive preferential focus over economic sustainability of the middle class and the Chinese elites, from whom Xi draws loyalty in exchange for luxurious standards of living, resistance to his rule can be expected. Corruption in China runs rampant, even after Xi’s crackdown that essentially was used as a ruse to eliminate political competition. Further, the vocal Tibet and Xinjiang ethnic minorities as well as Hong Kong citizens will offer extreme resistance. Harsh response to these protests will incur international ire – something Xi wants to avoid so as to not affect his international ties to further BRI, as was seen in the restrained response by Xi to the 2019 Hong Kong protests. Since the time Mao assumed power in 1949 until Deng put China on a new course in the 1970s, China has mainly been identifiable as a revolutionary power, especially in its international dealings. The post-1949 USled exclusion of China from international domains reopened its ‘century of humiliation’ wounds, but ensured that after regaining stability almost all multilateral and international organisations came under attack from Beijing. Today, China has not only created its own institutions as a response to the Bretton Woods ones, but it has also made a space for itself in the high echelons of the UN, WHO, World Bank and International Monetary Fund (IMF). Xi is a strongman leader and has presented his image to the Chinese people as well as the world accordingly. His thought has been enshrined into the Chinese state constitution and the crucial party constitution.89 Xi Jinping suffered through heavy hardships under the period of the Cultural Revolution, which came to an end under Deng Xiaoping; hence, Xi emerged with experiences beyond those of his American counterparts. He holds a deep faith in the strength of a strong CCP and is committed to the Chinese economic and military growth, ultimately aiming for respect for the Chinese nation in international platforms. He has repeatedly advocated Chinese nationalism – drawing strength from the ‘century of humiliation’ that the Chinese nation and its people have endured – as a political move that has earned him the tag of harbinger of growth, power and gusto for China, which the democratic world will continue to view sceptically.

Notes 1 Jonathan Woetzel and Jeongmin Seong, ‘We’ve Entered the Asian Century and There Is No Turning Back’, World Economic Forum, October 11, 2019, at https:// (accessed March 2, 2020).

228  Jagannath P. Panda and Eerishika Pankaj 2 ‘China reappoints Xi Jinping as President with No Term Limit’, The Guardian, March 17, 2018, at (accessed March 2, 2020). 3 Cao Desheng, ‘Xi’s Discourses on Mankind’s Shared Future Published’, China Daily, October 15, 2018, at c38adca310eff303282392.html (accessed on April 25, 2020). 4 Emma Charlton, ‘6 Things to Know about China’s Historic Rise’, World Economic Forum, October 1, 2019, at (accessed March 2, 2020). 5 Andrew Monahan, ‘China Overtakes Japan as World’s No. 2 Economy’, The Wall Street Journal, February 14, 2011, at 424052748703361904576142832741439402 (accessed on April 25, 2020). 6 Jo Inge Bekkevold and Robert S. Ross, ‘Introduction: China’s New Leadership in Domestic and International Politics’, in Jo Inge Bekkevold and Robert S. Ross (eds.), China in the Era of Xi Jinping: Domestic and Foreign Policy Challenges, Georgetown University Press, Washington, DC, 2016, pp. xiii–xxii. 7 Margaret Talev, ‘Asia Rise Drives Obama Message as U.S.’s First Pacific President’, Bloomberg, November 11, 2011, at articles/2011-11-11/asia-ascending-drives-obama-message-as-america-s-firstpacific-president (accessed March 7, 2020). 8 Mark Landler and David E. Sanger, ‘Trump Speaks with Taiwan’s Leader, an Affront to China’, The New York Times, December 2, 2016, at https://www. (accessed March 8, 2020). 9 Zhao Yinan, ‘Latest News “Chinese Dream” Is Xi’s Vision’, China Daily, March 18, 2013, at 16315025.htm (accessed March 7, 2020). 10 ‘Remarks by the President at the U.S./China Strategic and Economic Dialogue’, The White House, July 27, 2009, at check/the-press-office/remarks-president-uschina-strategic-and-economicdialogue (accessed March 24, 2020). 11 ‘Obama to Visit Japan, Singapore, China and South Korea’, Reuters, October 8, 2009, at (accessed March 2, 2020). 12 Mike Allen, ‘America’s First Pacific President’, Politico, November 13, 2009, at (accessed March 25, 2020). 13 David Skidmore, ‘The Obama Presidency and US Foreign Policy: Where’s the Multilateralism?’ International Studies Perspectives, 13 (1), 2012, pp. 43–64, at (accessed March 25, 2020). 14 ‘Full Text: Barack Obama’s Speech in Tokyo’, Financial Times, November 14, 2009, at (accessed March 25, 2020). 15 ‘China-US Joint Statement (November 17, 2009)’, Embassy of the PRC in the United States, November 17, 2009, at more/t944394.htm (accessed April 19, 2020); read also, Jagannath Panda and R.N. Das, ‘Hu Jintao’s State Visit to the United States: An Attempt to Put the Sino-US Narrative in Place’, Manohar Parrikar Institute for Defence Studies and Analysis, February 1, 2011, at toUnitedStates.pdf (accessed April 19, 2020). 16 Wu Xinbo, ‘China and the United States Core Interests, Common Interests, and Partnership’, US Institute of Peace, June 2011, at

The US–China rivalry – Beijing post-COVID  229

17 18

19 20 21


23 24

25 26

27 28 29

30 31

resrep12187.pdf?refreqid=excelsior%3A122a0b5c942f0526f7e0033a6a4ae844 (accessed April 19, 2020). Ibid. China’s increased integration in the international economy has led to steadily growing interdependence with other nations; for countries that are economically interdependent, there is a heightened need to coexist peacefully as compared to in the absence of such interdependence. See, Helge Hveem and T. J. Pempel, ‘China’s Rise and Economic Interdependence’, in Robert S. Ross and Jo Inge Bekkevold (eds.), China in the Era of Xi Jinping: Domestic and Foreign Policy Challenges, Georgetown University Press, Washington, DC, 2016, pp. 196–232, at (accessed April 19, 2020). Hillary Clinton, ‘America’s Pacific Century’, Foreign Policy, October 11, 2011, at (accessed April 25, 2020). Ibid. ‘President Obama at the Asia-Pacific Economic Cooperation (APEC)’, The White House, November 12, 2011, at 11/13/president-obama-asia-pacific-economic-cooperation-apec (accessed April 25, 2020). Matt Schiavenza, ‘What Exactly Does It Mean That the U.S. Is Pivoting to Asia?’ The Atlantic, April 15, 2013, at what-exactly-does-it-mean-that-the-us-is-pivoting-to-asia/274936/ (accessed April 25, 2020). James McBride and Andrew Chatzky, ‘What Is the Trans-Pacific Partnership (TPP)?’ Council on Foreign Relations, January 4, 2019, at backgrounder/what-trans-pacific-partnership-tpp (accessed April 25, 2020) A tiger economy is one used to describe multiple booming Southeast Asian economies that experienced high-economic growth since the 1960s. They are also referred to as the ‘four Asian Dragons’. See, ‘After Half a Century of Success, the Asian Tigers Must Reinvent Themselves’, The Economist, December 5, 2019, at (accessed April 25, 2020). See, Jonathan Woetzel and Jeongmin Seong, no. 1. Oliver Tonby, Jonathan Woetzel, Wonsik Choi, Jeongmin Seong and Patti Wang, ‘Asia’s Future Is Now’, discussion paper, McKinsey Global Institute, July 2019, at (accessed April 25, 2020). Janine Davidson, ‘The U.S. “Pivot to Asia”’, American Journal of Chinese Studies, 21, 2014, pp. 77–82, at (accessed April 25, 2020). Qi Hao, ‘China Debates the “New Type of Great Power Relations”’, The Chinese Journal of International Politics, 8 (4), 2015, pp. 349–370, at https://doi. org/10.1093/cjip/pov012 (accessed April 25, 2020). Cheng Li and Lucy Xu, ‘Chinese Enthusiasm and American Cynicism Over the “New Type of Great Power Relations’”, Brookings, December 4, 2014, at https:// (accessed April 25, 2020). Jeffrey A. Bader, ‘How Xi Jinping Sees the World…and Why’, Brookings, February 11, 2016, at (accessed April 25, 2020). Ken Davies, ‘China Investment Policy: An Update’, OECD Working Papers on International Investment, 2013, at (accessed April 25, 2020).

230  Jagannath P. Panda and Eerishika Pankaj 32 ‘China Surpasses US as World’s Largest Trading Nation’, The Guardian, January 10, 2014, at (accessed April 25, 2020). 33 Jonathan Woetzel, Jeongmin Seong, Nick Leung, Joe Ngai, James Manyika, Anu Madgavkar, Susan Lund and Andrey Mironenko, ‘China and the World Inside the Dynamics of a Changing Relationship’, McKinsey Global Institute, July 2019, at china/china%20and%20the%20world%20inside%20the%20dynamics%20of%20 a%20changing%20relationship/mgi-china-and-the-world-full-report-june2019-vf.ashx (accessed April 25, 2020). 34 See, Jeffrey A. Bader, no. 30. 35 ‘President Xi Jinping Delivers Important Speech and Proposes to Build a Silk Road Economic Belt with Central Asian Countries’, Ministry of Foreign Affairs of the PRC, September 7, 2013, at 665678/xjpfwzysiesgjtfhshzzfh_665686/t1076334.shtml (accessed April 25, 2020). 36 ‘BRI Instead of OBOR – China Edits the English Name of its Most Ambitious International Project’, LAI, July 28, 2016, at (accessed April 25, 2020). 37 Yeroen van der Leer and Joshua Yau, ‘China’s New Silk Route: The Long and Winding Road’, PwC, February 2016, at (accessed April 25, 2020). 38 Jackie Calmes, ‘A U.S. Marine Base for Australia Irritates China’, The New York Times, November 16, 2011, at obama-and-gillard-expand-us-australia-military-ties.html (accessed April 25, 2020). 39 ‘For Trump, Mar-a-Lago Is Place to Break the Ice with China’s Xi’, CNBC, April 5, 2017, at (accessed March 26, 2020). 40 ‘A Quick Guide to the US-China Trade War’, BBC, January 16, 2020, at https:// (accessed April 25, 2020). 41 Michael Sheetz, ‘Rating China’s Retaliation in the Trade War: “On a Scale of 1–10, It’s an 11”’, CNBC, August 5, 2019, at cowen-says-china-trade-war-response-on-a-scale-of-1-10-its-an-11.html (accessed April 25, 2020). 42 ‘National Security Strategy of the United States of America’, The White House, December 2017, at NSS-Final-12-18-2017-0905.pdf (accessed April 25, 2020). 43 Jagannath Panda, ‘India’s Strategic Moments in US-China Tug-of-War’, The Asian Age, October 21, 2018, at indias-strategic-moments-in-us-china-tug-of-war.html (accessed April 27, 2020). 44 David Dollar, Ryan Hass and Jeffrey A. Bader, ‘Assessing U.S.-China Relations 2 Years into the Trump Presidency’, Brookings, January 15, 2019, at https://www. (accessed April 25, 2020). 45 ‘State-Owned Enterprise’, The China Dashboard, 2018, at https://chinadash (accessed April 25, 2020). 46 ‘Xi Jinping Vows Transparency over Belt and Road’, BBC, April 26, 2019, at (accessed April 26, 2020). 47 Eleanor Albert, ‘The China-North Korea Relationship’, Council on Foreign Relations, June 25, 2019, at (accessed April 25, 2020).

The US–China rivalry – Beijing post-COVID  231 48 James Pearson and Ju-min Park, ‘Proposed North Korea Sanctions Dig Deep, Implementation Falls to China’, Reuters, February 26, 2016, at https://www. (accessed April 25, 2020). 49 ‘Factbox: U.S. and South Korea’s Security Arrangement, Cost of Troops’, Reuters, November 13, 2019, at (accessed April 25, 2020). 50 ‘A Free and Open Indo-Pacific’, US Department of State, November 4, 2019, at (accessed April 26, 2020). 51 Post the announcement of the United States Blue Dot Network initiative, a number of article in China’s state-run news agency the Global Times were published, denouncing the initiative, even as an official comment from Chinese leadership remained absent. This has been the same pattern followed vis-à-vis a Chinese response post speeches or initiative releases by the US regarding the Indo-Pacific. See, ‘Blue Dot Network Is Just Washington’s Delusion’, Global Times, December 24, 2019, at (accessed April 29, 2020); see, Long Xingchun, ‘Indo-Pacific strategy More a Geopolitical Military Alliance’, Global Times, July 8, 2018, at (accessed April 29, 2020). 52 ‘Cases in the U.S.’, Centers for Disease Control and Prevention, at https://www. (accessed May 9, 2020). 53 Dan Mangan, ‘Trump Defends Calling Coronavirus ‘Chinese Virus’ — ‘It’s Not Racist At All’’, CNBC, March 18, 2020, at coronavirus-criticism-trump-defends-saying-chinese-virus.html (accessed April 26, 2020). 54 ‘President Xi Jinping Speaks with US President Donald Trump on the Phone’, Ministry of Foreign Affairs of the PRC, March 3, 2020, at cn/mfa_eng/zxxx_662805/t1763044.shtml (accessed April 29, 2020). 55 Barbara Lippert and Volker Perthes (eds.), Strategic Rivalry between United States and China, German Institute for International and Security Affairs, April 4, 2020, at (accessed April 29, 2020). 56 ‘China Mocks the US in Coronavirus Cartoon’, 9 News, May 5, 2020, at https:// c8-c997-43af-a720-c33855186805 (Accessed on May 5, 2020). 57 ‘Some Countries Slow to Respond to Virus’, Global Times, February 23, 2020, at (accessed April 29, 2020). 58 Chen Qingqing and Leng Shumei, ‘US Owes World Explanation on COVID-19’, Global Times, May 6, 2020, at (accessed May 6, 2020). 59 ‘US System Fuels Trump Team’s Political Hooliganism’, Global Times, May 7, 2020 at (accessed May 7, 2020). 60 Emily Feng and Amy Cheng, ‘As New Coronavirus Cases Slow in China, Factories Start Reopening’, NPR, February 29, 2020, at https://www.npr. org/2020/02/29/810334985/as-new-coronavirus-cases-slow-in-china-factoriesstart-reopening (accessed April 27, 2020). 61 Vivian Wang and Amy Qin, ‘As Coronavirus Fades in China, Nationalism and Xenophobia Flare’, The New York Times, April 16, 2020, at https://www.nytimes. com/2020/04/16/world/asia/coronavirus-china-nationalism.html (accessed April 27, 2020).

232  Jagannath P. Panda and Eerishika Pankaj 62 Liu Xuanzun, ‘China Conducts Naval Drills in S. China Sea, Prepares for Post-Pandemic US Military Provocations’, Global Times, May 5, 2020, at https:// (accessed May 5, 2020). 63 Teddy Ng, ‘Anti-submarine Drills and Coast Guard Exercises Near the Spratly and Paracel Islands’, South China Morning Post, May 5, 2020, at https://www. (accessed May 5, 2020); see also, Amanda Macias, ‘China Quietly Installed Missile Systems on Strategic Spratly Islands in Hotly Contested South China Sea’, CNBC, May 2, 2020, at https://www.cnbc. com/2018/05/02/china-added-missile-systems-on-spratly-islands-in-south-chinasea.html (accessed May 5 2020). Further, the United States Department of State in July 2020 released Washington’s official “position” on the South China Sea, deeming Chinese claims “unlawful”; see, Mike Pompeo, “U.S. Position on Maritime Claims in the South China Sea”, US Department of State, July 13, 2020, at (accessed August 12, 2020). 64 Rebeccah L. Heinrichs, ‘The PLA’s Exploitation of the Coronavirus Pandemic’, Hudson Institute, April 15, 2020, at (accessed April 26, 2020). 65 Joel Wuthnow, ‘Responding to the Epidemic in Wuhan: Insights into Chinese Military Logistics’, Jamestown Foundation, April 13, 2020, at https://jamestown. org/program/responding-to-the-epidemic-in-wuhan-insights-into-chinesemilitary-logistics/ (accessed April 26, 2020). 66 Yang Sheng and Liu Xuanzun, ‘Xi Approves Chinese Military Medical Teams to Leave Hubei as Mission Completed’, Global Times, April 16, 2020, at https:// (accessed May 2, 2020). 67 Nicola Smith, ‘China Stages Nighttime Air Exercises Near Taiwan in Unprecedented Drill’, The Telegraph, March 19, 2020, at news/2020/03/19/china-stages-nighttime-air-exercises-near-taiwan-unprecedented/ (accessed April 26, 2020); see, ‘With the World Distracted, China Intimidates Taiwan’, The Economist, April 8, 2020 at with-the-world-distracted-china-intimidates-taiwan (accessed April 28, 2020). 68 Karishma Vaswani, ‘Why Asia Turned to China during the Global Financial Crisis’, BBC, September 13, 2018, at­ 45493147 (accessed April 26, 2020). 69 ‘Coronavirus Live Updates: U.S. Death Toll Nears 74,000’, NBC News, May 7, 2020, at May 7, 2020) 70 Will Knight, ‘China Flexes Its Soft Power with “Covid Diplomacy”’, Wired, April 2, 2020, at (accessed April 26, 2020). 71 ‘To Belgrade and Beyond: Beijing Exports China Model of Coronavirus Management’, Deccan Herald, April 13, 2020, at international/to-belgrade-and-beyond-beijing-exports-china-model-of-corona virus-management-824704.html (accessed April 26, 2020). 72 ‘China Donates over 2,000 COVID-19 Fast Test Kits to Cambodia’, Xinhua, March 18, 2020, at (accessed April 26, 2020). 73 ‘China Donates Additional 20,000 COVID-19 Fast Test Kits to Cambodia’, Global Times, March 28, 2020, at shtml (accessed April 29, 2020). 74 Milica Stojanovic, ‘Serbia Imposes State of Emergency, Pleads for China’s Help’, Balkan Insight, March 16, 2020, at (accessed April 29, 2020).

The US–China rivalry – Beijing post-COVID  233 75 ‘China Donates Masks and Testing Kits to Italy’, EUobserver, April 7, 2020, at April 29, 2020); ‘Coronavirus: US Travel Ban on 26 European Countries Comes into Force’, BBC, March 14, 2020, at (accessed April 29, 2020). 76 ‘China’s Medical Aids to Iran Continues’, Iran Press, March 21, 2020, at https://’s_medical_aids_to_iran_continues (accessed April 29, 2020). 77 Geeta Mohan, ‘After Failing across Countries, Faulty Chinese Testing Kits Now Hamper India’s Fight against COVID-19’, India Today, April 22, 2020, at https:// (accessed April 29, 2020). 78 Andrea Dudik and Radoslav Tomek, ‘Faulty Virus Tests Cloud China’s European Outreach over COVID-19’, The Jakarta Post, April 1, 2020, at https://www. (accessed April 29, 2020). Also, in a blog post, the European Union Foreign Policy Chief Joseph Borrell ideated the theme of ‘politics of generosity’, claiming that Xi wishes to show that China is, unlike the US, a ‘reliable’ and ‘responsible’ global power; see, ‘EU HRVP Josep Borrell: The Coronavirus Pandemic and the New World It Is Creating’, Delegation of the European Union to China, March 24, 2020, at china/76401/eu-hrvp-josep-borrell-coronavirus-pandemic-and-new-world-itcreating_en (accessed April 30, 2020). 79 Sinéad Baker, ‘Everything We Know about the Mysterious, Deadly Wuhan Virus Sweeping across China’, Business Insider, January 21, 2020, at ­ ­ cms (accessed April 26, 2020). 80 Hillary Leung, ‘“An Eternal Hero.” Whistleblower Doctor Who Sounded Alarm on Coronavirus Dies in China’, Time, February 7, 2020, at 678/li-wenliang-coronavirus-china-doctor-death/ (accessed April 26, 2020). 81 ‘China Government Spokesman Says U.S. Army Might Have Brought Virus to China’, Reuters, March 12, 2020, at (accessed April 26, 2020). 82 Betsy Klein and Jennifer Hansler, ‘Trump Halts World Health Organization Funding over Handling of Coronavirus Outbreak’, CNN, April 15, 2020, at (accessed April 26, 2020). 83 ‘Strength of Chinese System on Display during Virus Fight’, Global Times, March 27, 2020, at (accessed April 26, 2020); see also, ‘Why American Voters Are Easy to Fool despite Epic Pandemic Failure’, Global Times, March 26, 2020, at https://www.globaltimes. cn/content/1186819.shtml(accessed April 26, 2020). 84 Raymond Zhong and Paul Mozur, ‘To Tame Coronavirus, Mao-Style Social Control Blankets China’, The New York Times, February 20, 2020, at https:// (accessed May 2, 2020). 85 Helen Davidson and Alison Rourke, ‘Trump Says China Could Have Stopped Covid-19 and Suggests US Will Seek Damages’, The Guardian, April 28, 2020, at (accessed April 29, 2020). 86 Emily Feng and Amy Cheng, ‘As New Coronavirus Cases Slow in China, Factories Start Reopening’, NPR, February 29, 2020, at https://www.npr.

234  Jagannath P. Panda and Eerishika Pankaj org/2020/02/29/810334985/as-new-coronavirus-cases-slow-in-china-factoriesstart-reopening (accessed April 27, 2020). 87 Jenna Ross, ‘COVID-19 Crash: How China’s Economy May Offer a Glimpse of the Future’, World Economic Forum, March 31, 2020, at https://www.we (accessed April 27, 2020) 88 Minxin Pei, ‘China’s Coming Upheaval’, Foreign Affairs, April 03, 2020, at (accessed April 27, 2020); read also, Susan Shirk, China: Fragile Superpower, Oxford University Press, New York, 2007, pp. 18–21. 89 No leader apart from Mao himself had an ‘eponymous’ ideological inclusion in the party constitution whilst still holding office; the only other leader with a self-ideology inclusion in the party constitution is Deng Xiaoping, whose name was added post his death. See, ‘China to Enshrine Xi’s Thought into State Constitution amid National “Fervor”’, Reuters, January 19, 2018, at https:// (accessed April 28, 2020).

11 China–Southeast Asia relations in the era of Xi Jinping Ian Storey

Introduction Since his accession to the apex of China’s political system – first as general secretary of the Chinese Communist Party (CCP) in 2012, and then as president and chairman of the Central Military Commission in 2013 – Xi Jinping has become the country’s most powerful leader since Mao Zedong. He has discarded the post-Mao notion of collective leadership, launched a wide-ranging anti-corruption campaign (removing many of his political rivals in the process) and abolished presidential term limits, effectively making himself leader for life. Domestically, Xi has cracked down on civil society, dramatically tightened censorship, pursued repressive policies in Hong Kong, Tibet and Xinjiang and fostered a cult of personality. Under Xi, the military’s budget has maintained steady growth, the armed forces have been reformed and restructured, new offensive capabilities have been acquired, and defence diplomacy activities have been stepped-up around the globe. In the conduct of Chinese foreign policy, Xi has discarded former paramount leader Deng Xiaoping’s maxim that the People’s Republic of China (PRC) should ‘hide its capabilities and bide its time’ and pursued a more nationalist, proactive and self-confident role on the world stage particularly vis-àvis the United States. Xi’s Belt and Road Initiative (BRI), a trillion-dollar global infrastructure project involving the construction of railways, ports, highways, pipelines and airports designed to deepen and enlarge China’s connectivity with countries in the rest of Asia, Europe and Africa, has spotlighted the great power ambitions of the PRC. In the relatively short time that Xi has been in power, his economic, defence and foreign policies have exerted an enormous impact on the countries of Southeast Asia, such that Sino–Southeast Asia relations are qualitatively different than they were prior to 2012 – in scope, intensity and tenor. However, it would be an exaggeration to state that Xi has had a transformative impact on China–Southeast Asian relations, for two reasons. First, since the end of the Cold War, China’s trade with (and more recently investment in) the region has been growing apace, its political relations with the Association of Southeast Asian Nations (ASEAN) have been

236  Ian Storey broadening and deepening, and concerns regarding its emergence as Asia’s pre-eminent military power, its assertiveness in the South China Sea and geostrategic rivalry with America have been growing. In other words, these trend lines have been apparent for decades; but they have greatly intensified since in the era of Xi Jinping. Second, the verb ‘transform’ generally connotes improvement. But in many respects, Southeast Asian perceptions of China have worsened under Xi as the country has become more nationalistic, politically influential and more willing to flex its military muscles. A survey of elite Southeast Asian attitudes published by the ISEAS-Yusof Ishak Institute (formerly the Institute of Southeast Asian Studies) in January 2020 is illustrative of this phenomenon (though not definitive, of course).1 While 79.2 per cent of respondents viewed China as the most influential economic power in Southeast Asia, 71.9 per cent were worried about the country’s growing economic influence.2 Geopolitically, 38.2 per cent of those surveyed believed that China is a revisionist power intent on turning Southeast Asia into its sphere of influence – only 7.1 per cent saw China as a status quo power and a mere 1.5 per cent as a benign power.3 Moreover, 60.4 per cent had little, or no confidence in China’s ability contribute to global peace, prosperity and governance (though 49.7 per cent also felt the same way about the United States).4 As China has done little to assuage these concerns, it appears to have little empathy for Southeast Asian attitudes. China–Southeast Asia relations encompass a vast range of interactions and activities, ranging from the growing numbers of Chinese tourists travelling to Southeast Asia, to the negative effects for downstream states of China’s dam-building along the Mekong River, to the increasing frequency of combined military exercises between the People’s Liberation Army (PLA) and its Southeast Asian counterparts. Due to the limitations of space, however, to demonstrate the changed relationship between China and Southeast Asia in the era of Xi Jinping, this chapter focuses on three separate but interlinked issues. The first is the South China Sea dispute. Although the maritime territorial and boundary disputes have been a persistent thorn in the side of China–Southeast Asia relations since the end of the Cold War, since 2012– 2013, they have acquired a new intensity following China’s construction of military bases in the disputed Spratly Islands in 2013–2016 and, in 2016, Beijing’s rejection of a landmark international legal ruling centred on whether the PRC’s expansive jurisdictional claims – as denoted by the nine-dash line on Chinese maps – were compatible with the 1982 United Nations Convention for the Law of the Sea (UNCLOS). Both of these developments, and China’s more assertive posture in the South China Sea more generally, have heightened regional anxieties. Attempts by China and ASEAN to reduce tensions in the South China Sea by negotiating a Code of Conduct (CoC) are also assessed.

China–Southeast Asia relations and Xi  237 The second issue is the BRI. Southeast Asia occupies an important node in the BRI, and since its launch in 2013, Chinese investment in the region has increased significantly. However, nearly all of China’s BRI projects in Southeast Asia have courted controversy, resulting in delays, suspensions, cancellations and renegotiations. While regional states have generally been supportive of BRI, they have also taken note of, and sought to avoid, the debt traps which several South Asian governments and others have fallen into. Moreover, in a bid to prevent dependence on China, and keep their relations with the major powers in balance, Southeast Asian governments have welcomed infrastructure development projects from other countries, especially Japan. The third issue is the downward spiral of US–China relations that has taken place since Xi assumed office, and especially since President Donald Trump entered the White House in January 2017. While the United States has had long-standing concerns about China’s industrial, trade, defence and foreign policies, the Trump administration has given greater voice to these concerns and adopted a more hard-line policy towards Beijing. After decades of engagement, the Trump administration has explicitly identified China as a strategic competitor. As a result, Southeast Asian states are increasingly unnerved at the prospect of intensified US-China rivalry, as it greatly complicates the regional security environment and could impose hard choices on ASEAN and its member states.

The South China Sea dispute The territorial and jurisdictional disputes in the South China Sea between the PRC and Southeast Asian countries are complex, multifaceted and long-standing.5 China claims sovereignty over nearly all of the geographical features in the South China Sea, including the two largest archipelagos, the Paracel Islands and the Spratly Islands. In addition to claiming sovereignty of these features, China appears to assert ownership of, or at least exclusive access to, maritime resources – primarily hydrocarbons and fisheries – within the so-called nine-dash line on Chinese maps which covers more than 80 per cent of the sea. China occupies all of the Paracels, seven features in the Spratlys, and Scarborough Shoal (which is technically not part of the Spratlys). Taiwan’s claims are analogous with China’s, but it only occupies Itu Aba, albeit the largest atoll in the Spratlys. Moreover, as none of the other parties recognise Taiwan as a sovereign state, it has not been a major player in the dispute. Five Southeast Asian countries are claimants or parties to the dispute. Vietnam’s claims are the most expansive as it claims sovereignty of the Paracels (from which it was forcibly evicted by China in 1974) and the Spratlys (of which it occupies over 20 features). The Philippines claims around 40

238  Ian Storey atolls in the Spratlys (plus Scarborough Shoal) and occupies eight. Malaysia claims 10 of the Spratlys and occupies five. Brunei does not formally claim any feature in the Spratlys, but two reefs lie within its 200 nautical mile Exclusive Economic Zone (EEZ) which also overlaps with China’s nine-dash line. Indonesia does not claim any of the Spratlys but is a party to the dispute as the EEZ generated by the country’s Natuna Islands overlaps with the nine-dash line. Although the dispute has existed since the end of the Second World War, it only emerged as a major security issue in Sino-Southeast Asian relations towards the end of the Cold War. Since then, tensions have been cyclical: rising throughout the 1990s and peaking in 1995 when China occupied Mischief Reef; falling in the early 2000s due to Beijing’s ‘charm offensive’ towards Southeast Asia; increasing again in the late 2000s and especially after Xi assumed power in 2012. While China has pursued a policy of incrementally advancing its sovereignty and jurisdictional claims – taking actions that fall short of provoking armed conflict – since the late 1980s, under Xi there has been more of a concerted push to enforce those claims. Xi’s South China Sea policy is more proactive, more coordinated and more centralised than those of his predecessors. The government has also been able to increase China’s military presence in the South China Sea, and bring coercive pressure to bear on the other claimants, by utilising a greatly expanded navy, air force, coast guard and maritime militia. Xi’s China has become more willing to disregard legal norms enshrined in customary and international law such as UNCLOS. As is discussed later, Xi’s more aggressive South China Sea policy has contributed to the rapid deterioration in US–China relations over the past few years. This section focuses on three aspects of that policy: the construction and militarisation of seven artificial islands in the Spratlys; China’s non-participation in and rejection of the outcome of international legal arbitration over the South China Sea in 2013–16; and China’s approach to negotiations for an ASEAN-China CoC for the South China Sea. China’s artificial islands in the South China Sea President Xi’s decision in 2013 to terraform the country’s seven atolls in the Spratlys – transforming the submerged and semi-submerged features into large artificial islands – was a game-changer in the long-running dispute. It has allowed Beijing to project and sustain military power into the heart of maritime Southeast Asia, thereby shifting the balance of power with the Southeast Asian claimants even further in China’s favour. Reclamation work at the seven features – Fiery Cross Reef, Johnson Reef South, Cuarteron Reef, Mischief Reef, Subi Reef, Gaven Reef and Hughes Reef – took place between 2013 and 2016. Xi’s order to construct the man-made islands (which had long been on the drawing board) appears

China–Southeast Asia relations and Xi  239 to have been prompted by the Philippines’ initiation of legal proceedings against China’s claims in January 2013. Even before the reclamation work had been completed, China had begun construction of extensive military and civilian infrastructure on the man-made islands. These included three-kilometre long airstrips on Fiery, Mischief and Subi reefs, aircraft hangars, helicopter landing pads, barracks and other large, multistorey buildings, piers, lighthouses, desalination plants, radars, missiles batteries and communication equipment.6 As the facilities became operational, China temporarily deployed surface-to-air and anti-ship missiles to several of the islands.7 Rotational deployment of combat aircraft was widely anticipated. China has rejected criticism of its terraforming in the Spratlys and put forward four justifications. First, because China has ‘indisputable sovereignty’ over all the atolls in the South China Sea, it had the right to undertake reclamation and construction work on them.8 Second, over the years, the other claimants have undertaken similar reclamation and construction work on the atolls under their occupation. Third, while the facilities do serve a military purpose, their primary role is to provide public goods (such as safety of navigation and meteorological forecasts) and improve the living conditions of personnel stationed on the islands.9 Fourth, America’s military activities in the South China Sea, especially the US Navy’s Freedom of Navigation Operations (FONOPs), pose a threat to China’s sovereignty thus forcing it to militarise the islands.10 In a speech to the CCP Congress in 2017, President Xi underscored the importance of China’s island-building programme in the South China Sea when he listed it as one of the major accomplishments of his first five years in office.11 China’s man-made islands serve as critically important military bases for the country’s armed forces and maritime law enforcement agencies, which can now maintain a constant presence in the South China Sea and uphold the country’s territorial and jurisdictional claims by shadowing foreign warships, conducting military drills and serving as escorts for Chinese survey ships and fishing vessels operating in the EEZs of the other claimants. For example, between July and October 2019, China deployed several survey ships to Vanguard Bank, which is located within Vietnam’s EEZ. The China Coast Guard (CCG) cutters which escorted the survey ships regularly replenished at facilities on the artificial islands.12 In 2018, Admiral Philip Davidson, then nominee for Commander of the Honolulu-based United States Indo-Pacific Command, stated that the artificial islands enabled China to ‘challenge the US presence in the region, and any forces deployed to the islands would easily overwhelm the military forces of any other South China Sea-claimants. In short, China is now capable of controlling the South China Sea in all scenarios short of war with the United States.’13 In addition to their strategic value, the bases have also exerted a psychological impact on Southeast Asian states, strengthening the perception that China cannot be confronted militarily thereby engendering a sense of fatalism among the other claimants.

240  Ian Storey Legal arbitration over the South China Sea, 2013–2016 Until 2013, no international court had examined the South China Sea dispute. The main reason for this was China’s long-standing position that the country’s territorial and maritime boundary disputes should be resolved bilaterally and not through legal arbitration. For this reason the sovereignty dispute cannot be submitted to the International Court of Justice because consent is required from all parties before a case can be heard. In January 2013, however, in a bold move, the government of Philippine President Benigno Aquino circumvented China’s objections by mounting a legal challenge to China’s nine-dash line claims at the International Tribunal for the Law of the Sea (ITLOS). ITLOS is the dispute resolution mechanism established under UNCLOS, and cases brought before it do not require the consent of both parties provided they have ratified UNCLOS, which the Philippines and China both had. From the outset, the Chinese Government refused to participate in the case, citing its ‘indisputable sovereignty’ over the atolls, its decision in 2006 to exclude itself from compulsory dispute resolution procedures involving maritime boundaries (even though Beijing has never officially described the nine-dash line as a maritime boundary) and because the Philippines’ case was ‘factually flawed’ and contained ‘false accusations’.14 China also declared the Philippine submission to be a violation of the 2002 ASEAN-China Declaration on the Conduct of Parties in the South China Sea (DoC) despite the fact that in it all parties agreed to resolve their territorial and jurisdictional disputes by peaceful means ‘in accordance with universally recognized principles of international law’ including UNCLOS.15 Despite China’s objections, ITLOS determined it had jurisdiction over the case, and an arbitral tribunal composed of five judges was established. The tribunal’s final ruling on July 12, 2016, was far more wide-ranging and clear-cut than many experts had predicted, as it represented a major legal victory for the Philippines and an overwhelming defeat for China.16 The judges ruled that China cannot claim ‘historic rights’ to resources within the nine-dash line, that none of the geographical features in the Spratlys are islands entitled to an EEZ, that China had violated the Philippines’ sovereign rights in its EEZ by undertaking reclamation work and harassing Philippine fishing boats and survey vessels and that Beijing’s artificial island-building had caused irreparable damage to the marine ecosystem and aggravated the dispute while legal proceedings were underway. Unsurprisingly, China responded angrily. Beijing declared the ruling to be ‘null and void’ and that it would neither recognise nor accept it. Senior Chinese officials questioned the judges’ competence and integrity, while the state-run press denounced the ruling as a political conspiracy instigated by the United States and Japan.17 China was, however, able to snatch victory from the jaws of defeat. Several months before the ruling was issued, Rodrigo Duterte had been elected

China–Southeast Asia relations and Xi  241 to the presidency. Duterte had never been a supporter of the arbitration process, and rather than confronting Beijing over the South China Sea, favoured closer economic ties with the PRC. Accordingly, since July 2016, his administration has put the ruling to one side and courted Chinese investment. Much to China’s glee, Duterte has also rhetorically downgraded the importance of the US-Philippines alliance, though the country’s national security establishment remains overwhelmingly pro-US and concerned about China’s behaviour in the South China Sea. Duterte’s China policy has achieved mixed results. In November 2016, China lifted a blockade at Philippine-claimed Scarborough Shoal (which China had occupied in 2012 after a tense stand-off between the two countries’ maritime forces) which has allowed Filipino fishermen to operate around the shoal. However, the PLA-Navy, CCG and maritime militia have continued to harass Philippine warships, military aircraft and fishing boats inside the country’s EEZ. For example, in May 2018, a Chinese military helicopter harassed a Philippine Navy boat carrying supplies to Filipino Marines on Second Thomas Shoal, and in July 2019 a vessel belonging to China’s maritime militia rammed and sank a Filipino fishing boat.18 Public opinion polls consistently show a lack of support for Duterte’s South China Sea policy. In June 2018, for instance, a survey revealed that 73 per cent of respondents thought that the government should assert the country’s territorial claims in the South China Sea, while a poll in November showed that 87 per cent thought it important to regain control of Chinese-occupied islands claimed by Manila.19 However, Duterte’s South China Sea policy has not affected his overall popularity, which remains very high among Filipino voters. In November 2018, Xi paid a state visit to the Philippines, during which the two sides agreed to cooperate in oil and gas exploration in the South China Sea. Until a final agreement is signed, however, it remains unclear whether the Duterte administration would compromise the Philippines’ sovereign rights in its EEZ; if so, it is possible that Philippine courts could rule a bilateral joint development deal unconstitutional.20 China, ASEAN and a CoC for the South China Sea ASEAN and China have been discussing conflict management mechanisms for the South China Sea since the late 1990s. In 2002, the two sides issued the DoC, a one-page non-binding political statement which failed to defuse rising tensions in the late 2000s.21 The DoC envisages a more comprehensive, and possibly legally binding, CoC for the South China Sea, the aim of which is to reduce tensions among the claimants and create an environment conducive to a peaceful resolution of the dispute. Progress has been glacial. Serious talks between the two sides did not begin until 2014, and China only agreed to expedite the negotiations in 2016 to deflect criticism away from its rejection of the arbitral tribunal ruling. Moreover, by actively

242  Ian Storey participating in the talks, Beijing could claim that China and ASEAN were dealing with the problem and therefore there was no need for third parties, i.e. the United States, Japan and European countries, to ‘interfere’ in the dispute. In any case, whatever the final agreement looks like, it will not affect China’s territorial claims. Since 2016, limited progress has been achieved. In August 2017, China and ASEAN issued a one-page framework which set out basic principles.22 Twelve months later, the foreign ministers from China and ASEAN endorsed a 19-page Single Draft Negotiating Text (SDNT) which contains inputs from all 11 parties as to what the CoC should contain.23 By July 2019, the negotiating parties had consolidated the SDNT by removing overlapping areas of the text and inserting their views on the content of the document to create a First Reading. Altogether three readings are envisaged before the code is ready for accession. In September 2018, China had reversed its longstanding position that the parties should not impose artificial deadlines on the negotiations and unilaterally called the process to be concluded by 2021.24 Two reasons may account for China’s imposition of the 2021 deadline. First, the Philippines is the country coordinator for ASEAN–China relations until 2021, and Beijing may have calculated that the Duterte administration would be more favourable towards China’s negotiating position. Second, if the CoC is signed in late 2021, it can be presented as one of President Xi’s accomplishments at the 2022 CCP Party Congress. However, while some ASEAN members have supported China’s call, others, such as Singapore, see 2021 as more of an aspiration than a hard deadline and that the negotiating parties should focus more on outcomes than dates.25 The parties agree on many of the provisions in the SDNT, including the need to establish a rules-based framework containing a set of norms to guide the conduct of parties and promote cooperation, respect for freedom of navigation and overflight, the prevention and management of incidents at sea and in the air, a commitment to the principles of UNCLOS and other international laws and protection of the maritime environment. Yet there are also areas of contention. Vietnam included a list of activities that it wants to be forbidden by the CoC, and it is no coincidence that these are the kinds of activities China has been conducting over the past decade. These include an end to the construction of artificial islands and the militarisation of facilities, renouncing aggression and the threat to use force, and not establishing an Air Defence Identification Zone (ADIZ) as China did over parts of the East China Sea in 2013. Vietnam has also called on the disputants to clarify their claims in accordance with UNCLOS (a reference to the arbitral tribunal ruling) and respect the maritime zones of coastal states, including their EEZs – a direct challenge to China’s nine-dash line. More controversially, China has included certain provisions that have caused considerable unease both within Southeast Asia and outside the region. First, Beijing wants to limit joint development projects in the South China Sea to Southeast Asian and PRC companies and exclude foreign

China–Southeast Asia relations and Xi  243 energy corporations. Second, before any ASEAN country or China holds a military exercise with a foreign country, Beijing wants the prior consent of all 11 parties. This would effectively give China a veto over foreign military activities in the South China Sea, and is clearly aimed at undermining America’s strategic partnerships in Southeast Asia. Moreover, taken together, these two provisions imply that China does not see itself as an external power to Southeast Asia – and that therefore it should be treated differently to the other major powers. The majority of ASEAN states will find these two provisions unacceptable as they infringe on their sovereign rights enshrined in UNCLOS. Other stakeholders to the dispute also find them unacceptable; and indeed the United States, Japan and Australia have warned that the CoC must be consistent with UNCLOS.26 Three other areas of contention remain to be resolved by ASEAN and China. The first is determining the geographical scope of the code. Vietnam wants the CoC to include the Paracels, but China – which does not recognise a dispute with Hanoi over the islands – does not. Second, the two sides need to agree on a list of activities which are permissible and those that are not. And finally, the negotiating parties will have to decide whether the CoC will be legally binding or not. Given the inherent difficulty of these issues, and the slow pace of talks so far, the goal of 2021 might well be unattainable. China’s more aggressive posture in the South China Sea under President Xi has become an increasing source of concern for Southeast Asians. In the 2020 ISEAS survey, respondents ranked military tensions over flashpoints such as the South China Sea as their third most important security concern (44.6 per cent) behind economic downturn (68.5 per cent) and domestic political instability (70.5 per cent) – unsurprisingly, 88.2 per cent of Vietnamese and 82.5 per cent of Filipino respondents chose the South China Sea as their number one concern.27 Only 5.5 per cent of those surveyed had confidence that China would provide leadership to uphold the rules-based international order of which UNCLOS is a part. When asked what China could do to improve relations with their country, 74.1 per cent of respondents said Beijing should focus on resolving its territorial and maritime disputes with regional states peacefully and in accordance with international law.28

China’s BRI The BRI is composed of two main geographical routes: the overland Silk Road Economic Bridge (SREB) which runs from China through Central Asia, Russia and South Asia before reaching Europe (essentially retracing the ancient Silk Road); and the twenty-first century Maritime Silk Road (MSR), a series of ports that will link China with Southeast Asia, South Asia, Africa, the Middle East and Europe. China has pledged vast sums of money to realise the BRI, including US$ 40 billion for the SREB, US$ 25 billion

244  Ian Storey for the MSR, US$ 50 billion for the multilateral Asian Infrastructure Investment Bank (AIIB) and US$ 40 billion for the Silk Road Fund.29 The BRI has both economic and geopolitical rationales. From an economic perspective, it is designed to help develop China’s western and inland provinces, secure new overseas markets and raw materials and provide an outlet for industrial overcapacity and surplus capital. Its geopolitical intent is to burnish China’s Great Power credentials; some see it as part of China’s strategy to create a Sino-centric order in Asia. With the exception of Vietnam – which still harbours deep national security concerns about Chinese-investment projects in the country30 – Southeast Asian leaders have broadly welcomed the BRI as a means to address infrastructure gaps and promote economic development and connectivity between China and the region. At the 2019 Shangri-La Dialogue (SLD), Singapore Prime Minister Lee Hsien Loong rejected the Trump administration’s criticism of the BRI by describing it as a ‘constructive mechanism’ for China to engage with the region, though one that should be open and inclusive and not transform Asia into a ‘closed bloc centred on a single major economy’.31 Despite broad support within the region for the BRI, Southeast Asian governments have closely watched how infrastructure projects in South Asia have left regional governments with crippling debts which China has adroitly transformed into equities. Foremost among these include the Hambantota port in Sri Lanka, the port of Gwador in Pakistan and a massive bridge in the Maldives. And although the situation is not as bad as in South Asia, nearly all of China’s BRI projects in Southeast Asia have aroused controversy, resulting in delays, suspensions, scaling down and re-negotiations. China’s most cherished BRI project in the region, a High-Speed Rail (HSR) network designed to connect Kunming with Singapore, has encountered the most severe difficulties. The 400 km US$ 6 billion China-Laos HSR line has been criticised as being a ‘debt trap’ for poor, landlocked Laos.32 China’s HSR network in Thailand has been repeatedly delayed due to disagreements over financing, technology and operational issues.33 Within Thailand, the HSR has been heavily criticised for its excessive cost, for its lack of transparency and for making the country too dependent on China. The Malaysian Government has suspended construction of the Kuala Lumpur to Singapore HSR, also on the grounds of cost.34 While not part of the Kunming to Singapore network, the Chinese-funded 140 km Jakarta-Bandung HSR has been delayed for similar reasons. In Malaysia, Prime Minister Najib Razak was one of the BRI’s more ardent supporters in Southeast Asia. However, this situation changed when the Pakatan Harapan (PH) government led by Prime Minister Mahathir Mohamad came to power in May 2018. Mahathir had been highly critical of the Chinese-invested infrastructure projects which his predecessor had supported, arguing they were overpriced, uneconomical and potential debt traps. Mahathir pledged to re-evaluate and, if necessary, renegotiate or even cancel some of these projects, many of which

China–Southeast Asia relations and Xi  245 were critical to China’s BRI ambitions in Southeast Asia. These included the 688 km East Coast Rail Link (ECRL) designed to link Malaysia’s eastern and western seaboards, and two oil and gas pipelines. However, in order to preserve cordial relations with China – Malaysia’s number one trade and investment partner – the PH government was able to renegotiate the ECRL, resulting in a substantial reduction in costs.35 Myanmar is another key node in China’s BRI. The US$ 7.3 billion Kyauk Pyu port has also been scaled down due to concerns that it would become a debt trap similar to Hambantota and Gwadar.36 The controversies surrounding BRI projects in Southeast Asia have had two main consequences. First, other major powers have offered alternative infrastructure initiatives to compete with the BRI, especially Japan through its Partnership for Quality Infrastructure programme and America with its Better Utilisation of Investment Leading to Development (BUILD) Act, both of which stress greater transparency, more generous financing terms and high-quality construction than the BRI.37 Southeast Asian countries have welcomed these initiatives, particularly from Japan which remains the biggest investor in the region’s infrastructure.38 Second, China has been forced to increase transparency, tighten regulations and improve social responsibility in its BRI projects in Southeast Asia and elsewhere. While these moves have been welcomed by Southeast Asian countries, doubts continue to dog the BRI. In the 2020 ISEAS survey, for example, 63.6 per cent of respondents expressed little or no confidence in China’s pledge to make its global infrastructure project ‘open, green and clean’.39

Intensifying competition between the United States and China40 President Xi’s more aggressive policy in the South China Sea and his promotion of the BRI are not the only policies that have significantly impacted Sino-Southeast Asian relations: the development of China’s relations with the United States since 2012, and especially since President Donald Trump took office in January 2017, have also exerted a major influence on Southeast Asia’s security environment and regional states’ relations with the major powers. Under Trump’s predecessor, President Barack Obama, Sino-US ties were already showing signs of stress over issues such as Beijing’s policies in the South and East China Seas, rapid military modernisation and alleged unfair trade practices. The Obama administration’s ‘pivot/rebalance’ towards Asia was designed to put the Asia-Pacific at the centre of US foreign and defence policy and reassure America’s allies and partners of its commitment to the region. The US military was to increase its presence in the Asia-Pacific, and America would take the lead in designing a new regional economic framework through the Trans-Pacific Partnership (TPP). Yet the hype never lived up to reality: the Obama administration was largely pre-occupied with

246  Ian Storey recovering from the Global Financial Crisis of 2007–08 and disengaging from the conflicts in Iraq and Afghanistan. As a result, the pivot/rebalance was deprived of resources and political capital. Over the course of eight years, despite Obama’s efforts, Southeast Asian doubts about US staying power in the face of a more powerful and assertive China deepened. The surprise election of Donald Trump in November 2016 proved to be a geopolitical game-changer. Trump immediately withdrew America from the TPP and unveiled a new policy towards the region dubbed the ‘Free and Open Indo-Pacific’ (FOIP). The central organising principle of the FOIP is full-spectrum competition with China. The Trump administration has identified China as a ‘revisionist power’ that seeks to undermine the rules-based international order and a ‘strategic competitor’ which aims to displace the US as the global hegemon.41 In the economic sphere, the administration accused China of unfair trade practices (such as currency manipulation, non-tariff barriers, intellectual property theft and the forced transfer of technology) and sparked a trade war with the imposition of tariffs on hundreds of billions of dollars’ worth of Chinese imports. The Trump administration criticised China’s repressive policies in Xinjiang, Tibet and Hong Kong, and its coercion of Taiwan. In October 2018, in a landmark speech at the Hudson Institute – and which some analysts interpreted as a declaration of a ‘new Cold War’ – Vice President Mike Pence accused China of interfering in the United States’ domestic politics, pursuing ‘debt diplomacy’ through the BRI and working to expel America from the Western Pacific.42 Essentially Pence’s comments were admissions that the United States’ decades-long policy of engagement with China had failed to liberalise the country and transform it into a stakeholder in the rules-based international order and that a new, more confrontational approach was needed to protect US national interests. In the Trump administration’s strongest criticism of China to date, in January 2020, US Secretary of State Mike Pompeo called the CCP the ‘central threat of our times’.43 As part of its tougher policy towards China, the Trump administration has ramped up criticism of Beijing’s policy in the South China Sea. It has described China’s bases in the Spratlys as a threat to freedom of navigation, the sovereignty of other nations and regional stability.44 In his October 2018 speech, Pence criticised China’s ‘aggression’ in the South China Sea and its ‘reckless harassment’ of US warships, pledging that America would ‘not be intimidated’ and would ‘not stand down’.45 In a media interview soon after Pence’s speech, Trump’s then-National Security Advisor, John Bolton, declared that the United States was determined to keep international sea lanes open as the South China Sea was ‘not a Chinese province’.46 To counter Beijing’s assertiveness in the South China Sea, Washington has undertaken a series of initiatives. First, it has strengthened security cooperation with Southeast Asian countries by increasing capacity-building support and training activities. Second, the Pentagon has increased the frequency of FONOPs in the South China Sea. Between May 2017 and January

China–Southeast Asia relations and Xi  247 2020, the US Navy conducted 18 publicised FONOPs in the Paracels, Spratlys and at Scarborough Shoal, more than four times as many as during the Obama administration. According to the Trump administration, the difference between its FOIP and the Obama administration’s Asian pivot/rebalance is that it is devoting significantly more resources to the strategy, is broadening and deepening America’s network of alliances and partnerships and is not afraid to criticise China’s actions.47 China has, of course, robustly rejected US criticisms. According to Beijing, China is committed to regional prosperity and stability, does not seek hegemony or spheres of influence and has neither the capacity nor intention to challenge America for global primacy. It has attacked the Trump administration for its unilateral tendencies, putting US interests first and promoting the ‘clash of civilizations’ and ‘China threat’ theories. China has also accused the US of interference in its internal affairs through the Taiwan Relations Act, promoting Taiwanese independence and raising tensions in the South China through its FONOP missions.48 Southeast Asian anxieties There is an acute sense of discomfit in Southeast Asia at the prospect of accelerated US-China rivalry. These anxieties were highlighted at the 2019 SLD. A common refrain during the annual meeting of Asia-Pacific defence ministers was that the return of Great Power competition had brought the region to another historical inflection point – but one that was not in Southeast Asia’s interests. In his keynote address, Singapore Prime Minister Lee Hsien Loong captured well regional concerns when he stated that the world was at a turning point and that how the United States and China worked out their differences would ‘define the international environment for decades to come’.49 Unless they acted in good faith, he warned, ‘we will all be headed for a more divided and troubled world’. In closing the SLD, Singapore Defence Minister Ng Eng Heng reminded attendees that what was at stake was nothing less than the ‘existing global order’, which, while imperfect, had more or less ensured peace and development since the end of the Second World War.50 Singapore’s views were echoed by Philippine Defence Secretary Delfin Lorenzana, who said the region was witnessing a ‘seismic geopolitical shift’, and that the emergence of a ‘new and troubling superpower rivalry’ had raised the prospect of countries ‘sleepwalking’ into a conflict like the First World War.51 Several Southeast Asian ministers, such as Defence Minister Ng and Malaysian Defence Minister Mohamad Sabu, expressed concern that in this new era of Sino-US competition smaller states would be pressured into choosing sides on issues such as trade arrangements, technology (e.g. Fifth-Generation [5G] telecommunications networks) and security partnerships, 52 choices that Ng lamented would be the ‘ultimate losers’ game and

248  Ian Storey a race to diminishing benefits for all concerned’. The fear of being forced to make binary choices by the Great Powers has been a perennial concern in Southeast Asia, but has been rekindled by the recent deterioration in relations between Washington and Beijing. Southeast Asian leaders have criticised both the US and Chinese narratives. At the SLD, concern was also expressed that the FOIP was not about deterring China but containing it. Prime Minister Lee noted that Americans now openly talked of containing China, and how negative views’ of the country had ‘permeated’ the US establishment. However, he cautioned that a twenty-first century US-China confrontation would not be a Cold War redux due to the absence of deep ideological divisions and the strength of China’s economy. Moreover, due to high levels of economic interdependence, regional states would abjure joining opposing blocs or military alliances. Lee’s advice to the United States and other countries was to accept the inevitability of China’s rise and ‘integrate China’s aspirations within the current system of rules and norms’, an approach that has lost favour in America over the past few years though it still has its supporters.53 Other elements of the FOIP were queried by regional leaders. While the FOIP stresses the importance of partnerships and multilateralism, President Trump himself has questioned the value of America’s regional alliances (including with its most important ally in Asia, Japan);54 threatened punitive economic measures against countries his administration accuses of currency manipulation (including Singapore, Malaysia and Vietnam)55 and unfair trade practices (such as Vietnam);56 and withdrawn the US from multilateral arrangements such as the TPP, the Iran nuclear deal and the Paris agreement on climate change. On trade issues, Prime Minister Lee criticised the US for engaging in ‘trials of strength’ with smaller countries that advanced American interests but not those of the wider community of nations. Parts of China’s narrative were also questioned, particularly on the South China Sea. As events over the past two years have underscored, few Southeast Asians would agree that the current situation in the disputed waters is stable, or that China has not militarised its artificial islands in the Spratlys. Nor would some Southeast Asian claimants accept that China has never threatened them or occupied their territory. Southeast Asian preference for managing regional order In response to escalating US-China competition, the Southeast Asian leaders who spoke at the SLD put forward several proposals to manage the evolving security dynamics. First, each of the ministers strongly emphasised the importance of ASEAN centrality in the regional security architecture and the application of the organisation’s norms for resolving disputes. Indonesian Defence Minister

China–Southeast Asia relations and Xi  249 Ryamizard Ryacudu called ASEAN a ‘global miracle’,57 while Lorenzana said ASEAN should serve ‘as an inspiration across the Indo-Pacific region and beyond’ and that countries should adopt the ASEAN Way of dispute resolution ‘through peaceful dialogue, diplomatic negotiations and fidelity to international law and regional norms and principles’. ASEAN’s efforts to conclude a CoC with China for the South China Sea also found strong support. Lorenzana urged the two sides to finalise a ‘robust, mutually beneficial and inclusive’ CoC.58 Vietnam’s Defence Minister General Ngo Xuan Lich also advocated for an early conclusion to the CoC and called on China to make a greater effort towards achieving that goal.59 A few weeks after the SLD, at the 34th ASEAN Summit in Bangkok on June 23, ASEAN leaders attempted to recapture the regional narrative from the US and China – as well as Australia, Japan and India who have offered their own visions for the Indo-Pacific – when they adopted the ASEAN Outlook for the Indo-Pacific (AOIP).60 The five-page document underlines the importance of strengthening ASEAN centrality through the various ASEAN-led mechanisms including the East Asia Summit, ASEAN Regional Forum and ASEAN Defence Ministers’ Meeting Plus. Although there is some overlap with the FOIP, what sets the AOIP apart from the American vision is its inclusiveness, promotion of economic development and connectivity and preference for dialogue over strategic competition.61 Second, while Great Power competition is the new normal, conflict between the two countries is not inevitable, and Washington and Beijing should resolve their differences through constructive dialogue, focus on resolving their domestic problems, increase cooperation in areas of mutual interest, refrain from imposing choices on smaller states and work towards preserving but updating the current international order to reflect new geopolitical realities. In one of the more memorable quotes from the 2019 SLD, Sabu declared, ‘We love America. We also love China. Both of them must now take care and deliver.’ Third, middle powers and small states should work together to strengthen regional economic integration and multilateral institutions, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) being an exemplar. In doing so, they can help sustain the current international order, improve regional security and enhance their collective influence and bargaining power with the major powers. Southeast Asian concerns over Sino-US competition were reflected in the 2020 ISEAS survey of elite opinions. 73.2 per cent of respondents expressed concern that Southeast Asia was becoming an arena for Great Power competition, and that the ASEAN members were being used as proxies.62 To mitigate the effects of US-China competition, 31.3 per cent said ASEAN should continue not siding with either China or the United States, while 48 per cent believed the organisation should enhance its unity to fend off pressure from Beijing and Washington.63

250  Ian Storey

Conclusion Southeast Asia’s relations with the PRC in the era of Xi Jinping present a mixed picture: one of admiration tempered by fear. China’s sustained, albeit slower, economic growth is viewed as a positive even as the region’s stronger economies seek to avoid dependence. China’s push for greater connectivity with Southeast Asia through its ambitious BRI scheme dovetails with the region’s infrastructure needs, though governments remain wary of falling into debt traps and hence greater dependency on the PRC. China’s growing military prowess casts a shadow across the region, particularly in countries that have overlapping territorial and jurisdictional claims with Beijing in the South China Sea. Most worrying of all, the intensification of Sino-US competition holds out the prospect of economic decoupling, trade wars and military confrontation in Southeast Asia’s maritime domain. Southeast Asian states have little choice but to adjust to these new and unpalatable geopolitical realities. President Xi Jinping could well remain in power for at least another decade, and in any case, his successors are unlikely to relinquish China’s global ambitions. And even if Trump fails to win the re-election in November 2020, it is doubtful that US policy towards China will snap back to one of engagement. Almost certainly, US-China competition will be the defining feature of the 2020s, if not beyond, perhaps eclipsed only by the existential threat posed by climate change. To maintain the region’s political and strategic autonomy, and avoid the hard choices that Sino-US competition will create, Southeast Asian countries will strive to achieve their own vision of regional order, one in which ASEAN plays the leading role and Washington and Beijing put the region’s interests before their own and eschew ruinous strategic rivalry.

Notes 1 Tang S.M. et al., The State of Southeast Asia: 2020, ISEAS-Yusof Ishak Institute, Singapore, January 2020, at ofSEASurveyReport_2020.pdf (accessed February 29, 2020). 2 Ibid., p. 15. 3 Ibid., p. 35. 4 Ibid., p. 43. 5 The literature on the South China Sea is voluminous. For background, see: Clive Schofield and Ian Storey, ‘The South China Sea Dispute: Increasing Stakes and Rising Tensions’, Jamestown Foundation Occasional Paper, November 2009; Bill Hayton, The South China Sea: The Struggle for Power in Asia, Yale University Press, New Haven, CT and London, 2014; Ian Storey and Lin Cheng-yi (eds.), The South China Sea Dispute: Navigating Diplomatic and Strategic Tensions, ISEAS Yusof Ishak Institute, Singapore, 2016; and individual chapters in Ian Storey, Southeast Asia and the Rise of China: The Search for Security, Routledge, Abingdon, 2011. 6 The most comprehensive set of satellite images of China’s artificial islands, and the facilities on them, can be found on the Center for Strategic and International

China–Southeast Asia relations and Xi  251


8 9 10 11 12


14 15 16

17 18



Studies’ Asia Maritime Transparency Initiative, at (accessed January 15, 2020). ‘An Accounting of China’s Deployments to the Spratly Islands’, Asia Maritime Transparency Initiative, CSIS, Washington, DC, May 9, 2018, at https://amti. (accessed February 4, 2020). ‘China Tells PH off on Reef Reclamation, Says “It’s None of Your Business”’, Philippine Daily Inquirer, Manila, June 8, 2014. Foreign Ministry Spokesperson Hua Chunying’s Regular Press Conference on April 9, 2015. ‘Defense Ministry Warns U.S. against Causing Trouble Out of Nothing’, Xinhua, January 20, 2018, at 7915213.htm (accessed January 20, 2018). ‘Full Text of Xi Jinping’s Report at 19th CPC National Congress’, China Daily, November 4, 2017, at congress/2017-11/04/content_34115212.htm (accessed November 4, 2017). ‘Update: China Risks Flare-Up over Malaysian, Vietnamese Gas Resources’, Asia Maritime Transparency Initiative, December 13, 2019, at https://amti.csis. org/china-risks-flare-up-over-malaysian-vietnamese-gas-resources/ (accessed December 15, 2019). ‘Advance Policy Questions for Admiral Philip Davidson, USN Expected Nominee for Commander, US Pacific Command’, April 17, 2018, at https://www. (accessed April 18, 2018). ‘Chinese Ambassador: China Has Indisputable Sovereignty over South China Sea Islands’, Xinhua, January 23, 2013; ‘China Rejects Philippines’ Arbitral Request: FM’, Xinhua, February 19, 2013. See Article 4 of the Declaration on the Conduct of Parties in the South China Sea, at (accessed March 6, 2020). ‘The South China Sea Arbitration (The Republic of the Philippines V. The People’s Republic of China)’, Press Release, The Hague, July 12, 2016, at https:// (accessed July 12, 2016). Ian Storey, ‘Assessing Responses to the Arbitral Tribunal’s Ruling on the South China Sea’, Perspective, 43, ISEAS-Yusof Ishak Institute, July 28, 2016, at Jim Gomez, ‘Philippines Says It Protests China “Harassment” of Navy Boat’, Associated Press, May 20, 2018, at 3bbb6ed3ded9821fa (accessed May 20, 2018); ‘Chinese Vessel Sinks Philippine Fishing Boat in Contested Waters; Manila Seeks Probe’, The Straits Times, June 12, 2019. Dharel Placido, ‘Duterte Says to “Defend” Philippine Interests in South China Sea’, ABS-CBN, Manila, July 23, 2018, at 23/18/duterte-says-to-defend-philippine-interests-in-south-china-sea (accessed July 23, 2018); ‘Third Quarter 2018 Social Weather Survey: Pinoys Maintain Anti-Chinese Stance on West Philippine Sea Issue’, Social Weather Stations, November 20, 2018, at code=ART-20181119235355 (accessed November 20, 2018). Jay Batongbacal, ‘The Philippines-China MOU on Cooperation in Oil and Gas Development’, Asia Maritime Transparency Initiative, December 5, 2018, at

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22 23 24

25 26

27 28 29 30


32 33 34 35 36 (accessed December 6, 2018). ‘Declaration on the Conduct of Parties in the South China Sea’, ASEAN, November 4, 2002, at (accessed March 6, 2020). Ian Storey, ‘Assessing the ASEAN-China Framework for the Code of Conduct for the South China Sea’, Perspective, 62, ISEAS-Yusof Ishak Institute, August 8, 2017, at Single Draft Code of Conduct in the South China Sea (COC) Negotiating Text, as of July 26, 2018 (author copy). Lee Chyen Yee, ‘Chinese Premier Li Says Talks on South China Sea code Should End in Three Years’, Reuters, November 13, 2018, at article/us-asean-summit-china/chinese-premier-li-says-talks-on-south-chinasea-code-should-end-in-three-years-idUSKCN1NI0B0. ‘PM Lee Calls for United Asean amid US-China Tensions’, The Straits Times, June 24, 2019, at (accessed June 24, 2019). See, for instance, Department of Defence, Canberra, ‘Joint Statement: Eighth Japan-Australia 2+2 Foreign and Defence Ministerial Consultations’, October 10, 2018, at joint-statement-eighth-japan-australia-22-foreign-and-defence (accessed October 10, 2018); Jake Maxwell Watts, ‘Bolton Warns China against Limiting Free Passage in South China Sea’, The Wall Street Journal, November 13, 2018, at (accessed November 14, 2018). Tang S.M. et al., no. 1, p. 7. Ibid., p. 38. Michael Clarke, ‘The Belt and Road Initiative: China’s New Grand Strategy?’ Asia Policy, 24, July 2017, p. 71. Le Hong Hiep, ‘The Belt and Road Initiative in Vietnam: Challenges and Prospects’, Perspective, 18, ISEAS-Yusof Ishak Institute, March 29, 2018, at https://[email protected] (accessed March 29, 2018). Lee Hisen Loong, ‘Prime Minister of Singapore, Keynote Address, 18th Asia Security Summit’, IISS Shangri-La Dialogue, May 31, 2019, at https://www. (accessed June 7, 2019). Will Doig, High-Speed Empire: Chinese Expansion and the Future of Southeast Asia, Columbia Global Reports, New York, 2018. Shang-Su Wu and Alan Chong, ‘Developmental Railpolitics: The Political Economy of China’s High-Speed Rail Projects in Thailand and Indonesia’, Contemporary Southeast Asia, 40 (3), December 2018, pp. 509–515. ‘Malaysia, Singapore Ink Agreement to Defer High-Speed Rail Project for 2 Years; KL to Pay S$15m for Suspending Work’, The Straits Times, September 5, 2018. Lye Liang Fook, ‘China-Malaysia Relations Back on Track?’ Perspective, 38, ISEAS-Yusof Ishak Institute, May 15, 2019, at pdf/ISEAS_Perspective_2019_38.pdf (accessed May 15, 2019). ‘Myanmar Scales Back China-Funded Kyauk Pyu Port Project in Rakhine State Due to Debt Concerns’, South China Morning Post, August 2, 2018, at https:// (accessed August 2, 2018).

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254  Ian Storey


54 55 56


58 59

60 61 62 63

org/-/media/files/shangri-la-dialogue/2019/speeches/haji-mohamad-sabu-ministerof-defence-malaysia----as-prepared.ashx (accessed June 7, 2019). For example, a letter signed by prominent US scholars, diplomats, military and business leaders was highly critical of the Trump administration’s hardline policies towards China. See M. Taylor Fravel, J. Stapleton Roy, Michael D. Swaine, Susan A. Thornton and Ezra Vogel, ‘China Is Not an enemy’, The Washington Post, July 3, 2019, at enemy-is- counter productive/2019/07/02/647d49d0 -9bfa-11e9-b27fed2942f73d70_story.html?utm_term=.77a073276a66 (accessed July 4, 2019). ‘Trump Claims Japan “Doesn’t Have to Help” if US Is Attacked’, CNN, June 27, 2019, at (accessed June 27, 2019). ‘Singapore Added to US Watch List for Currency Manipulation’, The Straits Times, May 29, 2019, at (accessed May 29, 2019). ‘Trump Says Vietnam Worse than China on Trade’, Business Standard, June 26, 2019, at (accessed June 26, 2019). Speech by General (Retd) Ryamizard Ryacudu, ‘Minister of Defence, Indonesia, 18th Asia Security Summit’, IISS Shangri-La Dialogue, June 2, 2019, at https:// (accessed June 7, 2019). Speech by Major General (Retd) Delfin Lorenzana, no. 51. Speech by General Ngo Xuan Lich, ‘Minister of National Defence, Vietnam, 18th Asia Security Summit’, IISS Shangri-La Dialogue, June 2, 2019, at https:// (accessed June 7, 2019). ‘ASEAN Outlook on the Indo-Pacific’, ASEAN, June 23, 2019, at https://asean. org/storage/2019/06/ASEAN-Outlook-on-the-Indo-Pacific_FINAL_22062019. pdf. [This URL works for me]. Hoang Thi Ha, ‘ASEAN Outlook on the Indo-Pacific: Old Wine in New Bottle?’ Perspective, 51, ISEAS-Yusof Ishak Institute, June 25, 2019, at https://www.iseas. (accessed June 26, 2019). Tang S. M. et al., no. 1, p. 8. Ibid., p. 28.

12 Xi Jinping’s ‘Asia for Asians’, major power diplomacy and India Atmaja Gohain Baruah

Introduction Interpretations concerning China’s great power role and major country diplomacy have been aplenty. It helps to unpack China’s foreign policy conduct as a fast-developing nation and also shed light on Chinese President Xi Jinping’s stewardship, under whom China has been rapidly asserting its stance on international affairs. Its vantage point is marked by distinct “Chinese characteristics”, marked by an acute sense of responsibility towards global peace and security based on the quite played out phrases – “win-win cooperation” and “a community of shared future for mankind”.1 There is already wide scholarship pertaining to China’s major country diplomacy according to which China is highly keen on shouldering utmost responsibility, appeal and influence on the world stage. Such discussions hold a cue to wider international relations and Indo-Pacific debates – e.g. about the current roles played by other major powers in the region like the United States (US), Japan, Australia and India. Meanwhile, the ongoing tensions, contestations and uncertainties in the global political environment can certainly not be dismissed: Sino-American relations are at their lowest, the North Korean nuclear issue is still problematic and maritime disputes in the East and South China Sea are nowhere close to being resolved.2 China is, however, in a different space than where it was a decade ago – it has moved away from the periphery to actually the centre, and as President Xi argues, ‘Closer than ever to the center of the global stage … closer than ever to fulfilling the Chinese Dream of national renewal.’3 Such self-confidence not only places China in a strategic and favourable position regionally but also alters the scenario globally, which for the longest time was dominated by the West. There is also a systematic and comprehensive move towards shedding China’s previous low profile and portraying it as being a rising but benign and amicable power. In fact, since the late 2000s, there has been notable improvement in China’s comprehensive power projection, particularly after it fared much better than most Western economies during the global financial crisis. Also, in 2010, China overtook Japan as the second-largest economy

256  Atmaja Gohain Baruah in the world, which validated its standing as a fast-developing nation and raised its self-esteem. Stemming from that, the present Xi Jinping narrative of major country diplomacy involves economic proliferation, political influence, creating new networks and increased emphasis on the protection of ‘core interests’.4 Broadly speaking, China dons multiple identities: it identifies itself as a socialist state with ‘capitalist characteristics’, a fast-developing country, a victim of a humiliating history at the hands of Western powers, Japan and Russia and lastly, a responsible great power.5 The role of the Chinese Communist Party (CCP) also cannot be denied, with the CCP conflating Chinese identity with the ‘identification of the Communist leadership’, which despite its capitalist embrace still projects China as a socialist country in the international milieu.6 This is linked to China’s history of being a victim of historical humiliation, which further stresses the need to be a responsible great power – the intersectionality can be traced back to Chinese views on hegemonic power, being a victim itself, which reflects in its quest for a more ‘harmonious world order’. In fact, the Chinese phrase wuwang guochi (never forget national humiliation) is more or less always followed by zhenxing zhonghua (rejuvenate the Chinese nation), implying a thrust towards greater global power and influence.7 All of these identities provide reference points to China’s evolving stature, which is fast shaping its foreign policy developments, especially towards being a responsible great power.8 This recognition is reflective of China’s major country diplomacy. Time and again, whenever China has made global assertions, it has claimed to abide by international obligations. Even when charged with militarising the South China Sea and East China Sea Islands, the Chinese side has always stood by its activities being coterminous with China’s maritime claims of ‘search and rescue, disaster prevention and mitigation, meteorological observation, ecological conservation, navigation safety and fishery services’.9 All of these have different ramifications on Asia’s strategic landscape, which shall be discussed at length in this chapter. Besides, the protuberant need for security and stability in Asia becomes more evident when trying to grapple with issues such as North Korea’s denuclearisation, security issues in Iran and Afghanistan, terrorism and drug trafficking spreading across West and South Asia and other forms of transnational crime. Each of these have the potential to be sources of potential instability or conflict, thereby necessitating the need for creating engagement on multiple platforms. This is where minilateral forums come into the picture – not just to facilitate comprehensive dialogue but to overcome multilateral institutional lethargy as well. The Quadrilateral Security Dialogue (‘Quad’), comprising of the US, India, Japan and Australia, having re-emerged in 2017 after a decade of dormancy, is setting new mechanisms to build a minilateral construct by taking

Xi Jinping’s major power diplomacy – India  257 forward the various bilateral engagements between the member states. The role of the Quad as a regional construct in creating synergies for cooperation is important here and highlighted later in the chapter. Countries having felt the threat of China’s fast-developing security partnerships, well-entrenched regional presence and growing global outreach, have thus, resorted to multilateralism and minilateralism as coping strategies. This chapter analyses India’s response specifically, as India–China relations are already heavily skewed – territorial disputes among other caveats involving the Indian Ocean Region (IOR) have affected their regional powers’ ties. While it comes within a larger strategic mix of coexistence, cooperation and competition, there are broader strategic implications of not only what India and China conduct together but their dynamic with the other neighbouring countries as well.10 Such externalities sometimes are more consequential in creating strains in their relationship than actual aspects of their bilateral relations. For instance, China and India hold different perspectives on the legitimacy of the other’s role in the Indian Ocean.11 They also seek to leverage the other’s vulnerabilities, be it economic or geographical, to their own advantage. This acts as a catalyst towards even more strategic competition, which is already fuelled by the economic imbalance, conventional military supremacy, their nuclear potential and, finally, relations with other major or neighbouring powers.

Xi Jinping’s thoughts on diplomacy and China’s major country relations There is no denying that the primary objective of President Xi’s major country diplomacy was to improve relations with the United States.12 When China’s Foreign Minister Wang Yi gave a speech at the Brookings Institute in 2013, China–US relations seemed to be on the uphill.13 Trade relations were flourishing and were seen as a stabiliser to any other kind of derailment. It was during those times when the US-China major country model was actively reiterated by Chinese Government officials.14 The model was based on three prerequisites: a situation of no confrontation or conflict, mutual respect for each other’s diversity and win–win cooperation.15 Wang Yi also indicated that China’s major country diplomacy has a ‘new vision, new thinking and new strategies’ of foreign policy. When in 2016, he spoke about the ‘theory of major country diplomacy with Chinese characteristics’, he lent it even more substance and legitimacy by giving it a theoretical framework based on public diplomacy. The concept was soon theorised at length within the Chinese circle, as it got enshrined within China’s five pillars of a community – shared destiny of mankind, win-win cooperation, people’s development, partnership and promotion of world justice.16 The same has been officially articulated time and again; the then Chinese State Councillor, Yang Jiechi, published articles to illustrate

258  Atmaja Gohain Baruah ‘Xi Jinping thought on diplomacy’. He described how through scientific assessment of the global scenario, President Xi is using unique Chinese principles to further global governance and all-rounded diplomacy.17 He placed this within the bigger picture of President Xi’s other diplomatic goals: achieving the ‘Chinese Dream’ where the Western value system can coexist with the Chinese one;18 forwarding a new US–China major-power relations model; and enhancing ties with other developing and neighbouring countries.19 Other official discourses, too, placed relations with major powers such as the US, Russia and the European Union as the topmost priority, followed by complementing neighbours, developing nations and multilateral organisations. Thus, several parallels can be drawn between Xi Jinping’s thoughts on diplomacy and China’s major country diplomacy, which has drawn more attention as a theoretical system than just a concept.20 Many Chinese scholars have pointed out how having good relations with major powers is not new, but the increased thrust by President Xi definitely is – some even label it as ‘Chinese diplomacy 3.0’.21 The strategic objective here is as much on creating a political international order that is conducive to the renewal of the great nation of China as on economic development. Like with most things, there is a difference of opinion in the way China’s major country relations are conceived – while for pandits in mainland China, President Xi’s policies are proactive, nationalistic yet cosmopolitan, outside of China they are characteristic of ‘high assertiveness’, ‘insecure nationalism’, ‘offensive realism’ and ‘Chinese diplomacy 3.0’.22 For the former, the tag of major country diplomacy does not necessarily mean that China is a ‘major power’. By focusing on non-confrontation and building of ‘strategic trust’, China wants to send a signal that its foreign policy agenda is benign and accommodating of other nations’ interests.23 In an attempt to prove this further and downplay its capabilities, China has also changed the official terminology – from ‘major power’ to ‘major country’. This diplomacy also holds a moralistic element: it is actually said to follow a value compass according to which a major country cannot just pursue nationalistic interests; it must also ensure that justice is accorded to all.24 For instance, the great ‘Chinese Dream’ not only is just a narrowly conceived concept for the betterment of Chinese people but conveys similar aspirations for other nations as well.25 This moralistic compass magnifies China’s quest to provide for the common goods, hence enhancing its soft power. The Belt and Road Initiative (BRI), President Xi’s most momentous and far-reaching initiative so far, does well to exemplify this quest towards bettering a ‘shared future for mankind’.26 While this concept may be distorted and idealistic, it does show President Xi’s grand vision of putting China at the centre.27 It has already made several developing nations dependent on China’s infrastructure and connectivity measures – that level of unprecedented reliance certainly has deeper ramifications. It becomes more

Xi Jinping’s major power diplomacy – India  259 evident when we look at the rapid development of big data, artificial intelligence and Fifth Generation (5G) networks.28 China already holds several stakes in this area, cyber connectivity being one of the tenets of the Belt and Road Forum (BRF).29 For President Xi, China’s contribution to global governance however must take into account the international balance of power, meaning it has to choose its battles selectively.30 Hence, China’s major country diplomacy should not only be seen as a geopolitical or geoeconomic strategy of gaining hegemony, but also one infused with distinctive Chinese features of community-building and shared responsibilities.31 It can be reflected in different spheres of global affairs, such as building connectivity projects, creating more global governance norms, promoting sustainable development and taking on more responsibilities such as that of addressing climate change and providing public goods.32 As President Xi articulates, ‘We have seen a further rise in China’s international influence, ability to inspire, and the ability to shape.’33 Furthermore, the successful running of the Asian Infrastructure Investment Bank (AIIB), and the fact that it could appeal to American allies such as Germany, the United Kingdom and Israel put China ahead in the global governance front.34 Another milestone was the inclusion of the renminbi in the Special Drawing Rights Basket of the International Monetary Fund (IMF). Xi’s book The Governance of China is reflective of this growing confidence as a global leader, who sees the US, Russia and the European Union as peer powers.35 The book underlines the work done by the CCP Central Committee led by President Xi to promote the Chinese Dream as in fact the dream of the whole world through more multilateral dialogues based on trust and friendship.

Asia for Asians or China for Asians? Central to China’s rise in the late 2000s, there was a noticeable change in the US administration since 2009 under President Barack Obama, regarding China’s new role as a global responsible power. As Obama stated in 2011, ‘China’s rise is potentially good for the world, to the extent that China is functioning as a responsible actor on the world stage.’36 The Obama administration galvanised a ‘pivot to Asia’ in 2012, shifting the US focus from the Middle East, which experienced a withdrawal of US strategic involvement, to the Asia Pacific region. More specifically, this ‘forward- deployed’ diplomacy, a term coined by Hillary Clinton, also boosted ties with the hub-and-spoke partners such as Japan, Thailand, the Philippines, Australia and South Korea through military investments.37 It sought to improve economic ties with emerging regional countries like India, Indonesia and other ASEAN countries. Emphasis was further diverted towards multilateral forums such as the Asian Regional Forum (ARF), ASEAN

260  Atmaja Gohain Baruah Summit and East Asia Summit. It was accompanied by various policy adjustments and enhanced dialogue mechanisms.38 At that time China had started taking more global responsibility, which became salient as the country got involved in contributing towards international peace and security, participating in global decision-making, making its foreign policymaking more transparent, providing global common goods and enhancing regional cooperation and stability (Swaine 2010). During a joint press conference with Obama in 2014, President Xi articulated how China has become more than a participator in the international system; it is a ‘builder of and contributor’. He went on to voice how ‘China continues to shoulder more and more international responsibilities that are commensurate with [its] own strengths and responsibilities’.39 This internationalist position can also be traced back to the Chinese idea of ‘all under heaven’, according to which China is held morally accountable to the world being ‘harmonious’ and ‘shared’ by all. Development and security are like two sides of the same coin – economic, social progress as well as political stability are crucial for security, and security, too, is a prerequisite for overall progress.40 Therefore for Asia particularly, President Xi began advocating a new Asian security concept. On April 7, 2013, at the Boao Forum for Asia Annual Conference, Xi talked at length on security, ‘What we need to do is to enhance mutual understanding, build consensus, and enrich and deepen cooperation so as to strike a balance among the interests of various parties and build mechanisms that bring benefits to all.’41 The Asia for Asians slogan or the notion of ‘Chinese solutions’ to international problems found space in the Chinese lexicon of diplomacy first at the 2014 National People’s Congress when Foreign Minister Wang spoke about offering ‘Chinese solutions’ to regional and global issues.42 On May 21, 2014, President Xi proposed a ‘common, comprehensive, cooperative, sustainable Asian security concept’ in his keynote speech at the fourth Conference on Interaction and Confidence Building Measures in Asia (CICA), To keep up with the times, the body cannot enter the 21st century, and the head still stays in the Cold War thinking, zero-sum game. We believe that we should actively advocate a common, comprehensive, cooperative, and sustainable Asian security concept, innovate in security concepts, build a new framework for regional security and cooperation, and work hard to embark on a road of co-construction, sharing, and win-win Asia.43 Taking increased responsibility implied that China was on a path to seek maximum ‘political legitimacy’, to enrich its ‘strategic credibility’ and also to take some of the negative attention away from the various human rights violation cases.44

Xi Jinping’s major power diplomacy – India  261 Moreover, when the Obama administration started shifting its strategic alignment to the Asia-Pacific, China increasingly felt more threatened expecting hostility from its neighbours, who are also the US hub-and-spoke partners. President Xi also remarked on their perceived relationship with the US, ‘Strengthening military alliances against third parties is not conducive to maintaining common regional security.’45 Abandoning such military alliances is crucial for China’s vision of a new Asian security order, which led President Xi to reiterate on various occasions how ‘Asia is Asian problem, and Asians need to solve it … it is for the people of Asia to run the affairs of Asia, solve the problems of Asia and uphold the security of Asia’46 and how ‘Asia belongs to the world. For Asia to move towards a community of common destiny and embrace a new future, it has to follow the world trend and seek progress and development in tandem with that of the world’.47 These statements reflect China’s readiness and proactiveness in being a great power in Asia – building comprehensive regional security is not a new phenomenon, but it is definitely being pursued with a new vigour. A clear sign was seen when China hosted the 2014 Asia-Pacific Economic Cooperation (APEC) meeting in Beijing and the 2016 G20 Summit in Hangzhou. By being in charge of the theme and agenda of such summits, China forwarded its own strategic claims which later got reflected in the leaders’ communique and the outcome of the summit.48 CICA, for instance, has played a formative role in promoting regional security in Asia. As part of this whole rhetoric, President Xi strives to call for Asian leaders to discuss transregional issues without extra-regional interferences, thus keeping US influence at bay. Over the years, whenever China has chaired CICA, President Xi has mostly pressed on having more defence consultations and on adopting various confidence-building measures to improve the member countries’ ‘capacity and institutional building’. All in all, more than directly addressing conflicts, CICA is aimed at creating conditions to promote mutual understanding. Even at the fifth CICA summit at Dushanbe, Tajikistan, in June 2019, the focus was on developing dialogues for an open and inclusive regional security architecture that was based on universally recognised principles of the Charter of the United Nations (UN). However, CICA tilts more towards Russia, Western and Central Europe, leaving some key countries in the region such as Japan, Cambodia, Indonesia, Malaysia and the Philippines as CICA reviewers. There is also no representation from West Asia – Oman, Saudi Arabia, Lebanon and Yemen are neither observers nor members.49 This non-representation from otherwise important stakeholders makes the proceedings bleak for the overall security framework of Asia. On the other hand, China has held talks on regional security through several other forums, such as the SCO, Xiangshan Forum, Six-Party Talks, China-ASEAN Ministerial Dialogue on Law Enforcement and Security

262  Atmaja Gohain Baruah Cooperation, Center for Comprehensive Law Enforcement and Security Cooperation in the Lancang-Mekong Sub-Region, Asian Law Enforcement Security Cooperation Forum and Asian Security Emergency Response Center.50 The Conference on Dialogue of Asian Civilizations (CDAC) is another new platform to deliberate Asia’s contemporary affairs, ranging from culture and education to tourism and trade. Documents such as the ‘Beijing Consensus on the Dialogue Conference of Asian Civilizations 2019’ and ‘Building a Partnership for the Asian Destiny Community Think Tank Partnership’ were released to promote Asian regionalism.51 The main theme of this conference was to focus on Asia’s achievements as a civilisation and how it can be the basis of future mutual well-being, too. What should be taken note here is that while these forums may be dissoluble, they set forward a path towards increased interaction. Secondly, Chinese-led security partnerships are not incidental – with President Xi wanting to create a China- centric security order, they are propelled by the exigency of addressing common security threats. For instance, the 2018 Xiangshan Forum had the theme ‘Building a New Type of Security Partnership of Equality, Mutual Trust and Win-Win Cooperation’, while the 2017 Forum was themed ‘Build a New Type of International Relations through Security Dialogue and Cooperation’, both of which portray China’s security ambitions. Table  12.1 provides an overview of some of these associations. Lately, it has been noticed that there is an increased readiness in these partnerships to be more institutionalised – they are involved in not just high-level official visits but also diverse types of collaborations, including arms sales, military exercises and dialogues. China has in fact made consequential inroads into most of the world’s markets as well as their societies through Foreign Direct Investment (FDI), technology, culture and other areas (see Table 12.2). Finally, there are other initiatives that President Xi has proposed in order to facilitate regional comprehensive development in Asia and beyond, e.g. the AIIB, the Silk Road Economic Belt and the Twenty-first Century Maritime Silk Road. The BRI, for instance, is a medium of securing Chinainitiated global governance by rejuvenating the sluggish economies of the world, promoting globalisation and strengthening economic interdependence.52 Boosting the economic nexus in turn is expected to reap political and strategic leverage in the making of an Asian ‘community of common destiny’. Thus, by combining the trinity of security, economy and culture through a multipronged approach, China is seeking to lead this new cornerstone of Asia’s regional security.53 This is also concomitant to the fulfilment of the Chinese Dream - having committed to achieving the 200-year goals, it is a crucial time for China to create a stable growth environment both domestically and internationally.54 With rising global uncertainties – the US’s America First Policy, Russia’s stagnancy, Europe’s domestic upheavals and economic sluggishness – the onus seems to be on China to take the world economy forward.

China, Afghanistan, Azerbaijan, Bahrain, India, Iran, Iraq, Israel, Jordan, Kazakhstan, Kyrgyzstan, Egypt, Mongolia, Pakistan, Palestine, South Korea, Russia, Tajikistan, Thailand, Turkey, United Arab Emirates, Uzbekistan and Vietnam. Encourages dialogue and consultation on security China, ASEAN states, Australia, Bangladesh, Canada, issues; Democratic People’s Republic of Korea, European Union, enhances confidence-building and preventive India, Japan, Mongolia, New Zealand, Pakistan, Papua New diplomacy. Guinea, Republic of Korea, Russia, Sri Lanka, Timor-Leste and the United States Helps ASEAN in capacity building; China, ASEAN States, Australia, India, Japan, New Zealand, Builds trust and confidence through defence Republic of Korea, Russia and the United States establishments; encourages maritime cooperation; provides humanitarian assistance and disaster relief. Expands consensus; boosts cooperation through China, Russia, Indonesia, Malaysia, Nigeria, Serbia, Vietnam, security dialogue and defence contacts; Ecuador, Sri Lanka, the Philippines, Cambodia, Belarus and promotes regional peace and stability. Nepal Provides a high-level dialogue platform for China, Australia, Bangladesh, Brunei Darussalam, Cambodia, various political, business and academic India, Indonesia, Japan, Iran, Kazakhstan, the Kyrgyz discussions; Republic, Lao People’s Democratic Republic, Malaysia, promotes development in technology innovation, Mongolia, Myanmar, Nepal, Pakistan, the Philippines, education, heath, media and culture. the Republic of Korea, Singapore, Sri Lanka, Tajikistan, Thailand, Turkmenistan, Uzbekistan, Vietnam, Israel, New Zealand and, Maldives

Source: Various open sources.

Boao Forum for Asia Annual Conference

Xiangshan Forum

ASEAN Defence Minister’s Meeting Plus



China, India, Kazakhstan, Kyrgyzstan, Russia, Pakistan, Tajikistan and Uzbekistan


Caters to regional security issues, against regional terrorism, ethnic separatism, religious extremism and boosts regional development. Engages in confidence building measures: economic, environmental, human, military-political.

Member countries

Association/forum Objectives

Table 12.1 Selected organisations/institutions for China’s regional cooperation

Xi Jinping’s major power diplomacy – India  263

264  Atmaja Gohain Baruah Table 12.2 China’s inroads into world markets and cultures under President Xi Area Trade

Since 2013, China is the biggest goods trading nation, accounting for 11.4 per cent of global goods trade during 2017. Merchandise trade In 2018, China’s exports stood at US$ 2.49 trillion and its imports at US$ 2.14 trillion, growing rapidly since 2012. Commercial China has been the leading exporter of commercial services services trade among developing countries – its exports increasing by 17 per cent in 2018. Firms China has 110 Global Fortune 500 companies, much more compared with the United States. Capital China has one of the largest financial system, biggest banking system and one of the leading stock and bond markets. Office and telecom China has invested greatly in its R&D – second largest in the equipment world – $ 293 billion in 2018. It accounted for 32 per cent of world exports. Data China has the world’s most internet users, generating a huge amount of data. Culture China has invested greatly in enhancing its global cultural presence – films shot in China has increased and more international movies are being shown. Source: McKinsey Global Institute analysis and World Trade Statistical Review 2019.

India’s multipronged response and the Quad: an upshot of China’s new diplomacy The relationship between India and China showcases an interplay of various tangible factors (such as economic and military might) and intangible factors (such as international perception, prestige and historical trauma), which not only underscore the rivalry between them but also shape their national and regional identities.55 Their regional standing too is hinged on their diplomatic, economic and military dominance – often coalescing with historical conditions, global interactions and individual power projection.56 Securing a strong sphere of influence is therefore considered extremely crucial by both, as they seek to be seen as benign regional powers. At the same time, maintaining a stable and peaceful immediate neighbourhood is of foremost importance to reduce external stressors. This is accompanied by perception management in the periphery, which is again critical for both China and India, considering the controversial relations they have with Japan and Pakistan, respectively, that could possibly disrupt their aspirations of attaining regional domination.57 For India, souring relations with Pakistan, Bangladesh and Nepal has stalled regional governance – South Asian Association for Regional Cooperation (SAARC) as a multilateral framework has failed and new initiatives such as the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) and Sagarmala require a great deal of investment, on which

Xi Jinping’s major power diplomacy – India  265 India is still deliberating. Moreover, owing to their historical baggage  – India’s military intervention in Sri Lanka, former East Pakistan (now Bangladesh) and West Pakistan (now Pakistan) – positive regional engagement becomes tricky. China, on the other hand, fulfils the criteria of great power capabilities – the strategic centrality in its regional foreign policy transcends other bilateral setbacks it may have with its neighbours. New Delhi’s response towards China, therefore, is geared more towards adopting multipronged foreign policy directives, practising both hedging and engaging techniques.58 Employing countermeasures with other South Asian countries, promoting its influence and strengthening its maritime capabilities form part of its hedging strategies. In terms of securing the Indian Ocean lanes, India’s Prime Minister Narendra Modi has been engaging with island states like Maldives, Mauritius and Seychelles.59 The Indian Navy is also gradually increasing its fleet of aircraft carriers, submarines and surface ships in an effort to achieve better control over its sea resources and protect its merchant ships and trade routes.60 As it seeks to be a great regional power in a maritime-oriented Indo-Pacific, India needs to have a multipronged blue water navy. Consequently, a robust submarine fleet constitutes a substantial part of a country’s offensive naval capability, be it for strategic, tactical or operational forces. Although India is building its submarine capabilities and possesses a force level of 17 submarines, it is paltry when compared to China’s submarine fleet.61 From 2013 to 2018, there have been about eight Chinese submarine deployments in the Indian Ocean.62 This not only increases Indian Navy’s strategic vulnerability but also speaks poorly of India’s aspirations of becoming a regional power. This is why India needs to augment its submarine capability by focusing on accomplishing the Project 75I (P75I)63 and building more strategic partnerships with littoral allies. In this respect, the Quad, an informal security framework between India, Japan, the US and Australia, is an important construct. Under the shadows of China’s increasing assertiveness, this framework seeks to reinvigorate the presence of the US in the Indo-Pacific, dilute Chinese incursions and more importantly, provide alternative security guarantees to the region.64 It adds legitimacy to the US’s rebalance, India’s Act East Policy and Japan’s renewed focus on defence modernisation. Such engagements become prominent as boundaries transgress beyond the previously defined geographical understanding of the Asia-Pacific. IndoPacific is now characterised by a rising convergence of security, economic and maritime trajectories, mostly related to addressing non-traditional security issues such as global interconnectivity and maritime cooperation.65 The post-Cold War American ‘hub-and-spokes’ network has given rise to a range of smaller security coalitions geared towards addressing various concerns, for instance, the Six Party Talks. The fluidity of the Indo-Pacific geopolitical arrangement also lets the ASEAN members explore their own possibilities.66 Thus, contemporary geopolitics has boiled down to two

266  Atmaja Gohain Baruah contrasting yet overlapping understandings – first, of a US-led system of like-minded countries; and second, institutionalisation of regional security building within an extended framework of regionalism.67 In this regard, minilateralism, because of its more exclusive and narrower nature, can be more consequential in the global security context.68 Miles Kahler had argued that in the post-Cold War scenario, larger groupings cracked and became unwieldy due to clashing domestic interests, but smaller groupings tende to be more effectual.69 For Victor Cha, such smaller groups do not have to be permanent as that gives them the freedom to disband any time without breaking the general institutional structure.70 Brad Glosserman and Scott Snyder called this ‘minilateral solution’ – their agenda is mostly clearer which increases the likelihood of resolving it.71 With regard to the Quad, Euan Graham reasons how it is national interests and threat perceptions which will determine the level of strategic alignment between the Quad partners.72 While undeniably, China is at the heart of it, there are still several lingering doubts about the veracity of the cooperative mechanism.73 Australia’s strategic reckoning is uncertain, and even Japan has been struggling with respect to its position. While the US exhibits an inclination towards sustaining its regional hegemony despite the uncertainty shown by the present US administration, there are persisting differences between the US and India, which hinder full cooperation. Nonetheless, the whole arrangement has brought back the urgency of addressing ‘traditional security’ politics, marked by managing major country competition through military means and protecting national security from transnational threats.74 On the other hand, considering how high the stakes of having favourable India-China ties are for both the countries, neither wants to actively participate in antagonising the other.75 That is why India actively stresses on the Indo-Pacific being a ‘free, open, inclusive region’. However, while historically India has always held a non-aligned posture, the present geopolitical scenario has necessitated leveraging strategic benefits from its relations with other powers such as the US and Japan, especially in the face of China’s extended role in the Indian Ocean Region (IOR).76 Shoring up defence relations with the other Indo-Pacific members is first. India already has a Logistics Exchange Memorandum of Agreement (LEMOA) with the US since 2016, and India is ready to sign a similar mutual logistics agreement with Russia. Both pacts will ease port visits, military exercises and disaster relief between the countries.77 India has also signed a Framework for Security Cooperation with Australia in 2014 to improve institution-level security and diplomatic relations. With Japan, too, there are increased military exercises and capacity-building mechanisms, drawing from the synergy between Japan’s free and open Indo-Pacific concept and India’s ‘Act East’ policy.78 Moreover, the Japan-US-India Trilateral Infrastructure Working Group is anticipated to further advance infrastructure and capacity building, particularly in the subregions such as the Mekong region or the Bay of

Xi Jinping’s major power diplomacy – India  267 Bengal region in the Indo-Pacific.79 This is useful for India’s Sagar vision too, considering it has partnered with the US International Development Finance Corporation (DFC), a new agency formed under the US Better Utilisation of Investments Leading to Development Act (BUILD Act) of 2018.80 However, there are complexities regarding the institutionalisation of Quad – while it may boost cooperation among some, it might increase antagonism among others.81 In this context, there was a lot of hesitation from the Chinese side to accept this new geopolitical change, which is largely seen as an alliance against a Sino-centric regional order. So far, China has been viewing this trajectory from a one-sided dimension – how the Indo-Pacific terminology gives too much importance to India and the US-led alliances. Another perspective is, however, more complimentary; it points towards how there is more to this notion than just aspects of zero-sum competition – there are opportunities to develop cooperation as well. While it could be difficult in the military sphere, there is no denying the prospects that exist in the economic sphere. Another reason why the Indo-Pacific matters to China is because the country has extended strategic interests in the IOR.82 It is a dialogue partner of the Indian Ocean Rim Association (IORA). Moreover, China might not be a part of the Quad, but it is a critical stakeholder in the ongoing economic and strategic trajectories.83 There are actually, greater strategic connections between China and the smaller Asian states than combining the US and other regional countries. One has to observe the BRI’s maritime component and China’s neighbourhood diplomacy to identify the resonance.84 For members like India, obstructions arise with regard to the operationality of the Quad – give the grouping a narrower but more functional approach or keep the membership open towards a broader regional framework. The former could be more useful to manage regional disasters and operate maritime exercises; while taking the broader approach could be more fruitful to discuss issues of regional concern. Whichever approach is taken, it would be beneficial for all members to communicate the core objectives more comprehensively, chart a viable plan towards achieving it, coordinate domestic policies and be more accommodating of national constraints. Cooperation has to be incremental – for instance, in the area of military cooperation, there is scope for more capacity building, joint military trainings, mutual defence pacts and sharing of military technology.85 Japan has already made several new amendments to expand its military cooperation and intelligence sharing.86 The problem, however, lies with the inability of the Indo-Pacific countries to be consistent and follow through their connectivity plans despite available opportunities. According to reports by the Asian Development Bank (ADB) – infrastructure needs in the region amount to over $ 26 trillion between 2016 and 2030.87 In 2018, the US had announced an investment of $ 113 million in new technology and infrastructure for the Indo-Pacific, along with the formation of the DFC with a budget of $ 60 billion, but these

268  Atmaja Gohain Baruah initiatives are still modest compared to the BRI.88 They are also not inclusive – maritime Southeast Asia, for instance Indonesia, lies at a crucial geopolitical juncture, but is not a part. One cannot say there is a lacuna of trade and market access in the region, but in terms of latitude and inclusivity, more work can be done. It could serve as one of the missing puzzles in the framework, be it a quadrilateral or pentagonal.89 So, besides coming with an itch to contain China, the Quad has to find other ways to achieve consonance – such as promoting regional connectivity and infrastructure projects and having a balanced maritime order. This would lead not only to more integration within the Indo-Pacific but also to more meaningful and durable cooperation. Encouraging a formal and coordinated Indo-Pacific investment and trading structure could also help in linking the economies, though it might not guarantee the absence of tariffs and barriers. Nonetheless, by and large, the Quad as a strategic security construct has met its shares of critics and optimists – Rory Medcalf argues in favour, citing Quad’s mere existence and ambitions being beneficial for discussing regional contentions; while Quad sceptics like Hugh White argue how Quad is just an ‘empty gesture masquerading as a policy’.90

Conclusion Xi Jinping’s China was not built on a tabula rasa; it drew on the Chinese conception of the premodern world (tianxi), the American perspectives on Beijing and the debates about countries shouldering equal if not greater responsibility in world affairs. Coming out of Deng Xiaoping’s shadow, President Xi launched China into the world as a major country-seeking intensive geoeconomic engagement.91 The BRI is a testament to that – connecting China’s foreign affairs ministry and diplomatic personnel to develop infrastructure missions across the world, which has also bestowed much global power responsibility on China. There have been certain externalities, too, which have had a catalytical effect on China’s role as a responsible global power – the Asian financial crisis, the Six Party Talks and the 9/11 terrorist attack – precipitating the perception of China being able to respond promptly to crises. China believes in having a peaceful external environment and in preventing tense situations from escalating so as to avoid any hindrances to its great rejuvenation. Sometimes this narrative takes on an ugly turn for the world when China uses it to justify and reinforce its aggressive activities – the finest example being China changing the landscape of the disputed South China Sea islands in order to pursue maritime resources. Asia for Asians also emerged out of China’s views on its regional and global commitments and the role of the US in the region. While China was involved in international decision-making, it was embedded within a very Western-backed power system – historically reflecting only the traditional

Xi Jinping’s major power diplomacy – India  269 power structure. China did not consider a West-centric developmental course conducive for the growth of all, specifically Asia, and sought to chart a different one. The AIIB was created for the very same reason. President Xi has also highlighted at various occasions that Asia’s security is the collective responsibility of Asia, security being ‘universal, equal and inclusive’; thus, the idea of pan-Asianism is very evident in the Chinese leadership’s security agenda.92 However, the US’s role or its alliances in the region are hard to dismiss, which is where the operationalisation of ‘Asia for Asians’ faces hiccups. Now with China’s emergence as a major power, and President Xi having secured utmost power and being undeterred to bring about changes as long as they serve his party’s purpose, questions have been raised in international politics about China’s real intentions, for instance: Will China change the existing world system just to suit its rise? What would be the implications on its foreign policy directives in such a case; and specifically, on the neighbourhood to avoid a clash with other rising powers like India? There are opportunities for India and China too to contribute not towards a Sino-centric Asia, but a globalised Asia that is built on strong regional institutions. For the time being, they could focus on developing mutually agreeable protocols to de-escalate crises and impede confrontations in the IOR. Non-traditional security threats like maritime piracy, trafficking, humanitarian assistance, disaster relief and free and open trade shall always be common areas of concern.93 The cooperation has to be backed by greater transparency in information sharing, port access and use, particularly within other subregional economic cooperative groupings such as the Bangladesh-China-India-Myanmar (BCIM) Corridor. Both countries could collaborate in the development of other lesser developed littoral states like Seychelles. Further, there is potential for the US and other like-minded partners to adopt minilateral security ties in the region, as first, such arrangements seem less threatening; and second, they do not replace the already existing multilateral institutions.94 The US has already created its own smaller spheres of influence within the broader ASEAN mechanism in the IndoPacific. By focusing on a niche area, more effective policies can be formulated. However, any new Indo-Pacific regional framework must work with existing frameworks, i.e. be conducive to overlapping arrangements even if that makes them hybrid in nature. Taking into consideration both the maritime and continental aspects is also important so that actual comprehensive potential is realised. The same should also contribute towards generating a more inclusive and stable reflection of how the Indo-Pacific should ideally be. The problem, however, would lie in a leadership change – which could render the minilateral associations ineffectual or even non-existent. With countries unilaterally deciding the extent of their involvement as security actors, the viability of minilateral geopolitics remains undetermined. For instance, with the increased determination of the Trump administration

270  Atmaja Gohain Baruah to ‘make allies pay more’, long-term relations between the US and its allies lie in the danger of getting marred.95 Nonetheless, minilateral ad hoc mechanisms meant to pick low-hanging fruits could seem unsustainable, but if they act as smaller but functional coalition of those willing, it might be more efficient in addressing issues too esoteric for multilateral cooperation. As far as China is concerned, while the overall trends in the Xi Jinping era may seem like paradigm shifts, they are in reality a continuation of the CCP’s ideology and political discourse. What makes it appear like a shift is President Xi’s enhanced zeal towards strengthening the one-party rule system.96 The CCP, while sticking to its Leninist principles, has adapted a combination of both centralisation and selective retreat, at the same time, ensuring economic growth and domestic social stability. While the party’s governance over the state and society matters has noticeably increased, it has been accompanied by an even more aggressive foreign policy. With time, China has indeed done well in combining the Chinese Dream with its grander scheme of geoeconomic and geopolitical medley. As perceptions are changing so are the strategic alignments in the region and if all such conjectures are considered, China’s position is going to be important for the longest time.

Notes 1 Yang Jiechi, ‘Study and Implement General Secretary Xi Jinping’s Thought on Diplomacy in a Deep-going Way and Keep Writing New Chapters of MajorCountry Diplomacy with Distinctive Chinese Features’, Ministry of Foreign Affairs of the People’s Republic of China, July 17, 2017, at cn/mfa_eng/wjdt_665385/zyjh_665391/t1478497.shtml 2 Greg Poling and Bonnie S. Glaser, ‘How the US Can Step up in the South China Sea: The Right Way to Push back against Beijing’, Foreign Affairs, January 16, 2019, at (accessed March 19, 2020). 3 Yang Jiechi, ‘Study and Implement General Secretary Xi Jinping’s Thought on Diplomacy in a Deep-Going Way and Keep Writing New Chapters of Major-Country Diplomacy with Distinctive Chinese Features’, Xinhua, July 17, 2017, at (accessed March 19, 2020). 4 According to the whitepaper ‘China’s Peaceful Development 2011’, China’s core interests include: (1) state sovereignty; (2) national security; (3) territorial integrity; (4) national reunification; (5) China’s political system established by the Constitution and overall social stability; (6) basic safeguards for ensuring sustainable economic and social development. See Yoshikazu Kato, ‘What Is Xi Jinping’s Major Power Diplomacy?’ Asian Global Online, March 7, 2019, at (accessed March 19, 2020); Xuetong Yan, ‘Diplomatic Transformation, Priority of Interest, and the Rise of Major Power’, Journal of Strategy and DecisionMaking, 8 (3), 2017, pp. 4–11. 5 Chris Ogden, China and India: Asia’s Emergent Great Powers, Polity Press, Cambridge, 2017, p. 118. 6 Ibid.

Xi Jinping’s major power diplomacy – India  271 7 Ondřej Klimeš and Maurizio Marinelli, ‘Introduction: Ideology, Propaganda, and Political Discourse in the Xi Jinping Era’, Journal of Chinese Political Science, 23 (2), 2018, pp. 313–322. 8 Hoo Tiang Boon, China’s Global Identity: Considering the Responsibilities of Great Power, Georgetown University Press, Washington, DC, 2018, p. xx. 9 Yunbi Zhang, ‘Nansha Islands Construction “Befits China’s International Responsibilities”’, China Daily, May 27, 2015, at china/2015-05/27/content_20827819.htm (accessed March 19, 2020). 10 Adam P. Liff and G. John Ikenberry, ‘China’s Rise, Military Competition in the Asia Pacific, and the Security Dilemma’, International Security, 39 (2), 2014, pp. 55–91; Tim Huxley and Brendan Taylor, ‘Military Modernization and Arms-Racing in the Asia-Pacific’, in Joanne Wallis and Andrew Carr (eds.), Asia-Pacific Security: An Introduction, Georgetown University Press, Washington, DC, 2016, pp. 123-145. 11 David Brewster, ‘Indian Ocean Base Race: India Responds’, The Interpreter, February 15, 2018, at (accessed March 19, 2020); Ling Xue, ‘Over the Belt and Road Initiative versus Rebalance of the Indo-Pacific: Cooperation in Competition’, World Economy and Politics, 5, 2016; Minghao Zhao, ‘The Emerging Strategic Triangle in Indo-Pacific Asia’, The Diplomat, June 4, 2013, at http:// (accessed March 19, 2020). 12 Yoshikazu Kato, no. 4. 13 Wang Yi, ‘Toward a New Model of Major-Country Relations between China and the United States’, speech by the Chinese Foreign Minister at the Brookings Institute, September 20, 2013, at uploads/2013/09/wang-yi-english-prepared-remarks.pdf (accessed December 15, 2019). 14 ‘Foreign Minister Wang Yi on Major-Country Diplomacy with Chinese Characteristics’, Ministry of Foreign Affairs, People’s Republic of China (PRC), June 27, 2013, at zcyjs_663346/xgxw_663348/t1054783.shtml (accessed March 19, 2020). 15 Wang Yi, no. 13; See-Won Byun, ‘China’s Major-Powers Discourse in the Xi Jinping Era: Tragedy of Great Power Politics Revisited?’ Asian Perspective, 40, 2016, pp. 493–522. 16 Jianwei Wang, ‘Xi Jinping’s “Major Country Diplomacy:” A Paradigm Shift?’ Journal of Contemporary China, 28 (115), 2019, pp. 15–30; Weixing Hu, ‘Xi Jinping’s “Major Country Diplomacy”: The Role of Leadership in Foreign Policy Transformation’, Journal of Contemporary China, 28 (115), 2019, pp. 1–14. 17 Jiechi Yang, ‘Studying General Secretary Xi Jinping’s Thought on Diplomacy’, Qiushi Journal, English edition, October-December 2017, 9 (4), p. 33. 18 Jiechi Yang, ‘Implementing the Chinese Dream’, The National Interest, September 10, 2013, at (accessed December 15, 2019). 19 Jiechi Yang, ibid. Bates Gill, ‘China’s Future under Xi Jinping: Challenges Ahead’, Political Science, 69 (1), 2017, pp. 1–15; Kerry Brown, CEO, China: The Rise of Xi Jinping, I.B. Tauris, London, 2016. 20 Jiechi Yang, no. 17. 21 Kejin Zhao, ‘China’s Diplomacy 3.0: China’s New Diplomacy in the Post-18th Party Congress Period’ (中国外交 3. 0 版: 十八 大后的中国外交新走向), Social Sciences (社会科学), 7, 2013, p. 10; Jiechi Yang, no. 17. 22 Jiechi Yang, no. 17; Weixing Hu, no. 16. 23 Kejin Zhao, no. 21.

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Xi Jinping’s major power diplomacy – India  275


13 Xi Jinping’s PLA and China’s regional security ambitions Mrittika Guha Sarkar

Introduction Xi Jinping’s refashioning of the People’s Liberation Army (PLA) and China’s military diplomacy in recent years exemplifies his sincere and serious belief in the Mao Zedong dictum of ‘Whoever has an army has power’.1 Breaking up with Deng Xiaoping’s ‘hide and bide’ policy, China has increasingly been viewing its military diplomacy as a vital tool for advancing its political goals and preserving its national security. At the same time, Xi has been reiterating Mao’s perspective of China as the ‘centre of gravity in Asia’,2 by introducing new ideas, institutions, reforms and initiatives in order to attain his national objectives of rejuvenation and the Chinese Dream.3 The same is true for China’s foreign policy strategy, which was echoed in the president’s New Year’s Eve speech in 2015 when Xi announced his vision for China as a ‘moderately prosperous society’.4 Subsequently, in 2016, Xi propounded the restructuring of the PLA; and in 2017, the National Congress of the 19th Communist Party of China (CPC), too, advanced the national military goals of achieving mechanisation by the year 2020, evolving into a modernised power by 2035 and becoming a ‘world-class power’ by 2050. The evolution of PLA seems to be an integral part of Xi’s national efforts, while the reforms and restructuring have only accentuated the military’s role under the current leadership. Xi elucidated the military reform process, both structural and organisational, while addressing the 89th anniversary of the PLA on August 1, 2016. The restructuring condensed the earlier seven Military Area Commands (MACs) into five Theatre Commands, each of which remains strategically responsible for a specific set of regions: the Northern Theatre has been responsible for Northeast Asia; the Eastern Theatre focuses on Taiwan and the East China Sea (ECS); the Southern Theatre covers the South China Sea (SCS) and land borders with Southeast Asian states; the Western Theatre handles the land borders with India and Central Asian states; and the Central Theatre takes care of the defence of the capital, as well as provides support to other Theatre Commands if needed.5 Further, these Theatre Commands act as joint headquarters for the army, navy

PLA and China – regional security ambition  277 and air force for conducting combat operations under the ‘joint operations command system’, in an effort to improve joint warfighting operations and win information-age wars. What is important to note here is the strategic significance of the above reforms, as they provide an overview of China’s heightened regional security threat perceptions considering the intensifying regional power politics, power redistribution and conflicting national interests and rights. The reforms have also led to the introduction of the PLA Strategic Support Force6 to gain regional advantages in the astronautic war, space war, network war and electromagnetic space war and ensure smooth operations.7 Further, the newly established headquarters of the ground forces are to function autonomously. This has been established by upgrading the Second Artillery Force as a full-fledged PLA Rocket Force to position the country’s nuclear missile and conventional weapons to an advanced platform.8 At the same time, the ground force of the PLA has been positioned as the ‘mighty, modernized, and new-style’ military force, while its size has been reduced by 300,000, accelerating PLA’s shift from a traditionally land-based force to a naval and air power.9 This has mainly been witnessed in the build-up of the PLA Navy (PLAN); China’s strategy of offshore diplomacy in the context of the Belt and Road Initiative (BRI) – earlier referred to as ‘One Belt One Road’; and its coercive attempts to attain complete reunification with Taiwan; its reclamation of islands in the ECS and the SCS; and its attempts to maintain law and order in Hong Kong vis-à-vis pro-democracy demonstrations. Finally, Xi Jinping’s ‘new era’ vision for the PLA, which invokes strengthening of its resilience, preparedness and combat capabilities, has also been witnessed during its spat with the Indian Army in Doklam in 2017. Against this backdrop, the chapter seeks to trace the PLA’s reform and restructuring under Xi Jinping which signifies a greater correlation between China’s military modernisation and its overall foreign policy in terms of regional connotation as well as ‘China’s neighbourhood strategy’10 or ‘periphery diplomacy’. 11 In other words, the chapter wishes to argue that the restructuring of the PLA is associated with its outreach, namely (a) Beijing’s regional outlook; (b) the politicking of the PLA over land and maritime territories; and (c) an intense economic outreach policy on connectivity and corridors, primarily through the BRI.

The drivers of military modernisation The approach of the leadership to develop the PLA into an ‘informationized’ military draws its origins back to the 1990s, especially after the American victory in the Gulf and the Kosovo wars that pushed China to rectify its inadequate capabilities to fight modern and high-tech wars. Therefore, the current focus has been on redressing this gap. More importantly, the reforms are aimed at allaying foreign policy and national security concerns and fulfilling Beijing’s core strategic ambitions. These carry added significance as

278  Mrittika Guha Sarkar China climbs up to be the second-largest economy in the world with substantial economic interests abroad. However, China’s land and maritime territorial ambitions have been expanding amidst growing uncertainty in the regional order. Thus, the PLA reforms have been undertaken keeping Chinese claims and regional posture in perspective.12 In this regard, one of the major drivers of China’s military modernisation has been to defend its territory and people from the ‘Three Evils’/‘Three Evil Forces’ – terrorism, separatism and extremism. These pertain to enhancing the capability of the PLA to suppress the challenges of separatism in regions within and outside the mainland, namely – Tibet, Taiwan and Xinjiang. The challenges in Xinjiang, in particular, are associated with the summons of the three evil forces at the backdrop of the government’s concerns regarding insurgency in Xinjiang, having links with Islamic militant groups in Central Asia. These, if not quashed, could severely impair China’s western borders and further encourage Uighur extremists.13 Another factor for China’s military modernisation has been its ambition to project power wherever it holds strategic and economic interests. To understand this, it is essential to take note of the few specifics which remain important for China’s regional economic and security ambitions under Xi Jinping:14 1 Sustaining CPC’s power and ensuring the survival of Xi Jinping’s thought on ‘Socialism with Chinese Characteristics for a New Era.’ 2 Maintaining national unity by defending territory and reinforcing territorial claims in Xinjiang,Taiwan and in the India–China border (Line of Actual Control); preventing secessionism, separatism and independence activities in Xinjiang, Tibet, Taiwan, Inner Mongolia and Hong Kong. 3 Sustaining and enhancing economic growth to strengthen China’s Comprehensive National Power (CNP), 15 legitimising the CPC’s authority, fulfilling China’s objectives of global technological dominance and enabling it to escape the ‘middle-income trap’. 4 Maintaining peaceful and stable relations with neighbouring countries and upholding its neighbourhood policy. 5 Reasserting the maritime claims in the ECS and the SCS 6 Pushing back the influence of the United States in the regional domain, particularly against the backdrop of Washington’s security alliances with South Korea and Japan; and the former’s relationship with Taiwan – a hindrance to Beijing’s ‘One China Policy.’ 7 Reshaping the global order so that Chinese values and interests are accepted universally The above listed regional economic and security ambitions suggest that the military modernisation under Xi is and will be leading towards a more proactive and assertive Chinese military posture in the region as they remain linked to China’s core strategic interests. Besides, the PLA, along with the

PLA and China – regional security ambition  279 CPC, make it a point to not compromise on land and maritime territorial ambitions. A driver for the PLA’s reforms also has been Xi Jinping’s political motivations. Politically, the PLA’s centralisation and Xi’s direct control over the military remains linked with the increasing corruption in the PLA armed forces. Xi’s anti-corruption campaign, too, acts as a ploy to instill absolute loyalty and discipline in the forces, while strengthening Xi’s authority over the military and invigorating his role as the general secretary of the party. If anything, the reforms and restructuring under Xi aim to enable China to better cater to its security and foreign policy goals. These are connected to China’s neighbourhood policy or periphery diplomacy which shape its approach towards the Taiwan and Hong Kong issues, maritime disputes in the SCS and the ECS and the boundary disputes with India. Further, these reforms remain synergic to its broader regional outlook: China aims to balance the influence of the United States in its backyard as well as in the region. In this regard, China has been paying crucial attention to this factor since the Trump administration rolled out the Indo-Pacific Strategy. The continuing trade war between the United States and China and the growing distrust between them, especially since the outbreak of the COVID-19 pandemic, have been making matters worse. The reforms also play a crucial role in legitimising Xi’s stature as a leader in the domestic sphere, and at the same time, stimulates his governance in regional and global affairs. Largely, the PLA’s reforms and restructuring undertaken by the current leadership in 2015–2016 will have long-term implications for the region. However, to what extent the military reforms offer a strategic consonance to China’s foreign policy at the regional level requires further scrutiny.

PLA’s security ambitions: analysing wider implications in the region China’s foreign policy has witnessed a significant amount of transition, as the nation evolves from an under-developed agrarian society post the formation of the People’s Republic to a major power in the current scenario. Central to this transition has been China’s economic rise and the recently acquired strategic clout. Under Xi Jinping, these developments have buttressed his ideas of ‘proactive diplomacy’ and ‘action-driven’ foreign policy and security strategy.16 This is a ‘new era’17 for China where the PLA supplements the changing course of its foreign policy, especially its regional strategic objectives, neighbourhood policy or periphery diplomacy.18 Analysing China’s military diplomacy across the Taiwan Strait: deterrence and persuasion For more than two decades, China’s military modernisation has focused on deterring Taiwan’s de jure independence, and the state has employed

280  Mrittika Guha Sarkar ‘coercive diplomacy’ to pursue reunification with the latter.19 Moreover, against the backdrop of the US intervention in Taiwan, the PLA has been upping its ante in developing military capabilities to deter and disrupt US defence as well as economic support to Taipei.20 For Xi Jinping, Taiwan remains an important part of the Chinese Dream and the national rejuvenation, and reunification with Taiwan remains encapsulated in Xi’s vision for the country. Hence under Xi, Taiwan independence has received a much tougher posture as unification becomes a key part of Xi’s ambitious agenda as the leader of China.21 China has claimed sovereignty over Taiwan since the formation of the People’s Republic of China (PRC) in 1949. At the same time, the legitimisation of Beijing’s claims on Taipei, especially under its ‘One China Policy’ has been central to the legitimacy of the CPC. The tensions between the PRC and Taiwan has resulted in military confrontations in 1955 and 1958  – the First and Second Taiwan Strait Crisis, respectively. Potential threat of an armed conflict was further revisited in the 1995–1996 Taiwan Strait Crisis, in which China test-fired ballistic missiles near Taiwan’s main ports and launched live-fire military exercises in the ECS.22 In retrospect, the election of Ma Ying-jeou, a Kuomintang (KMT) candidate, as the president in 2008 led to improved cross-strait economic and political relations, reducing the threat perception. As a result, Taiwan participated in World Health Assembly (WHA), the annual policy meeting of the World Health Organization (WHO), from 2009 to 2016, as well as in regularised crossstrait mechanisms. Besides, direct flights, shipping and mail across the strait were restored, and the Economic Cooperation Framework Agreement was signed.23 Military exercises such as in the Dongshan Island were also suspended between 2009 and 2016, as the risk of conflict in the Taiwan Strait reduced.24 However, after the arrival of the Democratic Progressive Party (DPP) in power, and Tsai Ing-wen’s election as the new president in 2016, relations between Taiwan and China have deteriorated. The DPP regime under Tsai has taken a more nationalistic turn, and as per Chinese suspicion, the current Taiwanese regime has not endorsed the ‘One-China Policy’ overtly. As a result, China, since the inception of DPP in Taiwan, unilaterally has been terminating all channels of communication as a form of retribution and in order to exert diplomatic pressure on Taiwan.25 Multilaterally, Taiwan has been excluded from the WHA as a non-voting observer and was left out from the participation in the International Civil Aviation Organization (ICAO) meeting, which was held in September 2016 in Montreal, Canada. (Taiwan last attended the ICAO meeting in 2013, under the KMT rule.) In addition, China’s only aircraft carrier (at the time; now has two), Liaoning, along with other warships, cruised the east of Taiwan in 2016, while the PLA Air Force (PLAAF) aircraft flew near Taiwan earlier on several instances. It is significant to note that neither of the military activities mentioned above

PLA and China – regional security ambition  281 crossed the Air Defence Identification Zone (ADIZ) of Taiwan and only acted as a military signal for potential coercion, to deter Taiwan.26 China’s military exercises around Taiwan have significantly enhanced (see Table 13.1), especially under the DPP rule, signalling towards greater Chinese vigilance on cross-strait ties. Table 13.1 reiterates Beijing’s increasingly assertive and aggressive posture towards Taipei through military efforts to deter the latter against an independence campaign. It is certain that Taiwan would remain a major stimulus for Chinese military planning and posture building at the regional level.27 Table 13.1 PLA’s military drills and exercises in proximity to Taiwan (2013–2020) S. no. 1. 2. 3. 4. 5. 6.

7. 8. 9. 10.

11. 12. 13. 14. 15.

Military exercise


Further information

PLA missile test

April 18, 2013 DF-21D anti-ship ballistic missile were deployed near Taiwan. PLAN exercise November Liaoning aircraft carrier transited the 2013 Taiwan Strait. Liaoning aircraft carrier transited the PLAN exercise December Taiwan Strait. 2013 PLAN exercise December 5, PLAN launched eight days of naval 2013 drills in the Yellow Sea and the Bohai Strait. PLAAF exercise August 25, Two Y-8 maritime patrol planes 2014 entered Taiwan’s ADIZ. PLAAF exercise March 30, PLAAF carried out drills in the air 2015 over the Bashi Channel, the body of water between Taiwan and the Philippines archipelago. June 10, 2015 Chinese warships and aircraft passed PLAN and through the Bashi Channel between PLAAF exercise Taiwan and the Philippines. PLA live-fire September Live-fire drills were held in Taiwan drills 11–13, 2015 Strait. PLA live-fire and January 21, These drills were held just days after landing drills 2016 the DPP won the election in Taiwan. Joint exercise May 16, 2016 Landing exercise was conducted by between Eastern Theatre Command on the PLAAF, PLAN Fujian Coast. and PLAA PLAAF exercise August 18–19, Shaanxi Y-8, Xian H-6 2016 PLAAF exercise September Shaanxi Y-8, Xian H-6, Tupolev Tu09, 2016 154, unidentified military aircraft PLAAF exercise October 17, Shaanxi Y-8, Shaanxi Y-9 2016 PLAAF exercise November 25, Shaanxi Y-8, Xian H-6, Tupolev Tu2016 154, Sukhoi SU-30 PLAAF exercise December 10, Shaanxi Y-8, Xian H-6, Tupolev Tu2016 154, Sukhoi SU-30 (Continued)

282  Mrittika Guha Sarkar S. no.

Military exercise


Further information


PLAN exercise


PLAAF exercise


PLAN exercise


PLAAF exercise


PLAN exercise


PLAN exercise


PLAAF exercise


PLAAF exercise


PLAAF exercise


PLAAF exercise




PLAN exercise


Air encirclement patrol

December 25, The carrier Liaoning and its combat 2016 ships passed through the Miyako Strait and the sea area east of Taiwan outside of ROC’s ADIZ, heading to the SCS for open-sea, long-distance training. Shaanxi Y-8, Shaanxi Y-9, Xian H-6 January 09, 2017 January 11, The carrier Liaoning and its combat 2017 ships set out from Hainan Island and sailed north along the west side of the Strait Central Line, leaving the Taiwan Strait on January 12. Xian H-6, unidentified military March 02, 2017 aircraft July 01, 2017 Liaoning and its combat ships sailed south along the west side of Strait Central Line and left the Taiwan Strait on July 2 on the way to Hong Kong where it was open to visitors from July 8 to 18 to mark the 20year anniversary of the handover of Hong Kong. July 12, 2017 Liaoning and its combat ships sailed north along the west side of the Strait Central Line back to Shandong, leaving the Taiwan Strait on July 13. July 13, 20 Shaanxi Y-8; Xian H-6; Shaanxi Y-8 & and 24, Xian H-6; Xian H-6 2017 Shaanxi Y-8; Shaanxi Y-8, Xian H-6, August 09, 12, 13 and KJ200, Sukhoi SU-30; Shaanxi Y-8; 14, 2017 Shaanxi Y-8 November 18, Tupolev Tu-154; Shaanxi Y-8, Xian H-6, Tupolev Tu-154; Xian H-6; 19, 22 and 23, 2017 Shaanxi Y-8; Xian H-6, Ilyushin Il-78, Tupolev Tu-154, Shaanxi Y-8, Sukhoi Su-30 December 07, Xian H-6; Shaanxi Y-8, Xian H-6, 09 and 12, Sukhoi SU-30; Shaanxi Y-8, Xian 2017 H-6, Tupolev Tu-154, unidentified military aircraft March 2018 Two Chinese J-11 fighters (a domestic version of the Su-27) crossed the median or centre line of the Taiwan Strait. April 18, 2018 Aircraft carrier, submarines and fighter jets were used. May 11, 2018 Su-35 fighter jets, H-6K strategic bombers and the advanced KJ-2000 airborne early warning aircraft were used. (Continued)

PLA and China – regional security ambition  283 S. no.

Military exercise



PLAN exercise

July 2018


PLAAF drill


Joint drill between PLAAF and PLAN


PLA live-fire drills

33. 34.

Air and naval joint exercise PLAAF exercise




PLAAF exercise


PLAN Live-fire drills

Further information

Amphibious landing exercise was held near the Taiwan island of Kinmen. Sukhoi Su-30 fighter jet and a Shaanxi January 22, 2019 Y-8 surveillance plane, along with other aircraft were used. April 15, 2019 Long-range military drill was conducted by the Eastern Command Theatre. Xian H-6K bombers, a Shaanxi KJ-500 airborne early warning and control aircraft, a Shaanxi Y-9JB (GX-8) electronic warfare and surveillance plane, as well as Su-30 and J-11 fighter jets were used. May 5, 2019 Live-fire military drills were held at the northern end of the Taiwan Strait. July 29, 2019 The drills took place in the waters of northern and eastern Taiwan. January 23, KJ-500 early warning and control 2020 aircraft and an H-6 bomber were used. Night drill by J-11 fighters and KJ-500 March 16, 2020 early warning aircraft March 24, F-16 fighter jets 2020 April, 2020 Type 022 stealth missile boats of the PLA Eastern Theatre Command Navy held live-fire combat-oriented drills.

Sources: Information regarding PLA exercises near Taiwan held between August 2018 and March 2018 have been taken from Taiwan National Defense Report, 2017, at (https://www. (PLA exercise data near Taiwan, August 2018-March 2018)). The rest have been taken from various open sources such as Taipei Times, South China Morning Post and The Diplomat. (,,

There also remains a relative difference in the frequency of the PLA exercises near Taiwan during the Ma Ying-jeou and the Tsai Ing-wen administrations, where Chinese military exercises during the latter period have been mounting. Nonetheless, military exercises by China during the KMT rule in Taiwan, irrespective of the thawed relations between both sides, signify towards Beijing’s continued qualms of a possible independence campaign by Taiwan. In light of the recent developments, the PLA has been increasingly upgrading and tightening its military posture vis-à-vis Taiwan under the current DPP regime that is pursuing a pro-independence policy. Thus, the Eastern Command responsible for handling Taiwan affairs has been strengthening its technological capabilities, especially in view of mounting American

284  Mrittika Guha Sarkar military and economic aid and intervention under Trump. The US administration also has passed the Taiwan Travel Act, which aims to promote official exchanges, meetings and business between the United States and Taiwan, much to China’s disapproval.28 In order to counter such initiatives and as a show of force, China has started conducting joint operations in the region more aggressively than before. Under the Xi Jinping administration, the PLA is willing to adopt all necessary actions, even military if needed, to ensure greater control on the Taiwan discourse. The same was indicated in Xi’s speech commemorating the 40th anniversary of ‘Message to Compatriots in Taiwan’ stating: We do not renounce the use of force and reserve the option of taking all necessary measures. This is to guard against external interference and a tiny number of separatists and their separatist activities for “Taiwan independence”. It does in no way target our compatriots in Taiwan. We people on both sides should work together to pursue peace, protect peace, and enjoy peace.29 China’s frequent military exercises near Taiwan, especially the landing exercise on the Fujian coast in the Eastern Theatre Command, has also highlighted its assertive approach towards Taipei, implicating a warning to the US over its proactive role in the region.30 The PLA, further, stated that ‘the recent land, air and sea training exercises in the southeast of China are aimed at addressing security threats and fulfil their military mission’, signifying towards its objective to disallow any sovereignty attempts by Taiwan.31 China is further enhancing the PLA ability through conventional missiles within the arsenal of the PLA Rocket Force (PLARF) to decimate the US military installations in China’s backyard, especially in Guam; at the same time, it is seeking to reclaim its core strategic imperative of sovereignty with Taiwan by deterring any American military involvement in the region. It is utilising anti-ship missiles (ASMs) – both cruise and ballistic – within the PLA’s broader anti-access/area-denial (A2/AD) capabilities which substantially increases China’s capabilities to target the US forces as an offensive and defensive course of action.32 Interestingly, China began its pursuit of developing anti-ship missiles (ASMs) as early as in the 1990s, where the 1995–1996 Taiwan Strait crisis acted as one of the major drivers for China’s military modernisation efforts. The ASMs have more often than not, been perceived by China to be used for tactical warning and signalling, and for precision strikes; as a conventional deterrence strategy to sustain its core strategic objectives. However, for China, it is the US military bases and alliances in the region which have acted as a reassertion of the American intent to strategically encircle China and prevent it from peacefully achieving its sovereignty goals.33 In this context, the military parade marking the 70th anniversary of the end of World War II and China’s role in defeating Japan lead to the first

PLA and China – regional security ambition  285 public appearance of the Dongfeng-21D ‘carrier-killer’ intermediate-range ballistic missile (IRBM), having the capability of targeting aircraft carriers and other warships at sea at a range of up to 1500 kilometres.34 This has been presumed to be a part of China’s anti-access strategy and a tool for power projection to deter US intervention in Taiwan Strait, or even in the SCS or the ECS. Similarly, the military parade on the occasion of the 70th Anniversary of the PRC held on October 1, 2019, revealed a vigour in Chinese leadership’s part to augment the PLA’s command, control, communications, computers, information, surveillance, reconnaissance (C4ISR) and precision strike capabilities.35 Most importantly, the above weapons signified towards the military advancement aimed at degrading US communication and information network capabilities. Concerns in the US strategic community has, most recently, been enhancing over China’s DF-26 having a dual-capability of both conventional and nuclear variants, which was first unveiled in 2015. The DF-26 IRBM with a 4,000 km range, can carry nuclear as well as conventional payloads and reach up to the US military bases in the “second island chain”, particularly Guam in Marianas islands.36 The expanded range of the DF-26 has encouraged many PLA observers to denote the IRBM as the ‘Guam Killer’ or ‘Guam Express’, as an optimal weapon to employ in the event of the US military intervention in Taiwan Straits. In brief, the unification between China and Taiwan remains vital to the Chinese leadership, whether peacefully or through military means; and its failure would reflect fundamental political weaknesses of China, as well as of the CPC regime, and question the legitimacy of Xi Jinping. For this reason, Taiwanese unification has been an essential part of the PLA’s ‘new historic missions’, which is responsible for shaping its acquisitions and military planning. China’s growing military aggression in the region through Anti-Access/Area-Denial (A2/AD) strategy, including the deployment of Anti-Ship Ballistic Missiles (ASBMs), submarines, long-range cruise missiles, satellites and cyberweapons, remains aimed at deterrence against Taiwan, and implicitly signify towards China’s apprehensions about American intentions in the region (e.g. assisting Taiwan in cross-strait issues and providing support to its allies).37 Reclaiming sovereignty in SCS and ECS: coercive diplomacy The military posture building in the ECS and the SCS has been a priority for the PLA and shall remain a core objective for China in the coming years. In both the Seas, China has sought to utilise ‘gray zones diplomacy’, gaining control incrementally and deterring the other countries without resorting to the explicit use of force. Under Xi Jinping, this has been buttressed by the People’s Armed Police (PAP), the China Coast Guard (CCG) (merged into the military command structure through its subordination to the PAP), and the People’s Armed Forces Maritime Militia (PAFMM) playing a substantial role in SCS and ECS, apart from the PLA. In brief, the above services

286  Mrittika Guha Sarkar have jointly been playing a vital role in coercive activities in both the maritime domains to achieve China’s strategic goals rather tactfully. By employing non-military services to reiterate control over disputed territories, China has been attempting to cautiously project power in the region to legitimise its core sovereignty interests and bolster its legal claims over the disputed islands without escalating to a war-like situation.38 The SCS China’s assertive behaviour in the SCS – one of the most strategically important maritime regions on earth – is a result of its long-standing contests with several Southeast Asian nations, namely with Vietnam, Taiwan, Malaysia, the Philippines and Brunei over the Spratly Islands; Taiwan and the Philippines over the Scarborough Shoal; and Vietnam and Taiwan over the Paracel Islands. China claims sovereignty over as much as 80–90 per cent of the islands through its ‘historical rights’ in the region on the basis of its Nine-Dash Line;39 it reiterates the same through its White Paper titled ‘China Adheres to the Position of Settling Through Negotiation the Relevant Disputes Between China and the Philippines in the South China Sea’.40 The paper was released on July 13, 2016, subsequent to China’s rejection of the ruling of the Permanent Court of Arbitration (PCA) on July 12, 2016, which supported the Philippines’ plea over the latter’s claims in the islands: where China’s claims were termed unlawful under the United Nations Convention on the Law of the Sea (UNCLOS). In China’s view, however, the ruling against China based on historical rights was ill-founded. As a result, in 2019, China released another White Paper titled ‘National Defense in a New Era’ that further justified its claims in the SCS by stating: ‘The South China Sea islands and Diaoyu Islands are inalienable parts of the Chinese territory,’ reverberating China’s ‘national sovereignty to build infrastructure and deploy necessary defensive capabilities on the islands and reefs in the South China Sea’.41 China, if anything, has displayed a rather belligerent and provocative stance towards the PCA ruling and the SCS region in general, especially under Xi Jinping. Its strategy of continuous land reclamation and militarisation in the SCS zone is aimed at ‘national rejuvenation’ and attainment of the ‘Chinese Dream’. Further, a gradual but firm approach considering China’s adventurism in the SCS zone is reflected in its Defence White papers, which speaks volume of its territorial and sovereignty concerns in the region. China’s diplomacy towards the region draws direct correlation to its strengthening and modernising navy, which has been instrumental in incrementally expanding China’s control over the islands and the adjacent waters in the SCS. More importantly, there is a prevalent shift in China’s approach towards the dispute: from an initial will to resolve the SCS dispute through treaties and agreements, China now claims the SCS islands as

PLA and China – regional security ambition  287 inseparable parts of Chinese territory, refusing to acknowledge the PCA. Such an approach highlights a revisionist desire to change the status quo of the region. It also highlights a shift in China’s maritime strategy from defensive to offensive diplomacy in the SCS region, where the offensive is largely a response to China’s imperatives to protect its sovereignty and territorial integrity. Since 2013, China has been reclaiming and constructing geographical features in the Spratly island chain on a large scale, transforming the uninhabitable reefs into man-made islands with substantial infrastructure.42 According to Beijing, such developments were brought about to ensure the safety of navigation and disaster relief logistics.43 In addition, Xi Jinping in his statement at the White House summit in 2015, reiterated China’s commitment to uphold freedom of navigation and not pursue militarisation in the region.44 However, such statements have been contradictory to the reports of the Asia Maritime Transparency Initiative, which have confirmed construction of military and dual-use facilities by China such as potential radar facilities in Fiery Cross, Mischief and Subi Reefs in the Spratly Islands and Triton Island in the Paracel Islands; hangars at Fiery Cross Reef – enough to accommodate 24 combat aircraft and four larger planes;45 and airstrips at Fiery Cross, Mischief and Subi reefs.46 China also appears to be building significant point-defence capabilities, in the form of large antiaircraft guns and probable Close-in Weapons Systems (CIWS), at each of its outposts in the Spratly Islands.47 More significantly, in 2018, China deployed long-range anti-ship cruise missiles and air-defence missiles in the Spratly Islands, providing the islands with offensive reach for the first time. It installed supersonic YJ-12B antiship cruise missiles (ASCMs) and HQ-9B anti-air missiles on Fiery Cross, Subi and Mischief Reefs in the Spratly Islands, highlighting its coercive diplomacy towards the region.48 These developments are reflective of China’s desire to expand its power projection capabilities by gradually enhancing military control over the SCS islands. China’s advanced military developments in the SCS has been substantially changing the strategic environment of the region. Its assertive and aggressive behaviour has further been having a deterring effect on not just the other claimant countries but also dissuading outside powers from enhancing their involvement in the SCS. Beijing has been checking on the interference of external powers in the region through the SCS Code of Conduct (CoC).49 As a formal framework of rules, norms and responsibilities, the CoC in its current form, ‘Single Draft South China Sea Code of Conduct Negotiating Text’ (SDNT) aims to promote peace and stability in the SCS through maritime cooperation. However, China, through the CoC has been trying to legitimise its strategic clout in the region, rather incrementally. It has been addressing its concerns regarding the involvement of outside countries by proposing to include the point four of the document under part iii of Section

288  Mrittika Guha Sarkar 2.c, which perhaps remains the most contentious portion of the SDNT. As cited by Carl Thayer in The Diplomat on August 03, 2018: The Parties shall establish a notification mechanism on military activities, and to notify each other of major military activities if deemed necessary. The Parties shall not hold joint military exercises with countries from outside the region, unless the parties concerned are notified beforehand and express no objection.50 The above point has been naturally targeted against the joint military exercises and the freedom of navigation activities by nations, particularly the United States, Japan, Australia and India; the naval drills by the United States, Japan, India and Philippines in May 2019 especially alarmed China, while the joint freedom of navigation activities by the United States and Australia in the SCS since mid-April, 2020 was severely condemned by Beijing.51 As a response, China has been reiterating that it would demarcate an ADIZ over the SCS if its security interests are threatened.52 Thus, a continuation of China’s aggressive and coercive posture in the region remains on the card. However, even as China’s assertive posture in SCS might gradually increase in the future, it might enhance through a ‘multipronged’ strategy over the SCS, including ‘smart’, ‘soft’ and ‘hard’ power strategies, which would allow Beijing to sustain its influence over ASEAN. At the same time, in lieu of its neighbourhood policy and peripheral diplomacy, China would like to maintain peaceful development in the region, while explicit use of force is something China would like to avoid. It should be noted that stability in the region continues to remain important for China considering its vital trade and energy interests and needs in the region, and important Sea Lines of Communication (SLOCs) in the Malacca Strait, Sunda Strait and Lombok Strait. In this regard, the ‘peaceful development’ policy would be vital for China in trying to convince its neighbours that its rise and activities in the region are not detrimental to their strategic interests. In fact, since 2003, when China implemented its ‘peaceful development’ campaign, the leaderships in China and in ASEAN have time and again discussed China’s rise and its developmental model and have brought new insights into advance mutual trust and reduce tensions concerning the SCS dispute.53 The COC, too, once implemented, aims to play a substantial role in enhancing cooperation between the claimant countries. However, China’s response to the SCS dispute award and its growing military assertiveness in the region portends that the regional conflict in the SCS will intensify sooner or later. Beijing under Xi is, thus, certain to pursue a multidimensional strategy that would be to its advantage. The ECS In the ECS, Beijing has been using military and economic threats, coercive language and assertive behaviour through legal means, as part of its

PLA and China – regional security ambition  289


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diplomacy. This is a result of the decades-long unresolved claims over disputed islands in the ECS, which are called the Diaoyu by China and the Senkaku by Japan.54 China claims ‘historical rights’ to the region, and therefore has been asserting territorial sovereignty over the Diaoyu/Senkaku Islands. To recall, in 2008, both Japan and China had reached a consensus by agreeing to respect an equidistant median line in the region for cooperative resource development and initiation of joint development of oil and natural gas field in a delineated area.55 However, Japan has often accused China of breaching the consensus line and extending its continental shelf beyond the Okinawa Trench.56 Japan has had concerns with China conducting oil and gas drilling on the Chinese side of the median line of the ECS since 2013.57 Nonetheless, China continues to dismiss such claims and contests Japan’s control of the Senkaku Islands. In fact, in 2013, China declared an ADIZ in the ECS and stated that it would ‘adopt defense emergency measures to respond to aircrafts that do not cooperate in identification or refuse to follow the instructions’.58 (The declaration of ADIZ in the region was also part of a broader US deterrence strategy by China.) Further, in 2017, China restated its presence in the region with Coast Guard Ships in the territorial waters within 12 nautical miles to the islands.59 The next year, PLAN sailed its Shang-class nuclear-powered attack submarine (SSN) in close proximity to the Senkaku Islands.60 Besides, the PLAN East Sea Fleet has been regularly conducting military exercises to prepare for potential conflict in the region. Such exercises and adventurism have been tools of power projection by China, limiting its military presence in the region within the ‘gray-zone’ (see Figure 13.1). From the above figure (Figure 13.1), it is inferential that China’s military incursions in the ECS, particularly under Xi Jinping, has been increasing.


Figure 13.1 Chinese vessel incursions in Japan’s contiguous zone or territorial sea surrounding the Senkaku Islands. Source: Ministry of Foreign Affairs, Japan (

290  Mrittika Guha Sarkar There has been a 76 per cent increase in the number of Chinese vessel incursions into the territorial Sea of Japan from 2012 to 2019, reverberating a gradually strengthened PLA posture in the region. The number of Chinese vessels entering into the 44-kilometre contiguous zone of the Japanese controlled, but Chinese claimed Senkaku/Diaoyu islands has reached a record high level in 2019 with 1097 instances between January 1, 2019, and December 31, 2019.61 China’s autarchic attempts in the East China Sea has been causing concerns for Japan, which was reiterated in the policy paper introduced by the Japanese Defense Ministry in September 2019: China engages in unilateral, coercive attempts to alter the status quo based on its own assertions that are incompatible with existing international order. In the East China Sea and other waters, China is expanding and intensifying its military activities at sea and in the air. Around the Senkaku Islands, an inherent part of Japanese territory, despite Japan’s strong protests, Chinese government vessels continually violate Japanese territorial waters, and Chinese naval ships continuously operate in waters around the Islands.62 In brief, China’s revisionist attempts to expand and strengthen the PLA foothold in both the SCS and ECS reflect its desires to modernise the PLA and promote Civil-Military fusion to project its sovereignty claims, rather in a calculative manner. Its military diplomacy under the current leadership would not prefer an overt use of force, and instead, use the PLA for persuasion and deterrence in the maritime regions. It would want to wait for the opportune time, until its military modernisation reaches its peak, to gain greater control of both the maritime domains through its military diplomacy.63 However, China would also not want to compromise on its claims in the region. It would, thus, take advantage of the situation by utilising the PLA and other security forces to enhance control in the ECS as well as SCS, to deter the claimant countries and sustain its claims over the Islands through coercive diplomacy. China’s offshore balancing through BRI The BRI, comprising the Maritime Silk Road (MSR) and the Silk Road Economic Belt (SREB), has been a major part of China’s grand strategy to realise its Chinese Dream and national rejuvenation. It remains an embodiment of Xi’s vision of China’s persistent economic development and enhancement of Beijing’s national image in the regional and global affairs. The initiative is expected to play a major role in fulfilling China’s goal of building a moderately prosperous society by actualising a ‘global network of partnerships’, by focusing on regional pockets in the Indian Ocean Region. However, in the last decade or so, threats to China’s security interests beyond its borders

PLA and China – regional security ambition  291 have been growing, even as the number of its strategic bases in the IndoPacific are on the rise. And though the developmental initiative widens as the BRI expands its projects within its six corridors64 in Europe and Asia, so does the spectrum of vulnerability. BRI’s wide geographical scope extends over volatile areas where political instability, terrorism, religious extremism and social unrest have been prevalent. These pose a risk to the increasing number of Chinese workers, businesses, infrastructure, logistics and more, stationed abroad. It is not surprising that Chinese citizens employed in Asia and Africa have been a victim of crimes and attacks, as well as natural disasters.65 In such a scenario, the PLA plays an important role in rescue and evacuation operations, as well as in providing security to Chinese citizens and infrastructure outside China. Thus, the PLA, which is undergoing military modernisation, has started developing robust C4ISR capabilities to enable greater awareness and control of situations beyond its borders.66 It has been combining military force and technology to acquire its overseas goals. The Strategic Support Force, further, has been commanding warfare capabilities outside China, improving and upgrading military capabilities to win wars. Subsequently, it has also been building capacity by partnering with local forces to protect China’s development projects and interests in vulnerable areas. Nonetheless, what are also important to acknowledge is the grander strategic elements underpinning China’s ambitious BRI projects, especially in the Indian Ocean, which are swiftly unfolding as the BRI picks up speed. PLA’s role in China’s expanding global footprint through the BRI cannot be discounted, as a tool for defending China’s sovereignty and vital interests abroad. Moreover, China’s investments in strategically significant ports and its construction of naval bases at geopolitically important locations come under the PLA’s ambit. In this regard, the military intentions of China, through the BRI, require further scrutiny. Further, its investment in ports having the potential to diversify China’s overseas energy dependence and bases in proximity to China’s SLOCs also require greater attention. In the purview of the current developments, concerns regarding debt sustainability in the BRI financed projects, particularly among developing nations, have enhanced. Sri Lanka leasing the Hambantota port for a 99-year due to failure in repaying the loans comes as a ploy.67 Similar views have been expressed, especially by the United States, about China’s first overseas military outpost in Djibouti, where the government now has a loan to repay to China. What makes Djibouti a significant region is its important strategic location, lying on the transit routes of the Suez Canal and working as a sea outlet for land-locked Ethiopia. But most importantly, Djibouti remains situated at striking proximity to US bases in Djibouti, in Diego Garcia and the Gulf Cooperation Council (GCC) countries. Arguably, such concerns have been a part of a larger narrative that equates China’s ‘debt diplomacy’ to its geopolitical ‘String of Pearls’ strategy, which centres around China’s

292  Mrittika Guha Sarkar bases in Pakistan, Oman, Myanmar, Bangladesh, Seychelles, Nigeria, Namibia, Yemen, Tanzania, Kenya, South Africa, Gulf of Guinea, Australia, Sri Lanka, Djibouti, Cambodia and Maldives, that is, strategically encircling India.68 This approach further signifies China’s ‘offshore balancing’ as a check against threats by hostile powers to its national interests abroad. Nonetheless, Chinese officials have time and again negated such accusations while assuring that the BRI is a win-win venture and equally profitable for all the stakeholders.69 Irrespective of the above accusations, China’s expansion plans through the BRI might remain unchallenged in the near future. However, in light of the severe economic and health effects of the COVID-19 pandemic across continents, its sponsored schemes around the globe might take a beating. There already has been widespread criticism of China for its not-so-early response to the novel Coronavirus outbreak that likely originated within its own territory, and for punishing the whistle blowers instead. Thus, China’s ‘charm-offensive’ approach of partnering with countries through trade and infrastructure development via BRI projects, to achieve its own interests, might not be easy to sustain in the post-COVID-19 period.70 Instead, the leadership might need to modify China’s global governance model to cater for the criticisms towards the CPC amidst the global pandemic and prepare to witness changes in its BRI proceedings. China’s assertive posture amidst the Doklam crisis The unresolved border dispute between China and India has been the flashpoint of Sino-India relations since decades, whose effects resurfaced during the Doklam incident in mid-June 2017. Doklam remains a disputed trijunction between India, China and Bhutan, where China had built a road as early as in 2003.71 However, claiming the territory as part of China, Beijing started extending the road in 2017 – as a direct violation of its agreements with Bhutan in 1988 and 1998. The aforementioned agreements stated that ‘the two sides will refrain from taking unilateral action, or use of force, to change the status quo of the boundary’.72 Moreover, China had an understanding with India in 2012 that the ‘tri-junctions will be finalised in consultation with the third country concerned’.73 However, as China continued its construction work in the disputed territory, its activities were halted by the Indian army; while a scuffle broke between both the sides soon after. For India, China’s actions posed a threat to its security and territorial integrity. If anything, the Chinese construction initiative was an attempt to unilaterally change the status quo. Subsequently, China began stepping up its military posture in the region through re-enforcements and put diplomatic pressure on India to withdraw its troops. Moreover, it overwhelmed the international community with the Chinese narrative of the dispute and accused India of pursuing unlawful actions that threaten China’s sovereignty.74 This episode highlighted China’s

PLA and China – regional security ambition  293 use of the ‘Three Warfares’ – psychological warfare, legal warfare and media warfare – to sustain its claims within the region and alter the status quo.75 However, India’s unexpected and retaliatory assertive response prevented China from changing the status quo.76 In view of the above, it must be noted that China’s attempts to consolidate control in the Doklam area have had strategic imperatives. Particularly as China’s military presence in the region, in order to establish transportation infrastructure, had the ability to support deeper incursions towards a 17-mile-wide strip of land known as the Siliguri Corridor which connects the Northeast Indian states to the rest of India. The activity assumes greater significance in view of China’s claims over the Tawang region in the Indian state of Arunachal Pradesh, which it calls ‘South Tibet’, and Beijing’s complicated history with the Dalai Lama, who resides in India. While the situation returned back to normalcy after 72 days of the standoff between the Chinese and Indian army, the Doklam stand-off played a huge role in highlighting China’s coercive tactics to assert sovereignty claims on disputed territory through military means; an approach synergic to its diplomacy in the SCS and ECS. Presently, China’s fundamental approach for acquiring its core interests to secure its sovereignty still persists. This was reflected during a regular press conference post the stand-off on August 28, 2017, by the Chinese Foreign Ministry spokesperson Hua Chunying: China will continue fulfilling its sovereign rights to safeguard territorial sovereignty in compliance with the stipulations of the border-related historical treaty.77 The above statement resonates China’s assertive posture towards disputed regions and an unbending attitude towards its core interests of sovereignty. In hindsight, even after 22 rounds of talks at the Special Representatives level, India and China have not agreed upon the Line of Actual Control (LAC) and are yet to exchange maps that will clarify their respective stances on the matter. The two sides have, thus far, exchanged only the maps for the Middle Sector; and that, too, more than a decade ago.78 Constant tensions in both the Western and Eastern Sectors have raised serious doubts over the validity of the previously signed Memoranda of Understanding (MoUs); agreements of 1993, 1996 and 2005; and the Border Defence Cooperation Agreement (BDCA) of 2013. Moreover, unofficial meetings between Xi Jinping and Prime Minister Narendra Modi in Xiamen, Wuhan and Chennai, too, have achieved little in terms of creating an ambience to resolve the boundary dispute. It must be understood that for Beijing, under the leadership of Xi, the matters related to its national security, territory and sovereignty cannot be compromised. Further, in view of the military reforms and restructuring, PLA’s role in the CPC and its say in the party is increasing and would continue to

294  Mrittika Guha Sarkar enhance in the future. The growing nationalism in China and the sensitivity of the India-China boundary dispute due to its historical links with Tibet shall persist China to view the India-China boundary question with an authoritative approach, and even coercion if needed.79 China’s sovereignty claims in Hong Kong: the PLA’s role When Hong Kong was handed back to China on July 1, 1997, after more than 150 years of British administration in the region, ‘one country, two systems’ was the foundation of the relationship between mainland China and Hong Kong. The latter was, thus, provided with the status of a Special Administrative Region (SAR), to be governed under the Basic Law that protects rights such as freedom of assembly and freedom of speech, as opposed to no such rule in mainland China.80 The law further restricts the PLA from interfering in the local affairs of Hong Kong, allowing for only military activities such as training, with prior notice to the Hong Kong government. However, the law was breached in mid-2019 when more than 6,000 PLA soldiers and 15 garrisons were stationed in Hong Kong.81 The situation was worsened with the PLA Hong Kong garrison initiating anti-riot drills with thousands of troops firing tear gas and water cannon, displaying its capabilities to intervene and combat violent protests.82 Moreover, thousands of People’s Armed Police and the PLA’s paramilitary forces were tasked to quell the domestic unrest by conducting military drills in the region. The Chinese intervention mentioned above was a direct result of the protests in Hong Kong that erupted in June 2019 as opposition to an extradition bill that would allow suspects to be sent to mainland China for trial. While the bill was completely withdrawn in September 2019, demand for full democracy in the region has been mounting through demonstrations. The Defence Minister of China Wei Fenghe defended the country’s firm policy towards Hong Kong, reflecting China’s intentions to reclaim sovereignty over the region.83 Although the PLA’s role was to ensure law and order in the region, China’s coercive approach to reclaim sovereignty was criticised universally.84 Beijing was further aggravated after the passage of US legislation on Hong Kong, the ‘Hong Kong Human Rights and Democracy Act’, that aims to maintain liberties amidst growing unrest and violence in the SAR.85 The action was condemned by Beijing; while the Chinese Defence Minister in a telephonic conversation with his US counterpart in November 2019 called out the US interference in China’s internal matters.86 China’s coercive diplomacy towards Hong Kong reiterated its priority to reconciliate over its sovereignty interests, despite resistance. It reverberated that China’s implicitly aggressive approach towards Hong Kong would continue to enhance till the expiration of the Basic Law in 2047; after which, Beijing’s assertiveness might only become more overt.87

PLA and China – regional security ambition  295 Regardless, China’s aggression in Hong Kong also resonated its overestimating capacity to control the crisis in the region which has been inviting persistent resistance from the citizens in the SAR, as well as censures from the international community. The increasing complexities of the region stand as a potential corrosion to the authority of Xi Jinping in resolving the crisis. Further, the backlash and growing demands for greater political accountability and universal suffrage in Hong Kong act as a contagion to the authoritarian rule in the mainland. This holds a more significant position at the backdrop of the already growing demands for freedom of speech and expression in China, which has begun to put pressure on Xi. These, if anything, signify towards the growing and widespread public demand for government accountability in China, which would only enhance in the postCOVID-19 episode. PLA’s military adventurism amidst Covid-19 The rapid spread of the Covid-19 throughout the globe has affected millions and caused thousands of deaths worldwide. However, China’s recent military adventurism near Taiwan, in SCS and ECS has raised questions for the strategic community regarding Beijing’s precedence amidst a health crisis. If anything, PLA’s coercive diplomacy through military exercises has continued unabated, even as the COVID-19 pandemic is wreaking havoc around the world (see Table 13.1 and Figure 13.1).88 In this regard, the PLAAF in mid-March conducted a night drill by its J-11 fighters and early warning aircraft while crossing the median line in the Taiwan Strait to reaffirm its claims over Taipei and project its night-time combat capabilities to deter Taiwan as well as the US.89 China also resumed its joint military drills which were suspended due to disruptions in transport and allocation of military resources, amidst the pandemic. It conducted its large-scale drill comprising of a six-ship flotilla led by its aircraft carrier Liaoning, which sailed through the Miyako Strait in the Northern waters of Taiwan.90 Further, as recent as in April 2020, Chinese Coast Guard sank a Vietnamese fishing boat with eight crew members on board in the overlapping waters near the Paracel Islands. The incident marked the second time in the past 12 months in which China had provocatively sunk a rival Southeast Asian nation’s fishing vessel.91 Besides, more than 100 Chinese vessels were spotted near the Philippines-occupied Thitu Island located in the SCS in January and February 2020.92 In mid-March, China claimed to launch two research outposts on the Subi and Fiery reefs in the Spartley Islands, which are claimed by Vietnam and the Philippines.93 It also conducted an anti-submarine drill in the region despite the US launching live-fire missiles as warnings to China.94 The timing of these incidents play a significant role in determining the importance China accords to its sovereignty claims in the region; as even amidst

296  Mrittika Guha Sarkar the Covid-19 pandemic, PLA and other Chinese security forces continue to display Beijing’s belligerent approach in the region. Moreover, since the beginning of the current year till March 31, 2020, the Chinese vessels have entered the contagious zone between Beijing and Tokyo at least 289 times and intruded into Japan’s territorial sea on approximately 20 instances. In fact, in late March, a Chinese fishing vessel collided with a Japanese destroyer, while the former blamed Tokyo for the same.95 To some extent, China’s military activism in the region amidst the pandemic reverberates the priority for China to sustain its military posture and build up in the disputed regions to endure its sovereignty claims, even as China itself battles to completely contain the virus inside its territory. However, at the least, Beijing’s military diplomacy under Xi demonstrates a more conceptual underpinning which remains linked with its central desire for rejuvenation and the Chinese Dream.96 Even as the pandemic grapples the global community amidst health and economic crisis, the same has not distracted China from its aim of attaining its core strategic interests and acquiring its sovereignty claims. Thus, Beijing continues to conduct its military exercises near areas it claims is under its jurisdiction, aiming to safeguard its national sovereignty and territorial integrity.97 For China under the current leadership, continued military adventurism reiterates that the Covid-19 has not been able to debilitate China’s powerful army, navy, and airforce, while its desire to modernise and bolster its PLA as a world-class force would remain unchanged. Moreover, with its persistent military assertiveness in the region, it would want to deter the growing presence of the US and its allies in the regions it claims sovereignty.

Conclusion Chinese reforms and initiatives, both domestically and internationally, have been suggesting a pragmatic and progressive trend where Beijing’s intent is to bolster its domestic conditions as well as prepare to emerge powerful and resilient in both the regional and global arenas. Its coercive approach in the SCS, ECS, Taiwan, Doklam and Hong Kong; and offshore balancing activities through the BRI projects reiterate this intent. China’s aim to secure its core interests and enhance its status in the global sphere is evident in Xi Jinping’s vision for China’s future, where PLA plays a key role. However, China’s security perceptions, as well as its regional and neighbourhood policies might have to cater to a modified global order post the COVID-19 period, where its ability to influence the regional affairs through persuasion or deterrence might face challenges. China’s assertive and unilateral military approach to sustain sovereignty claims and enhance its own global footprint might witness delays; particularly in light of the criticism faced by the CPC for its handling of the Novel Coronavirus outbreak. Further, its coercive activities in the disputed areas of the SCS, ECS, the

PLA and China – regional security ambition  297 LAC and the Taiwan Strait, as well as in the region of Hong Kong, amidst the pandemic might invite greater cautiousness among the international community. China, even as it continues to approach the above-mentioned regions with assertiveness, might need to alter its global governance model and military posture to cater to the needs of a change.

Notes 1 Mao Zedong, in his Problems of War and Strategy stated: “Whoever has army has power” in a midst of his long campaign to bring China under the Communist Party rule. In China, war was the main form of struggle, and the army was the primary form of organisation. Mao believed that Chiang-Kai Shek (leader of Kuomintang) understood this vital point and it was necessary to learn from him if China wanted to be free from Japanese imperialism. Xi Jinping has taken this dictum to his heart as he installs himself as the commander-in-chief and overhauls the PLA. Please read, ‘Problems of War and Strategy’, Selected Works of Mao Tse-Tung, November 06, 1938, at archive/mao/selected-works/volume-2/mswv2_12.htm (accessed April 6, 2020). 2 ‘Farewell, Leighton Stuart!’ Selected Works of Mao Tse-tung,, August 18, 1949, at (accessed April 6, 2020). 3 The Chinese Dream for Beijing holds important historical undertones, focusing on its desire to restore the dignity of the country which was greatly affected during years of humiliation at the hands of imperialist powers. The concept for Xi holds greater significance; as it becomes a medium to materialize the great rejuvenation. By no means, it is a medium to seek hegemony. However, for many, the term also refers to a channel through which China can attain supremacy and climb up the stairs of becoming a ‘rising superpower’. This could be determined through its unilateral and aggressive attempts to change the status-quo and advance its powers to attain its core strategic interests in regions such as the Taiwan Strait, Hong Kong, the SCS, ECS, India-China border, etc. Please see, ‘Xi: Chinese Dream by No Means Hegemonistic’, Xinhuanet, November 22, 2019, at; Robert Lawrence Kuhn, ‘Xi Jinping’s Chinese Dream’, The New York Times, June 04, 2013, at; Jeffrey N. Wasserstrom, ‘The Elusive Chinese Dream’, The New York Times, December 26, 2014, at the-elusive-chinese-dream.html; Justyna Szczudlik-Tatar, ‘Towards China’s Great Power Diplomacy under Xi Jinping’, Policy Paper, Polish Institute of International Affairs, no. 9 (III), April 2015, p. 1. 4 ‘Chinese President Xi Jinping’s New Year Speech’, People’s Daily Online, January 1, 2016, at (accessed April 6, 2020). 5 The introduction of the five Theater Commands play a great role in accentuating Xi Jinping’s desire to make the military a more effective and capable fighting force, an imperative for national security and attainment of China’s core strategic interests. It also remains a landmark progress in implementing the military reforms and building PLA’s joint battle system. The Theater Commands are designed in such a way that each unit remains responsible for their respective areas which focus on China’s strategic priorities shaped by the regional environment. If anything, the establishment of the Theater Command and the formation of the joint battle command system remains a strategic decision by the party,

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8 9 10


headed by Xi, to realise the Chinese Dream of a strong military. Please read Joel Wuthnow and Philip C. Saunders, ‘Chinese Military Reforms in the Age of Xi Jinping’, China Strategic Perspectives, 10, March 2017, pp. 23–37; ‘China’s Military Regrouped into Five PLA Theatre Commands’, China Military Online, February 01, 2016, at (accessed April 6, 2020). The People’s Liberation Army Strategic Support Force was formed on December 31, 2015 and its main task remains to support and ensure smooth progress of battlefield operations. The force is integrated with actions of the PLA army, navy, airforce as well as rocket force, and remains a key for winning the wars through target detection, reconnaissance and target information return. During peacetime the PLA SSF remains responsible for undertaking daily navigation operations, managing of satellites and space reconnaissance means, and assuming the defence task of electromagnetic space and cyberspace. ‘Expert: The Strategic Support Force Will Run through the Entire Combat Process and Is the Key to Success’, People’s Daily, May 05, 2016, at n1/2016/0105/c1011-28011251.html (accessed April 6, 2020). Qiu Yue, ‘PLA Strategic Support Force a Key Force to Win Wars’, China Military Online, January 6, 2016, at pla-daily-commentary/2016-01/06/content_6846500.htm (accessed on April 6, 2020). Zhang Tao, ‘New PLA Rocket Force Conducts Desert, Forest Drills’, China Military Online, January 5, 2016, at china-military-news/2016-01/05/content_6843631.htm (accessed April 6, 2020). Dennis J. Blasko, ‘The PLA Army after ‘Below the Neck’ Reforms: Contributing to China’s Joint Warfighting, Deterrence and MOOTW Porture’, Journal of Strategic Studies, December 27, 2019, p. 5. China’s neighbourhood policy under Xi Jinping represents a shift from the Deng Xiaoping era where keeping a low profile while maintaining a favourable regional environment was the core to China’s foreign policy. Beijing, under the current leadership, believes in deepening ‘mutually beneficial cooperation with neighbouring countries’, but also emphasises on the imperatives of preserving and making the best use of strategic opportunities to attain national rejuvenation. China’s foreign policy in Asia ranges from projecting assertiveness on sovereignty issues, challenging the US influence in its neighbourhood, and initiating economic ties through trade and infrastructure, which would act as an instrument to push China towards centrality in the region. Please read, ‘Speech by Xi Jinping on Neighbourhood Policy to the Working Conference on Neighbourhood Relations’, Xinhua, 25 October 2013, at politics/2013-10/25/c_117878944.htm (accessed April 7, 2020); Francois Godement, ‘China’s Neighbourhood Policy’, China Analysis, February 2014, p. 1, at February2014.pdf (accessed April 7, 2020). The emphasis on China’s periphery was first stressed as being of “prime importance” at the 16th Party Congress in 2002. The greater need for China to defend its sovereignty claims on its periphery was regarded as the “bottom line principle” (底线原则). The concept of “good neighborhood, secure neighborhood, and wealthy neighbourhood” was coined by former Premier Wen Jiabo as a comprehensive description of China’s objectives towards its periphery states. Periphery diplomacy under Xi reflects the gradually growing significance of the peripheral regions to China’s security and development, which underpins an increasingly uncertain environment. In this regard, the PLA’s pro-active and assertive posture towards territorial and maritime disputes reiterate the “bottom line principle” through its mounting emphasis on protecting China’s core strategic

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13 14


16 17

18 19

interests of sovereignty through historical connotations. Further, China’s initiation of the BRI and its attempts to protect the infrastructural initiative draws from its desire to integrate the region and stabilise the ambivalence; protecting its economic and strategic interests. Please read, Michael D. Swaine, ‘Chinese Views and Commentary on Periphery Diplomacy’, China Leadership Monitor, no. 44, at (accessed April 09, 2020). Jeremy Page, ‘President Xi Jinping’s Most Dangerous Venture Yet: Remaking China’s Military’, Wall Street Journal, April 25, 2016, at articles/president-xi-jinpings-most-dangerous-venture-yet-remaking-chinas­ military-1461608795 (accessed April 6, 2020). David M. Finkelstein, ‘Breaking the Paradigm: Drivers Behind the PLA’s Current Period of Reform’, Chairman Xi Remakes the PLA, National Defense University Press, Washington, DC, 2019, p. 68. Please note, the core strategic interests mentioned in this chapter are inferences made by the author based on the arguments made in the sources below. Please see, Kevin Rudd, ‘The Coronavirus and Xi Jinping’s Worldview’, Project Syndicate, February 8, 2020, at virus-will-not-change-xi-jinping-china-governance-by-kevin-rudd-2020-02 (accessed April 7, 2020); ‘China’s Foreign Policy in a Fast Changing World: Mission and Responsibility – Speech by Vice Foreign Minister Le Yucheng at the Lunch Meeting of the Eighth World Peace Forum’, Ministry of Foreign Affairs of the People’s Republic of China, July 8, 2019, at cn/mfa_eng/wjdt_665385/zyjh_665391/t1679454.shtml (accessed April 7, 2020); ‘Full Text: China’s National Defense in the New Era’, Xinhua, July 24, 2019, at (accessed April 7, 2020); Dipanjan Roy Chaudhury, Border dispute with India now part of China’s core national interests’, The Economic times, September 26, 2014, at https:// (accessed August 10, 2020). The CNP could be defined as the combined weight of economic, diplomatic and military power. From a state-centric perspective, such power would be necessary for China to fulfil its aim of guaranteeing ‘appropriate influence at the world stage’. These are not military goals per se, but institutional goals tied to China’s national objectives. Zhiqun Zhu, China’s New Diplomacy: Rationale, Strategies and Significance, second edition, Ashgate, London, 2013, p. 7. The “new era” under the Xi Jinping denotes an era which is shaped by the new leadership’s guiding ideology or Xi’s “thought” of ‘Socialism with Chinese Characteristics’, putting Xi’s contribution at par with “Mao Zedong’s Thought”. The new era marks a new start for China and its mode of governance, foreign policy, economy and society; where the desire for enhancing development, modernisation, economy, ideology, strategic management to enhance China’s stature as a world power takes the front seat. Please read, Jean Christopher Mittelstaedt, ‘China’s New Era: Between Continuity and Disruption’, European Council on Foreign Relations, December 15, 2017, p. 5, at ECFR240_China_Analysis_Party_Congress_Ideology_2.pdf (accessed April 7, 2020). Yang Jiemian, ‘Exploration and Innovations of Thinking, Strategies and Practice of China’s Diplomacy in the New Era’, Global Review, Shanghai Institutes for International Studies, Shanghai, 2015, pp. 1–16. Richard Bush, ‘From Persuasion to Coercion: Beijing’s Approach to Taiwan and Taiwan’s Response’, Brookings, November 2019, at

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20 21

22 23

24 25

26 27 28 29 30

31 32 33 34



wp-content/uploads/2019/11/FP_20191118_beijing_taiwan_bush.pdf (accessed April 7, 2020). Ibid. Richard C. Bush, ‘What Xi Jinping said about Taiwan at the 19th Party Congress’, Brookings, October 19, 2017, at (accessed April 7, 2020). Please see Arthur S. Ding and Paul A. Huang, ‘Taiwan’s Paradoxical Perceptions of the Chinese Military: More Capable but Less Threatening?’ China Perspectives, 4, April 2011, pp. 43–51. Arthur S. Ding, ‘The PLA and Taiwan Policy under Xi Jinping: One Joint Actor without Its Own Agenda’, Issues & Studies, 53 (2), pp. 17–19; Alan D. Romberg, ‘Cross-Strait Relations: First the Easy, Now the Hard’, China Leadership Monitor, 28, Spring 2009, pp. 14–20. William Lowther, ‘Risk of Conflict in Taiwan Strait Reduced: US Admiral’, Taipei Times, November 06, 2009, at archives/2009/11/06/2003457773 (accessed April 7, 2020). Javier C. Hernandez, ‘China Suspends Diplomatic Contact with Taiwan’, The New York Times, June 25, 2016, at asia/china-suspends-diplomatic-contact-with-taiwan.html (accessed April 7, 2020). Arthur S. Ding, no. 23. William Lowther, ‘PLA Reforms Short-Term Boon for Taiwan: Expert’, Taipei Times, July 21, 2016, at 2016/07/21/2003651479 (accessed April 7, 2020). Please see ‘H.R.535 - Taiwan Travel Act’, 115th Congress (2017–2018), became Public Law No. 115–135 on March 16, 2018,, at https://www. (accessed April 12, 2020). ‘Highlights of Xi’s Speech at Taiwan Message Anniversary Event’, China Daily, January 2, 2019, at 310d91214052069.html (accessed April 7, 2020). Please see, Catherine Wong, ‘PLA Steps up Drills in Southeast “Targeted at Taiwan and US”’, South China Morning Post, May 18, 2016, at https://www.scmp. com/news/china/policies-politics/article/1946719/pla-steps-drills-southeasttargeted-taiwan-and-us (accessed April 7, 2020). Ibid. James Samuel Johnson, ‘China’s “Guam Express” and “Carrier Killers”: The Anti-ship Asymmetric Challenge to the U.S. in the Western Pacific’, Comparative Strategy, 36(4), November 01, 2017, p. 321. Ibid. Eric Heginbotham, ‘Chinese Capability to Attack Air Bases’, The U.S.-China Military Scorecard: Forces, Geography, and the Evolving Balances of Power 19962017, Rand Corporation, 2015, pp. 68–70, at dam/rand/pubs/research_reports/RR300/RR392/RAND_RR392.pdf (accessed April 28, 2020). Ina Williams and Masao Dahlgren, ‘More Than Missiles: China Previews Its New Way of War’, Center for Strategic and International Studies (CSIS) Briefs, October 2019, pp. 1–2, at publication/191023_MoreThanMissilesChinaPreviewsits_update.pdf (accessed April 28, 2020); Please read, ‘China Naval Modernization: Implications for U.S. Navy Capabilities-Background and Issues for Congress’, Government of United States, Congressional Research Service’, February 10, 2020, at sgp/crs/row/RL33153.pdf (accessed April 28, 2020). Sebastien Roblin, ‘Why China’s DF-26 Missile Is a Guam Killer and a Nuclear Killer’, National Interest, November 9, 2018, at

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41 42




46 47 48

buzz/why-chinas-df-26-missile-guam-killer-and-nuclear-killer-35847 (accessed April 28, 2020). Please see, ‘Annual Report to Congress: Military and Security Developments Involving the People’s Republic of China 2019’, Office of the Secretary of Defense, May 2, 2019, at CHINA_MILITARY_POWER_REPORT.pdf (accessed April 7, 2020). Lyle J. Morris, ‘The Era of Coast Guards in the Asia-Pacific Is Upon Us’, Rand Corporation, March 08, 2017, at (accessed April 7, 2020); Mark Beeson, ‘The State and Security in Asia’, January 21, 2016, at https://www.mei. edu/publications/state-and-security-asia (accessed April 7, 2020). Feng Zhang, ‘Assessing China’s Response to the South China Sea Arbitration Ruling’, Australian Journal of International Affairs, 71(4), February 2017, p. 444; The ‘Nine-Dash Line’ remains at the heart of the unresolved SCS dispute between China and its Southeast Asian neighbours. As a geographical demarcation, this remains the basis for China’s historical claim to 80–90 per cent of the islands in the SCS. The demarcation traces its origins back to a map originally issued by a department of the Republic of China (ROC) that showed 11 lines forming a U-shape in the SCS. Today, the geographical entity runs from mainland China to the Philippines, Malaysia and Vietnam, and has become one of the major reasons for the dispute. Please see, Liu Zhen, ‘What’s China’s ‘Nine-Dash Line’ and Why Has It Created So Much Tension in the South China Sea?’ South China Morning Post, July 12, 2016, at whats-chinas-nine-dash-line-and-why-has-it-created-so (accessed April 7, 2020). ‘China Adheres to the Position of Settling through Negotiation the Relevant Disputes between China and the Philippines in the South China Sea’, States Council for the People’s Republic of China, July 13, 2016, at http://english.www. (accessed April 7, 2020). Please see, ‘Full Text: China’s National Defense in the New Era’, no. 14. Megan Specia and Mikko Takkunen, ‘South China Sea Photos Suggest a Military Building Spree by Beijing’, The New York Times, February 8, 2018, at (accessed April 8, 2020). ‘Foreign Ministry Spokesperson Hua Chunying’s Remarks on Start of Operation of Huayang and Chigua Lighthouses’, Ministry of Foreign Affairs of the People’s Republic of China, October 10, 2015, at xwfw_665399/s2510_665401/t1304809.shtml (accessed April 8, 2020). ‘Remarks by President Obama and President Xi of the People’s Republic of China in Joint Press Conference’, The White House, Office of the Press Secretary, September 25, 2015, at (accessed April 8, 2020). ‘China’s Big Three Near Completion’, Asia Maritime Transparency Initiative, June 29, 2017, at (accessed April 9, 2020); ‘A Construction Year for Chinese Base Building’, Asia Maritime Transparency Initiative, December 14, 2017, at constructive-year-chinese-building/ (accessed April 9, 2020). ‘Another Piece of the Puzzle’, Asia Maritime Transparency Initiative, February 22, 2016, at (accessed April 9, 2020). ‘China’s New Spartley Island Defenses’, Asia Maritime Transparency Initiative, December 13, 2016, at (accessed April 9, 2020). Steven Stashwick, ‘China Deploys Long-Range Anti-Ship and Anti-Air Missiles to Spratly Islands for First Time’, The Diplomat, May 05, 2018, at https://the

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52 53 54 55 56 57 58 59 (accessed April 9, 2020). The CoC started as a set of rules, norms and responsibilities for the parties concerned to promote maritime cooperation in the SCS in the 1990s; formally, it was first discussed in 2002 at a gathering of foreign ministers of member countries of the Association of Southeast Asian Nations (ASEAN) and China in Phnom Penh, Cambodia. However, it was not until 2013 that China began discussing a formal framework for the CoC to ease tensions with its Southeast Asian neighbours. After four years of negotiations between China and the Southeast Asian claimant countries, all the parties decided on a framework for a CoC in November 2017, following the 11th ASEAN Defence Ministers’ Meeting. This was succeeded by a ‘Single Draft South China Sea Code of Conduct Negotiating Text’ (SDNT), announced on August 3, 2018, which would serve as the basis for the adoption of a CoC in the SCS. Please read, ‘China, ASEAN to Begin Consultation on Code of Conduct in South China Sea in March’, China Daily, February 14, 2018, at 6fa3106e7dcc13c958.html (accessed April 9, 2020); Nguyen Minh Quang, ‘Saving the China-ASEAN South China Sea Code of Conduct’, The Diplomat, June 29, 2019, at (accessed April 9, 2020). Carl Thayer, ‘A Closer Look at the ASEAN-China Single Draft South China Sea Code of Conduct’, The Diplomat, August 03, 2018, at https://thediplomat. com/2018/08/a-closer-look-at-the-asean-china-single-draft-south-china-seacode-of-conduct/ (accessed April 9, 2020). ‘India Joins Philippines, US, Japan in South China Sea Drills’, The Economic Times, May 09, 2019, at ­india-joins-philippines-us-japan-in-south-china-sea-drills/articleshow/ 69256405.cms (accessed March 11, 2020); Zhang Zhihao, ‘PLA slams naval drills in South China Sea’, China Daily, May 01, 2020, at http://global.chinadaily. (accessed August 10, 2020). ‘China Says ADIZ in South China Sea Depends on Threat’, Xinhua, July 13, 2016, at (accessed April 9, 2020). For more arguments, please read, Xiaoxiong Yi, ‘Chinese Foreign in Transition: Understanding China’s Peaceful Development’, The Journal of East Asian Affairs, 19 (1), pp. 74–112. Please read, Min Gyo Koo, ‘The Senkaku/Diaoyu Dispute and Sino-Japanese Political-Economic Relations: Cold Politics and Hot Economics?’ The Pacific Review, 22 (2), June 03, 2009, pp. 205–232. Please read, Gao Jianjun, ‘A Note on the 2008 Cooperation Consensus Between China and Japan in the East China Sea’, Ocean Development and International Law, 40 (3), August 07, 2009, pp. 291–303. Ibid. For more arguments, please read, Koichi Sato, ‘The Senkaku Islands Dispute: Four Reasons of the Chinese Offensive – A Japanese View’, Journal of Contemporary East Asian Studies, 8 (1), June 23, 2019, pp. 50–83. Madison Park, ‘Why China’s New Air Zone Incensed Japan, U.S.’, CNN, November 27, 2013, at (accessed April 10, 2020). Ankit Panda, ‘East China Sea: 4 China Coast Guard Vessels Enter Territorial Sea Near Disputed Islands’, The Diplomat, May 09, 2017, at https://thediplomat. com/2017/05/east-china-sea-4-china-coast-guard-vessels-enter-territorial-seanear-disputed-islands/ (accessed April 10, 2020).

PLA and China – regional security ambition  303 60 Ankit Panda, ‘Japan Identifies Chinese Submarine in East China Sea: A Type 093 SSN’, The Diplomat, January 16, 2018, at japan-identifies-chinese-submarine-in-east-china-sea-a-type-093-ssn/ (accessed April 10, 2020). 61 Gabriel Dominguez, ‘Number of Chinese Vessels Entering Contiguous Zone of Disputed Senkaku/Diaoyu Islands Reached Record Level in 2019’, Jane’s, January 09, 2020, at (accessed April 10, 2020). 62 ‘Military Trends in the Neighbouring Countries of Japan’, Defense of Japan 2019, Ministry of Defense, Japan, September 2019, p. 44, at https://www.mod. (accessed April 10, 2020). 63 Yusuke Saito, ‘China’s Growing Maritime Role in the South and East China Seas’, China’s Blue Water Navy Series, Center for a New American Security, March 2017, p. 5. 64 The six corridors under the BRI banner are the New Eurasian Land Bridge, ChinaMongolia-Russia Economic Corridor, China-Central Asia-West Asia Economic Corridor, China-Indochina Peninsula Economic Corridor, China-Pakistan Economic Corridor and Bangladesh-China-India-Myanmar Economic Corridor. These corridors have been officially listed in ‘The Belt and Road Initiative Progress, Contributions and Prospects’, Office of the Leading Group for Promoting the Belt and Road Initiative, 2019, at uploads/content/files/201904/201904220254037.pdf (accessed April 10, 2020). 65 See Nathan Beauchamp Mustafaga, ‘PLA Navy Used for First Time in Naval Evacuation from Yemen Conflict’, Jamestown Foundation, April 3, 2015, at (accessed April 10, 2020); Nadège Rolland (ed.), Securing the Belt and Road Initiative: China’s Evolving Military Engagement Along the Silk Roads, NBR Special Report, 80, September 2019, p. 2, at https://www.nbr. org/wp-content/uploads/pdfs/publications/sr80_securing_the_belt_and_road_ sep2019.pdf (accessed April 11, 2020). 66 Please read, Michael S. Chase, ‘The Space and Cyberspace Components of the Belt and Road Initiative’, Securing the Belt and Road Initiative: China’s Evolving Military Engagement along the Silk Roads, NBR Special Report, 80, September 2019, pp. 19–31, at sr80_securing_the_belt_and_road_sep2019.pdf (accessed April 11, 2020). 67 ‘Sri Lanka Joins China’s Belt and Road with Operations of Hambantota Port: PM’, Xinhua, December 09, 2017, at c_136813766.htm (accessed April 11, 2020). 68 The ‘String of Pearls’ is a geopolitical theory on potential Chinese interests and expansions in the Indian Ocean. The term refers to a network of Chinese military ports, bases and facilities securing its SLOCs that extend from the Chinese mainland to the Horn of Africa, including crucial chokepoints of the Mandeb Strait, the Strait of Malacca, the Strait of Hormuz and the Lombok Strait and maritime strategic centres in Sri Lanka, Pakistan, Bangladesh, Maldives and Myanmar. Please read, Christopher J. Pehrson, ‘String of Pearls: Meeting the Challenge of China’s Rising Power across the Asian littoral’, Strategic Studies Institute, US Army War College, July 2006, pp. 1–36. 69 Lucy Hornby and Archie Zhang, ‘Belt and Road Debt Trap Accusations Hound China as It Hosts Forum’, Financial Times, April 24, 2019, at content/3e9a0266-6500-11e9-9adc-98bf1d35a056 (accessed April 11, 2020) 70 Jagannath P. Panda, ‘Beijing Is at a Pax Sinica moment Post Covid-19’, The Sunday Guardian, March 28, 2020, at beijing-pax-sinica-moment-post-covid-19 (accessed April 11, 2020).

304  Mrittika Guha Sarkar 71 ‘Recent Developments in Doklam Area’, Ministry of External Affairs, June 30, 2017, at in_Doklam_Area (accessed April 11, 2020). 72 ‘Press Release’, Ministry of Foreign Affairs, Royal Government of Bhutan, June 29, 2017, at (accessed April 11, 2020). 73 ‘Recent Developments in Doklam Area’, Ministry of External Affairs, India, June 30, 2017, at Developments_in_Doklam_Area (accessed April 11, 2020). 74 ‘2017年7月6日外交部发言人耿爽主持例行记者会’ (Foreign Ministry Spokesperson Geng Shuang’s Regular Press Conference on July 6, 2017), Ministry of Foreign Affairs of People’s Republic of China, July 6, 2017, at web/fyrbt_673021/jzhsl_673025/t1475878.shtml (accessed April 11, 2020); Curtis Stone, ‘Op-Ed: India Is Playing with Fire, and It Could Get Burned’, People’s Daily Online, August 10, 2017, at html (accessed April 11, 2020); ‘Indian Troops’ Provocation Brings Disgrace to Themselves’, Global Times, June 27, 2017, at 1053801.shtml (accessed April 11, 2020). 75 Military and Security Developments Involving the People’s Republic of China 2011, Office of the Secretary of Defense Annual Report to Congress, 2011, at http:// (accessed April 09, 2020). 76 Oriyana Skylar Mastro and Arzan Tarapore, ‘Countering Chinese Coercion: The Case of Doklam’, War on the Rocks, August 29, 2017, at https://waronthe (accessed April 11, 2020). 77 ‘Foreign Ministry Spokesperson Hua Chunying’s Regular Press Conference on August 28, 2017’, Ministry of Foreign Affairs of People’s Republic of China, August 28, 2017, at t1487932.shtml (accessed April 11, 2020). 78 ‘PM’s China Visit: A Himalayan Deal?’, Ministry of External Affairs, November 21, 2002, at PMs+China+visit+a+Himalayan+deal (accessed April 11, 2020). 79 An assertive and even revisionist approach by China towards India was visible during the Galwan Valley border stand-off between both the countries on June 15, 2020, as the PLA’s conducts in the region, with the approval of the leadership, reflected an aggressive posture at multiple locations at the LAC concurrently, while the Chinese authorities unilaterally claimed Galwan Valley to its side of the border. Please see, Mrittika Guha Sarkar, ‘Xi Jinping’s India Policy-Analysis’, Eurasia Review, July 14, 2020, at https://www.eurasiareview. com/14072020-xi-jinpings-india-policy-analysis/ (accessed August 10, 2020); Derek Grossman, ‘Chinese Border Aggression Against India Likely Unrelated to Pandemic’, The Diplomat, July 05, 2020, at chinese-border-aggression-against-india-likely-unrelated-to-pandemic/ (accessed August 10, 2020). 80 Please read, The Basic Law of the Hong Kong Special Administrative Region of the People’s Republic of China, April 4, 1990, at basiclawtext/images/basiclaw_full_text_en.pdf (accessed April 11, 2020). 81 Austic Ramzy, ‘What Is the Chinese Military Doing in Hong Kong?’ The New York Times, July 25, 2019, at hong-kong-china-military.html (accessed April 11, 2020). 82 Martin Purbrick, ‘A Report of the 2019 Hong Kong Protests’, Asian Affairs, 50(4), October 14, 2019, pp. 480–481. 83 ‘China Defence Chief Wei Fenghe Defends Policy on Hong Kong, Xinjiang’, Financial Express, November 6, 2019, at

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91 92

93 94

china-defence-chief-wei-fenghe-defends-policy-on-hong-kong-xinjiang/1755869/ (accessed April 11, 2020); Teddy Ng, ‘PLA “Committed to Protecting” Hong Kong as Stand-Off Intensifies’, South China Morning Post, November 18, 2019, at (accessed April 11, 2020). Christian Shepherd, Kathrin Hille and Primrose Riordan, ‘China’s Army Can Intervene in Hong Kong, Says Beijing’, Financial Times, July 24, 2019, at https:// (accessed April 11, 2020). ‘Hong Kong Human Rights and Democracy Act of 2019’,, at https:// (accessed April 11, 2020). ‘China Defence Chief Wei Fenghe Defends Policy on Hong Kong, Xinjiang’, no. 83. China’s growing assertiveness towards Hong Kong was reverberated as Hong Kong promulgated the National Security Law sent by Beijing to curb “secession, subversion, terrorism, or collusion with foreign or external forces.” While the Chinese authorities defended the law to maintain stability in Hong Kong, this development was viewed as an act by China to consolidate its authoritarian control over Hong Kong, having severe implications to the ‘one China, two systems’ as well as Hong Kong’s unique attributes of free speech, free assembly, and legal transparency. Please read, Ryan Hass, ‘Why now? Understanding Beijing’s new assertiveness in Hong Kong’, Brookings, July 17, 2020, at https://www.brookings. edu/blog/order-from-chaos/2020/07/17/why-now-understanding-beijings-newassertiveness-in-hong-kong/ (accessed August 10, 2020). While China has repeatedly clarified its accusations regarding coercion in Taiwan, ECS and SCS activities as regular military exercises and aimed to safeguard national sovereignty, respectively, China observers have criticised Beijing for viewing the pandemic as a ‘strategic window of opportunity’ to gain the upper hand in the disputed regions. Please read, Abraham Denmark, Charles Edeland Siddharth Mohandas, ‘Same as It Ever Was: China’s Pandemic Opportunism on Its Periphery’, War on the Rocks, April 16, 2020, at https:// (accessed April 9, 2020). Lawrence Chung, ‘Taipei Says Chinese Military Aircraft Flew Night Exercise across Taiwan Strait’, South China Morning Post, March 17, 2020, at https://www. (accessed April 9, 2020). Minnie Chan, ‘PLA Flexes Military Muscle Near Taiwan ‘in Show of Covid-19 Control’ to Virus-Hit US’, South China Morning Post, April 14, 2020, at https:// (accessed April 9, 2020). Richard Javad Heydarian, ‘China Leverages Covid-19 Crisis in South China Sea’, Asia Times, April 9, 2020, at (accessed April 9, 2020). Francis Mangosing, ‘PH Military Spots 136 Chinese Vessels Near Pag-Asa Island since January 2020’,, March 02, 2020, at https://globalnation. (accessed April 9, 2020). ‘New Research Stations Come into Operation on Nansha Islands’, Xinhuanet, March 20, 2020, at htm (accessed April 9, 2020). Minnie Chan, ‘US Navy Launches Live-Fire Missiles in ‘Warning to China’, South China Morning Post, March 24, 2020, at

306  Mrittika Guha Sarkar china/military/article/3076768/us-navy-launches-live-fire-missiles-warning-china? fbclid=IwAR3ue_1R3Hgd5Z34Q3Nmhw8xEZ2Qlzcs-7VIIwKo8cjCOdjY0LUj S3tvdak (accessed April 20, 2020). 95 Mari Yamaguchi, ‘Japan Warship, China Fishing Boat Collide in East China Sea’, Japan Today, March 31, 2020, at japan-warship-china-fishing-boat-collide-in-east-china-sea (accessed April 20, 2020). 96 Mark J. Valencia, ‘As the World Focuses on Covid-19, Is China Exploiting the Distraction in the South China Sea? Only If You Believe US Propaganda’, South China Morning Post, April 27, 2020, at opinion/article/3081472/world-focuses-covid-19-china-exploiting-distractionsouth-china-sea (accessed April 20, 2020); Joshua Kurlantzick, ‘Covid-19 and the South China Sea’, Council on Foreign Relations, April 22, 2020, at https:// (accessed on April 20, 2020). 97 Zhang Zhihao, ‘PLA Slams Naval Drills in South China Sea’, China Daily, May 01, 2020, at 8b2411530ee.html (accessed April 9, 2020).


5G (Fifth-Generation) 31, 247, 259 6G (Sixth-Generation) 31 7G (Seventh-Generation) 31–32 9/11 terrorist attack 268 12 targets 56 12th Five Year Plan for National and Social Development 74 18th Party Central Committee 31, 62, 92, 97 Third Plenum 32, 62, 92 19th Congress 2, 88, 90 20th Party Congress 31 21st Century Economic Herald 143 31st Group Army 31 1989 Tiananmen Square Massacre 55, 93, 95, 97 aftermath of 97 1994 automobile policy 134, 136–137 2002 ASEAN-China Declaration on the Conduct of Parties in the South China Sea (DoC) 240 2004 automobile industry policy 136–137, 139 2008 Beijing Olympics 52, 64, 95 2008 Global Financial Crisis 95, 178, 182, 224 2013 Durban Summit Declaration 181 2014 Asia-Pacific Economic Cooperation (APEC) meeting 261 2016 G20 Summit 261 2018 Xiangshan Forum 262 #MeToo 76 A2/AD (Anti-Access/Area-Denial) 284–285 Abdel Fattah el-Sisi, Egyptian President 198 accountability 5, 85, 96–98, 165, 184, 295 changing contours of 85

demand for 97 judicial 184 ACD see Asia Cooperation Dialogue (ACD) ‘Act East’ Policy 265–266 ADIZ see Air Defence Identification Zone (ADIZ) Adjustment and Upgrading Plan of the Iron and Steel Industry 139–140 Adjustment policy of the iron and steel industry (draft) 140 Adventurism, military 295–296 Afghanistan 213, 215, 246, 256, 263 US military involvement in 213 Africa 14, 90, 164, 173, 178, 197–198, 204, 217, 220, 223, 235, 243, 291–292 Xi’s visit to 90 Africa and China strategic partnership 197 Afro-Asian Economic Council (AAEC) 179 aggression 242, 246, 285, 295 agriculture 4, 155 AIIB see Asian Infrastructure Investment Bank (AIIB) aircraft 25, 69, 163, 217, 223, 239, 241, 265, 280–283, 285, 287, 295 airborne early warning and control aircraft 223, 283 carriers 25, 217, 265, 280–281, 285, 295 military 241, 281–282 air defence 223, 242, 281 Air Defence Identification Zone (ADIZ) 223, 242, 281–282, 288–289 All-China Federation of Industry and Commerce (ACFIC) 54, 116 All-China Women’s Federation (ACWF) 74

308 Index alliances 36, 191, 194, 200, 209, 219, 241, 247–248, 261, 267, 269, 278, 284 regional 248 US-led 267 US-Philippines 241 allies 48–49, 55, 121, 193, 205, 216, 218, 220, 223, 225–226, 245, 248, 259, 265, 270, 285, 296 Asia-Pacific 216, 218 littoral 265 traditional 216 ambiguities 118, 172, 184 ambitions 7–8, 62, 87, 172, 212, 222, 224–226, 235, 245, 250, 262, 268, 276–279 America 39, 68, 174, 196, 204, 212–220, 236, 239, 243, 245–249, 262; see also United States (US) “America First” policy 219, 262 American Dream 93, 214 American Lego representation 222 Anhui province 114, 158 anti-access strategy 285 anti-China crusade 5 forces 55 measures 224 narrative 8, 226 rhetoric 222 anti-Communist ‘diehard’ KMT soldiers 48 anti-corruption campaign 12, 55, 86–87, 96, 105, 107, 109, 118, 182–183, 235, 279 crackdown 90 leader 91 movement 87 anti-extradition bill 68 anti-poverty programmes 154 anti-Rightist Campaign 49 anti-riot drills 294 anti-Ship Ballistic Missiles (ASBMs) 285 antiship cruise missiles (ASCMs) 287 anti-ship missiles (ASMs) 284 anti-Xi bloc 36 forces 36 views 37 APEC see Asia-Pacific Economic Cooperation (APEC) APT see ASEAN plus Three (APT) Arab States and China cooperation 204 arbitral tribunal 240–242

ARF see ASEAN Regional Forum (ARF) ARIA see Asia Reassurance Initiative Act (ARIA) Arpi, Claude 87 Artificial Intelligence (AI) 32, 69, 72, 163, 259 artificial islands 238–239, 242, 248 Arunachal Pradesh 293 ASCMs see Antiship cruise missiles (ASCMs) ASEAN see Association of Southeast Asian Nations (ASEAN) ASEAN and China 14–15, 195, 236, 241–243 CoC 238 relations 14, 15, 235, 242 ASEAN-China Declaration on the Conduct of Parties in the South China Sea (DoC) 240–241 ASEAN Outlook for the Indo-Pacific (AOIP) 249 ASEAN plus Three (APT) 204 ASEAN Regional Forum (ARF) 204, 249, 259, 263 Asia 4, 8–9, 14–15, 48, 164, 178, 194–195, 198, 200, 204, 212–220, 235–238, 242–245, 247–250, 255–256, 259–263, 265, 268–269, 276, 278, 287, 291 neighbouring countries in 8 power parity in 14 premier economies of 9 problems of 261 US interests into 213, 218 policy towards 14 presence and power in 213 Asia and China 213 Asia and US engagement 215 Asia Cooperation Dialogue (ACD) 204 Asia Enhancing Development and Growth through Energy (Asia EDGE) 220 ‘Asia for Asians’ 255, 259–260, 268–269 Asian Century 14, 212, 216, 221 Asian Development Bank (ADB) 267 Asian Infrastructure Investment Bank (AIIB) 13, 177–179, 181–183, 218, 244, 259, 262, 269 Asian Law Enforcement Security Cooperation Forum 262 Asian Security Emergency Response Center 262

Index  309 Asian Tigers 216 Asia-Pacific Economic Cooperation (APEC) 204, 215, 261 Asia Reassurance Initiative Act (ARIA) 220 ASMs see Anti-ship missiles (ASMs) aspirations 10, 25, 152, 158, 164, 166, 208, 217, 248, 258, 264–265 assertiveness 5, 220, 222, 236, 246, 258, 265, 288, 294, 296–297 Association of Southeast Asian Nations (ASEAN) 14–15, 194–196, 204, 216, 225, 235–238, 240–243, 248–250, 259, 261, 263, 265, 269, 288 attitudes 15, 66, 108, 221, 236, 293 Chinese 221 non-committal 108 rude 66 Southeast Asian 15, 236 Australia 58, 218, 220, 243, 249, 255–256, 259, 263, 265–266, 288, 292 Australia and India Framework for Security Cooperation 266 Austria 194 Austria and China strategic partnership 194 Autarky 37 authoritarianism 92–93, 95–96 hard 92, 95–96 populist 92–93, 96 authority 7, 10–12, 25, 27–30, 35, 36, 38–39, 57, 67–68, 70, 72–73, 75–78, 85, 88, 92–93, 99, 108, 110–112, 114, 117–120, 168, 176–177, 221, 278–279, 295 central 29–30, 35–36, 85 central party 29–30, 35–36 centralisation of 11 Chinese 7, 12, 67, 72 local 73, 76 party 29, 35, 93, 114, 118 state 7, 108, 110, 112, 117, 120 unquestioned 35 automobile 6, 12, 134–137, 139 industry 12, 134–135, 139 sales 6, 135 autonomy 75, 119–120, 250 associational 119 organisational 120 political 250 strategic 250 Azerbaijan 263

Bahrain 263 ballistic missiles 281, 285 Bangladesh 263–265, 269, 292 Bangladesh and China 269 Bangladesh-China-India-Myanmar (BCIM) Corridor 269 bank/banking 33, 37, 71, 110–112, 116, 133, 139, 166, 172, 175–183, 218, 264 commercial 110, 176 development 183 foreign 177 loans 110, 112, 116, 133, 139 shadow 110, 177 state-controlled 37 Bank for International Settlements (BIS) 204 bargaining power 198, 208, 249 Bashi Channel 281 Basic Law of 2047 294 Bay of Bengal 264, 266 Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) 264 BDN see Blue Dot Network (BDN) behaviour 1, 8, 15, 66, 68–69, 71–72, 98, 110, 117, 144, 147, 174, 191, 241, 286–288 assertive 15, 98, 286, 288 criminal 110 external 1 foreign policy 8, 174 non-compensatory 174 online 68 social 69 Beijing Consensus on the Dialogue Conference of Asian Civilizations 2019 224, 262 Belarus 194, 263 beliefs 2, 13, 27, 50, 91, 174–175, 182, 212, 276 cultural 2 ideological 13, 174 political 13, 174 religious 2 systems 13, 174, 175 Belt and Road Forum (BRF) 259 Belt and Road Initiative (BRI) 3, 7–9, 14–16, 32, 90, 162, 164–167, 178–181, 185, 198, 200, 212, 217, 219–220, 227, 235, 237, 243–246, 250, 258, 262, 267–268, 277, 290–292, 296 criticism of 90, 219, 244 Europe’s reactions to projects 9

310 Index expectations of 166 launch of 15 schemes 7 US initiatives to counter 14 Bentham, Jeremy 71, 77 Better Utilisation of Investments Leading to Development (BUILD) Act 220, 245, 267 Bhutan 292 Biaotai 36 Big Data 69, 73 bio-threat 223 BIS see Bank for International Settlements (BIS) blacklisting 70–71 blogosphere, control and management of 66 Blue Dot Network (BDN) 220 Boao Forum for Asia Annual Conference 260, 263 boats, fishing 240–241, 295 Bohai Strait 281 Bolton, John 246 Border Defence Cooperation Agreement (BDCA) 293 borders 50, 65, 166, 194, 219, 222, 224, 226, 276, 278, 290–293 defence cooperation 293 land 276 porous 219 Boston Consulting Group (BCG) 163 boundary 5, 9, 236, 240, 279, 292–294 dispute 5, 9, 236, 240, 279, 293–294 China and India 5, 9 brainwashing 26–27 brand hunting 202 Brazil 173, 178, 193, 196, 204 Brazil and China partnership 193 strategic partner 196 Bretton Woods Institutions 218 Brezhnev 77, 78 BRICS (Brazil, Russia, India, China and South Africa) 178–179, 181–182, 204 Fourth Summit 181 Sixth Summit 179 Brunei 194, 238, 263, 286 BUILD Act 267; see also US Better Utilisation of Investments Leading to Development Act (BUILD Act), 2018 Build a New Type of International Relations through Security Dialogue and Cooperation 262

Building a New Type of Security Partnership of Equality, Mutual Trust and Win-Win Cooperation 262 Building a Partnership for the Asian Destiny Community Think Tank Partnership 262 Building material 6 Bulgaria 194 bureaucracy 47, 51, 54, 66 UFWD 54 United Front 51 Bush, George, US President 215 administration of 215 business 12, 33, 50, 52–53, 59, 62, 64, 69, 71, 89, 105–106, 108–109, 110–111, 113–123, 131, 143, 146, 156, 178, 182–184, 201, 263, 284, 291 associations 50, 64, 118–120 control over 119 Chinese 52 control over 12 foreign 64 high-tech 111 international 178 joint venture 114 large-size 64 management 64 medium-size 64 private 12, 64 private-sector 53 Buzhenglun 26 Deng’s dictum on 26 ByteDance 67, 68 C10 139–140 Cadre Appointment and Promotion Code 88 Cadres 26, 28–31, 34, 36, 39, 49–50, 52–53, 56–60, 113–115, 117, 120, 182–183 individual 52, 117 judicial 34 local 34, 117 motivation of 59 party 53, 182–183 Seventh-Generation (7G) 31 United Front 49 Cai Qi 36 Cambodia 196, 225, 261, 263, 292 campaigns 4, 8, 12, 48–49, 52, 55, 58, 86–88, 90, 96, 105, 107, 109, 114, 118, 153, 155, 182–183, 235, 279, 281, 283, 288 anti-corruption 12, 55, 86–87, 96, 105, 107, 109, 118, 182–183, 235, 279

Index  311 patriotic education 90 Canada 58, 136, 263, 280 capabilities 8, 15–16, 58, 137, 142, 208, 235, 258, 265, 277–278, 280, 283–287, 291, 294–295 aggregation of 208 anti-access/area-denial (A2/AD) 284 combat 15, 277, 295 defensive 286 economic 208 expanded 58 expansion 16 precision strike 285 submarine 265 capital 4, 49–52, 76, 97, 106–107, 110–111, 121–122, 165, 175–176, 178–179, 181, 199, 244, 246, 276 collective 107 European 199 flow of 4 investment 106 non-public 107 political 51, 246 private 121–122 requirements 111 state-owned 107 capitalism 105, 107, 113, 116, 118, 122, 161, 175 Chinese 113 crony 107, 116 state 105, 122, 175 CAREC see Central Asia Regional Economic Cooperation (CAREC) CASCF see China-Arab States Cooperation Forum (CASCF) CCP Central Committee 55, 62–63, 259 CCP Central Propaganda (Publicity in official English translations) Department 66 CCP Central Work Conference on United Front 56 CCP Charter 29 CCP General Office 28 CCP Regulations 29 CEEC see Cooperation between China and Central and Eastern European Countries (CEEC) cell phone 52 censorship 65–66 internet 72 media 11, 52, 68, 72, 98, 235 Center for Comprehensive Law Enforcement and Security Cooperation in the Lancang-Mekong Sub-Region 262

Central Asia 200, 204, 243, 278 Central Asia Regional Economic Cooperation (CAREC) 204 Central Asian states 276 Central City Work Department 48 Central Commission for Discipline and Inspection (CCDI) 29, 87–88 2013 Session 87 Central Committee 33–34, 48, 55, 62–63, 66, 75, 87, 89, 92, 97, 98, 106, 108, 110–111, 192, 259 19th 75 Making Innovations in Social Governance System 62 plenum 33 Central Coordinating Group on Hong Kong and Macau Affairs 28 Central Coordination Group for Hong Kong and Macao Affairs 51 Central Cybersecurity and Informatisation Leading Small Group (LSG) 66 Central Discipline Inspection Commission 87 Fifth Plenum 87 Central Document No. 9 28 Central Europe 261 Central Finance and Economics Commission 28 Central government 13, 57, 106, 108–109, 120, 132, 144, 175 Central Leading Group on Finance and Economics (CLGFE) 28 Central Leading Groups 28 Central LSG for Party-Building 51 Central LSG for Taiwan Affairs 51 Central Military Commission (CMC) 30, 89, 235 Central National Security Commission 34 Central Party School 51 Central Political-Legal Commission 34 Central Propaganda Department 4 Central Theatre 276 Central UFWD 48, 59 Central United Front Department 48 centralism 30, 88 chairman 1, 3, 28, 30, 55–56, 89, 110, 112, 235 chairmanship 3 Chang, Gordon 95 Coming Collapse of China, The 95 charity 64, 105 law on 64 Charter ‘08 52

312 Index Chen 31, 62, 77, 90–91, 116, 121, 123, 132, 146 Chen Jiagang 62 Chen Min’er 31, 90–91 Chen Minglu 116 Chiang Kai-shek 47 child pornography 66 China aggression in Hong Kong 295 aggressive and coercive posture 288 ambitions 8, 212, 226, 250, 276 regional economic 278 regional security 276, 278 anti-access strategy 285 antipathy towards 7 as a benign power 15, 236 as a status quo power 15, 236 assertive posture 288, 292–293 behavioural approach 5 capabilities 16 challenges for 3, 5, 224 in the twenty-first century 3 ‘charm-offensive’ approach 7, 292 claims on Taipei 280 coercive approach 294 contemporary 106, 110, 119 debt-cutting efforts 110 development 1–2, 213 diplomacy of 3, 9, 191–193, 197, 203, 208–209 military 15, 276, 279 new 264 partnership 191–193, 197, 203, 208–209 diplomatic deployment 208 partner 203 relations 203, 204 economic clout 5 expansion 9 future 152, 168 growth 96–98, 213 power 209 transformation 106, 113 economy 6, 7, 12, 14, 16, 37, 39, 51, 96, 99, 106–107, 111, 113, 122, 150, 161, 163, 165, 172, 175–176, 182, 226, 248 Europe’s approach towards 9 excellent track record 7 exports 183 foreign policy 8–9, 14–15, 191, 255, 276, 279

campaign 8 conduct 255 future 8 objective of 9 strategy 276 GDP 181 ‘great power’ assertion 217 growth of 152, 183, 213, 219 rates 152 high-tech programme 35 Hu-Wen era 109 industrial capacities 202 policies 131–133, 147 industrialisation 202 influence 16, 59 infrastructure and connectivity measures 258 ‘institutional superiority’ 34 international image 3 investments in 6, 177 island-building programme 239 Japanese invasion and occupation of 47 leadership role in global affairs 5 ‘likely exception’ of 5 lockdown across 6 Mao-era 175, 182 Maoist era 118 maritime and land territories 8 maritime claims 256 military activism 296 diplomacy 15, 276, 279, 296 incursions 289 modernisation 277–279, 284 neighbourhood diplomacy 267 strategy 15, 277 Northern 222 ‘offshore balancing’ 292, 290 One China Policy 278 oppressive measures to achieve its aims 7 options for 9 partner countries 195 partnership 191–194, 196–197, 201, 203, 205, 208–209 building 196, 201, 205, 208–209 diplomacy 191–193, 197, 203, 208–209 perception of 15, 268 political goals 15

Index  313 power 209 post-COVID-19 trajectory 1 post-COVID manoeuvres 212 post-Mao era 1, 50, 92, 106, 118–119, 226 propaganda enterprise 59 public relations 4 reform era 1, 113, 119 response to US accusations 9 return of foreign companies from 6 rise 1, 16, 173, 192, 218, 248, 259, 279, 288 domestic 1 economic 279 international 1 social governance in 62, 75, 78 society of 51 soft power 11 South China Sea policy 246 sovereignty claims in Hong Kong 294 specific approach to democracy 74 statehood 1 state transformation 7 status across the world 99 strategic priority for 9 stronger 4, 99 stronger posture towards the United States 9 supreme role of 32 territorial claims 216, 242 twenty-first century 8 uncertain and insecure 99 under Xi 12, 62 US intimidation 8 western borders 278 Xi Jinping administration 8, 131, 133, 154, 177, 184, 284 Xi Jinping era 106, 109, 122, 270 Xi Jinping’s presidency 192 Xi Jinping’s reign 105, 107 20th commemoration ceremony of 3 digital 68 domestic 1 fixed asset 6 Setbacks 183 Southeast Asian 15, 236 China Adheres to the Position of Settling Through Negotiation the Relevant Disputes Between China and the Philippines in the South China Sea 286 China and Cambodia partnership 196 China and Egypt strategic partnership 198

China and EU 199–200 cooperation 200 China and Europe partnerships 198 China and Finland cooperative partnership 194 China and Hong Kong relationship 294 China and India 257, 264, 278, 292 boundary dispute 5, 9 cooperative partnership 194 relations 257 ties 266 China and Israel comprehensive partnership 194 China and Japan 289 China and Latin America 196 China and Republic of Bulgaria strategic partnership 194 China and Russia 180, 198, 200 coordinated diplomacy 200 energy deals 200 partnership 200 partnership diplomacy 193 security cooperation 200 strategic partnership 200 China and South Korea collaborative partnership 194 China and Southeast Asia 238, 243, 245 relations 235–236, 238, 245 China and Switzerland promising relationship 201 China and Taiwan tensions 223 China and the rest of the world 4–6 China and the United States 8–9, 13–14, 26, 92, 94, 98, 122, 155, 163, 167, 212–215, 218–221, 224, 226, 237–238, 245, 247–250, 255, 257–258, 279 antagonistic ties 14 competition 245, 247–250 conflict 219 economic decoupling 219 engagement 219 friction 213, 219 joint communiques 215 mistrust 218 new Cold War 26 Phase-1 trade 226 relations 8, 14, 213–215, 217–218, 224, 237–238, 245, 255 major-power 258 rivalry 212, 221 strategic confrontations 219 tariffs 167, 183 tensions 8 ties 9, 14, 213–214, 245

314 Index antagonistic 214 commercial 219 political 215 trade dispute 94 tensions 9 war 13, 92, 98, 155, 163, 167, 218 China and Vietnam joint statement 196 China-Arab States Cooperation Forum (CASCF) 204 China-ASEAN Ministerial Dialogue on Law Enforcement and Security Cooperation 261 China Automotive Industry Association 138 China Automobile Yearbook 138 China Banking Regulatory Commission (CBRC) 175, 177, 183 China-CELAC summit 197 China Center for Comparative Politics and Economics 62 China-Central and Eastern Europe Fund (CEE Fund) 179 China Coast Guard (CCG) 239, 241, 285 China-Community of Latin American and Caribbean States (CELAC) 197 China Credit website 69 China Development Bank (CDB) 178–180 China development model 198 China Economy Forum 37 China-Eurasian Economic Cooperation Fund (CEF) 179 China Institute for Employment Research 163 China Insurance Regulatory Commission (CIRC) 177, 183 China Investment Corporation (CIC) 179–180 China-Japan-South Korea (CJK) Trilateral Summit 204 China Labour Bulletin 162 China-Russia Treaty of Good-Neighbourliness and Friendly Cooperation 200 China Securities Regulatory Commission (CSRC) 183 China’s Ministry of Foreign Affairs 205, 209 China’s Constitution 1, 11, 88–89, 91 presidential term limit 1, 11, 89, 91 removal of 1, 91 ‘China threat’ theory 36, 247

China under Strongman 9 Chinese administration 220 approach towards Europe 9 assertiveness 5, 220 assertive posture 5 authorities 7, 12, 67, 72 business 52 capitalism 113 characteristics 10, 25, 27, 32–34, 54, 96, 156, 255, 257 companies 78, 162, 182, 225 culture 2 currency 7 diplomacy 191, 258 diplomats 94 economic infrastructure 226 economy backbones of 7 controlled by CPC 7 exports 155, 161, 163, 167 financial assistance 9 firms 118, 143–144, 183 foreign policy 8–9, 14, 235 under Xi 8 goods 6, 218 global outrage against 6 Gross Domestic Product (GDP) 38 image 4, 214 imports 183, 197, 246 industries 139, 142–143 leaders 117, 145, 150–151, 195, 212 leadership 8, 66, 106–107, 112, 177, 185, 221–223, 269, 285 assertive response to the United States 222 maps 236–237 media 97, 138 national interests 220 nationalism 92–94, 222, 224, 227 party-state 4, 78, 105 contemporary 4 political spectrum 3 political system 3–4 politics 121 public opinion 65 security 72, 296 socialism 13, 113, 174 society 3, 12, 51, 53, 58, 64, 66, 70–73, 75, 78, 113, 122, 164, 182 acceptability of the CPC in 3 control over 12 sociopolitical reality 39 sponsored schemes 5, 7

Index  315 state authorities 7 supply-chain network 6 technology 67 workers 90, 161, 167, 291 Chinese Academy of Governance 29 Chinese Academy of Social Sciences 114, 116 Chinese Chernobyl 77 Chinese Communist Party (CCP) 25–29, 31–32, 34, 36, 38, 47–59, 62–66, 68–69, 71–78, 106, 108, 110–111, 113–114, 117, 119, 123, 150–152, 154, 156, 164, 168, 172, 212, 215, 222–227, 235, 239, 242, 246, 256, 259, 270, 296; see also Communist Party of China (CPC) 15th Party Congress 64 16th Party Congress 31, 151 17th Party Congress 51 18th Central Committee, Sixth Plenary Session 97 18th Congress 28, 106 18th Party Congress 29–31, 50, 53, 55, 74, 86, 98, 156 19th National Congress 91, 96, 99 Fourth Plenum 91 19th Party Congress 29–31, 36, 38, 74–76, 88, 108, 151, 163 20th Party Congress in 2022 31, 242 22nd Party Congress in 2032 31–32, 35 adaptation 73 aspiration and mission 164 claim to legitimacy 38 control of 212 conventions 31 economic success model 224 establishment of 25 fight against coronavirus 65 goals of 25 internal-security apparatus 34 leadership 34, 65–66, 72, 74, 106–107, 112, 123, 177, 185, 221–223, 269, 285 nation building efforts 49 Organisation and Propaganda Departments 29 post-1949 27 post-reform period 27 pre-reform period 27, 176 propaganda 65 supervision 64 Chinese diaspora 59

Chinese diplomacy 3.0 258 Chinese Dream 2–3, 13–15, 32, 93, 105, 150–152, 158, 161, 164, 166–168, 214, 217, 255, 258–259, 262, 270, 276, 280, 286, 290, 296 announcement of 93, 150 aspect of 152 components 151 concept of 150 international dimensions 32 Chinese Government 12, 13, 64–65, 68, 112, 131–133, 139, 144–145, 153, 164–166, 172, 176–178, 183, 202, 225, 240, 257 Chinese Ministry of Education 59 Chinese nation 3, 25, 32, 54, 94, 105–151, 165–166, 214, 216–217, 227, 256 Chinese nationalism 92–94, 222, 224, 227 revival of 93 Chinese path and Chinese wisdom 38 Chinese People’s Consultative Congress 50 Chinese People’s Political Consultative Conference (CPPCC) 48, 54–56 Chinese virus 4 Chineseness 85 Chongqing 31, 90–91, 146, 158 Xi visited 90 Chuxin 10, 25, 26 Maoist 26 citizens control of 11, 63 digital surveillance 72 micro-management of 71 surveillance of 71 civil disturbances 11, 52 rights 28, 98 society 11, 28, 38, 52, 63, 98, 118–120, 212, 235 war 47–48 CIWS see Close-In Weapons Systems (CIWS) CJK see China-Japan-South Korea (CJK) class capitalist 28 inequalities 96 struggle 47, 49, 55 ideology of 49 clientelism 89, 116–117 organizational 116–117

316 Index patron- 117 climate change 191, 199, 248, 250, 259 Clinton, Hillary, US Secretary of State 215, 259 ‘America’s Pacific Century’ 215 Closed-Circuit Television (CCTV) 59, 66, 72 Close-In Weapons Systems (CIWS) 287 clothing 6, 153, 157, 159 CloudWalk 72 coal 70, 139–140 Code of Conduct (CoC) 236, 238, 241–243, 249, 287 ASEAN-China 238 coercion 98, 246, 281, 294 ideological 98 co-habitation 49 Cold War 14, 26, 174, 191, 212, 214, 235–236, 238, 246, 248, 260, 265–266 end of 174, 191, 235–236, 238 new 26, 246 collaboration 36, 63, 193–194, 208 strategic 193 combat 15, 86, 107, 239, 277, 282–283, 287, 294–295 capabilities 15, 277, 295 command-and-control apparatus 30 Command, Control, Communications, Computer, Intelligence, Surveillance, and Reconnaissance (C4ISR) 285, 291 Commission for Comprehensively Deepening Reforms 69 commissions 28, 87, 98, 177 inspection 98 common destiny 32, 196, 261–262 common prosperity 32, 107 Communiqué on the Current State of the Ideological Sphere 55 communism 38 Communist Internationale 47 Communist Party Committee of Guizhou 31 Communist Party of China (CPC) 1–5, 7, 10–12, 56, 85–90, 92, 95–97, 99, 106, 156, 178, 192, 276, 278–280, 285, 292–293; see also Chinese Communist Party (CCP) 18th Central Committee 192 19th National Congress 1, 4, 178, 276 Fourth Plenum 4, 33–35 ability to gather intelligence 11 autocratic functioning 5 centennial anniversary 3 Chinese economy controlled by 7 ‘command culture’ 3

‘custodian political figure’ of 2 functioning of 3 future of 2, 95 global image 4 governance structure 88 image of 7 leadership of 3 legitimacy of 85, 99, 280 messaging style of 86 model of governance 5 monopoly 11 PLA’s role in 293 reputation and legitimacy 12 resilience 11 struggle with factions 89 supremacy of the 3 sustainability of 4 systemic structures set by 7 threat to 11 under Xi Jinping’s leadership 3, 11 waning acceptability of 3 Communist Party of the Soviet Union (CPSU), collapsed of 27 Communist Youth League (CYL) 30, 75, 89, 91 community European 9 global 8, 296 Community of common destiny 32, 196, 261–262 ‘Community of Shared Future for Humanity’ 3, 8, 213 companies 6–7, 37, 51–52, 59, 64, 67, 69–72, 75, 78, 105, 110, 112, 114, 122–123, 146, 162, 165, 175, 182, 225–226, 242, 264 Chinese 78, 162, 182, 225 foreign 6, 52, 71, 75 investment 112 local 72 media 59 overseas 7 payment 71 private 37, 67, 75, 105, 110, 112, 114, 122 privately owned 51 securities 175 software 72 state 165 state-owned 112 US 72 Western 67 comparative advantages 133–134 compatriots 54, 56, 79, 284 mainland 54

Index  317 Taiwan 54, 56 Compound Annual Growth Rate (CAGR) 135 Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) 218, 249 Comprehensive National Power (CNP) 278 comradeship 3, 88 concentration centres 2 Conduct of Parties 240 Conference on Dialogue of Asian Civilizations (CDAC) 262 Conference on Interaction and Confidence Building Measures in Asia (CICA) 260–261, 263 Confidence building measures 260, 263 conflicts 9, 15, 73, 76, 110, 115, 117, 195, 216, 219, 221, 224, 238, 241, 246–247, 249, 256–257, 261, 280, 288–289 capital and labour 110 China and US 219 fundamental 195 labour-related 115 resolution 76 zones 9 Confucius Institutes 59 connectivity 4, 16, 167, 212, 217, 235, 244, 249–250, 258–259, 267–268, 277 infrastructure 212, 217 plans 267 regional 268 consciousness 29, 35, 166 conspiracy 7, 240 constitution 1–2, 28, 31, 33–34, 89, 178, 227 2018 amendment 88 CCP 28 CPC 2 elimination of presidential term limit 11 inviolability of 33 refusal to appoint successors 11, 31 consumer spending 38 contiguous zone 289–290 contradiction 12, 75, 85, 96, 98, 156 principal 85, 96, 98 conventions 28–29, 31 power-grabbing 29 cooperation 54, 112, 179–180, 191–205, 207–209, 215, 220, 242, 246, 249, 255, 257, 260–270, 280, 287–288, 291, 293 Arab States and China 204 cultural 201 defence 293

economic 179–180, 194, 201, 203–205, 215, 261, 264, 280 energy 200 multi-layered 193 international 204 political 203–205, 207 realistic 200 scientific 201 strategic 192–197, 199 technical 202, 264 international 202 win-win 255, 257 Cooperation between China and Central and Eastern European Countries (CEEC) 204 co-optation 109, 115, 117 co-option 49 Coronavirus Disease 2019 (COVID-19) 1, 3–10, 14, 65, 71, 77–78, 98–99, 212, 214, 220–227, 279, 292, 295–296 CCP’s fight against 65 Chinese way of handling the crisis 225 crisis 4, 222 deaths due to 221 exceptional characteristics of 99 impact of 6 impact on 8 Li Wenliang’s early warning 4 loss of life 9 mismanagement of 78 origin of 7 outbreak 292, 296 political trajectory 1 response 224 China’s 224 spread of 9, 220 corporate bonds 70 corporate social responsibilities 69 corporatism 118–119 corridors 16, 164, 201, 269, 277, 291, 293 corruption 3, 11–12, 35, 53, 55, 71, 86–88, 90–91, 96–98, 105, 107, 109, 117–118, 121, 151, 156, 164, 167, 182–183, 185, 212, 235, 279 causes of 88 fight against 97 ideological 88 massive 3 moral 88 pervasive 53 problems 87 scandal 91 cost-effect analysis 13 countries advanced 14, 142, 208–209

318 Index neighbouring 8, 257–258, 278 non-regional 15 COVID-19 see Coronavirus Disease 2019 (COVID-19) Cox proportional hazards model 203, 205–207 CP 116, 218 CPC’s Central Conference on Work Relating to Foreign Affairs 192 CP-TPP see Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CP-TPP) creativity 105 credit enterprises 71 firms 70 institutions 69 scores 70 scoring 69 social 11, 69–70 database 70 system 11, 69 system 11, 69, 112 scoring 69 Credit China website 70 Credit-rating system 176 Credit-to-Gross Domestic Product (GDP) ratio 178 crime 72, 75–76, 90, 199, 256 transnational 199, 256 CSRC see China Securities Regulatory Commission (CSRC) Cuarteron Reef 238 Cuba 85 cultural beliefs 2 cooperation 201 needs 98 Cultural Revolution 1, 36–37, 95, 151, 226–227 culture 2–4, 72, 93, 166, 262–263 Chinese 2 command 3 museum 93 political 72 currency 7, 33, 180, 184, 246, 248 Chinese 7 controls 33 management 184 manipulation 246, 248 Cybersecurity 66, 67, 199, 220 Cybersecurity and Informatization LSG 66

Cybersecurity Law 67 Cyberspace Administration of China (CAC) 66 CYL Clique 30 Czech Republic 225 Dacheng Enterprise Institute 109 Dacheng Qiye Yanjiuyuan 109 Dalai Lama 215, 293 US support for 215 dam-building 236 Dangnei minzhu, tradition of 28 Darussalam, Brunei 263 debt 32, 39, 70, 106, 110, 112, 167, 237, 244–246, 250, 291 corporate 110 household 39 problem 106 public 106 debt trap 32, 244–245 diplomacy 32 decision-making process 3–4, 13, 35, 74, 105, 173, 175, 260, 268 international 268 political 105 powers 35 rational maximisation rules of 13, 175 Decision of the Central Committee of the Communist Party of China on Some Major Issues Concerning Comprehensively Deepening the Reform 106 Decision on Certain Major Issues Concerning Comprehensively Advancing Rule of Law 33; see also Rule of Law Decision Decision on Certain Major Issues Concerning Comprehensively Deepening Reform 33; see also Deepening Reform Decision on Some Major Issues Concerning How to Uphold and Improve the System of Socialism with Chinese Characteristics and to Advance the Modernization of China’s Governance System and Capacity for Governance 34; see also Fourth Plenum Decision Decision on Temporary Organizational Organizations of Party Committees at All Levels 48 decoupling 9, 219, 250 Deepening Reform Decision 33, 66, 69; see also Decision on Certain Major

Index  319 Issues Concerning Comprehensively Deepening Reform defence/defense 29, 85–86, 94, 199, 217, 235, 237, 245, 247, 261, 263, 265–267, 276, 280, 287, 289 air 223, 242, 281 border 293 budgets 85–86 cooperation 293 expenditures 217 pacts 267 policies 29 de-Maoification movement 27 democracy 3, 5, 28, 68, 74, 76, 96, 98–99, 277, 294 consultative 74 deliberative 74 demands for 98 intra-party 28 model of 5 notion of 3 socialist 74 democratic centralism 30, 88 norms 5, 89 parties 50, 54, 56 Democratic Progressive Party (DPP) 94, 280, 281, 283 democratisation 95, 113, 121 Deng Xiaoping 1–4, 8, 26–28, 30–31, 36–38, 49–50, 89, 91, 93, 97, 150, 156, 175, 182, 184, 227, 235, 268, 276 as the leader of the CCP 49 dictum on buzhenglun 26 doctrine of the separation 30 foreign policy 4, 8 great architect of reform 31 insistence on collective leadership 36 modernisation policies 4 programmes 4 reform and open-door policy 26 reforms, betrayal of 36 denuclearisation 220, 256 detention 77, 98–99 arbitrary 98 camps 77, 99 developing countries 32, 147, 152, 165, 181, 217, 264 developing nations 258, 291 developing world 3, 173, 208 development banks 183 challenges 158 common 196

contradiction of 12 coordination 86 discourse of 2 domestic 98 economic 2, 54, 64, 97–98, 111–113, 132, 199, 244, 249, 258, 290 green 86 indigenous 13 industrial 131–133, 147, 176 innovation 86 local 105 micro-level 68 national 105 opening-up 86 people-centred 86 obstacles and problems of 106 private sector 105–106, 112–113, 120, 123 rural 98, 160 scientific 86 sharing 86 social 54, 63, 98 western 158, 160 sustainable 107, 179, 199, 259 technological 202 unbalanced and inadequate 75, 96 urban 98, 199 western policy 158 Development Policy of the Iron and Steel Industry 139 dialectical unity 27 Diaoyu Islands 286, 289–290 Dibao 159–160 system 159–160 dictatorship 32, 34–35 one-party 35 party 32, 34–35 perfect 32 digital economy 68, 163 surveillance 11, 63, 66, 72, 76 citizens’ 72 of society 66 Digital Connectivity and Cybersecurity Partnership 220 digitalisation 72 digital surveillance 11, 63, 66, 72, 76 technologies 11, 63, 76 Dingyuyizun 30, 36 diplomacy 3, 8–10, 14–15, 32, 173, 181, 183, 191–194, 197, 200–201, 203, 208–209, 217–218, 220, 224–225, 235, 246, 255–260, 263–264, 267, 276–277, 279–280, 285–291, 293–296

320 Index Chinese 9, 191, 258 coercive 15, 280, 285, 287, 290, 294–295 coordinated 200 debt trap 32 defensive 287 economic 173, 181, 183 international 201 major country 255–259 manoeuvres 201, 209 military 15, 276, 279, 290, 296 offensive 287 offshore 15, 277 paradigm 191–192 characteristics of 192 shift in 191 partnership 14, 191–193, 197, 201, 203, 208–209 peripheral 288 periphery 277, 279 ‘pro-active’ 8 proactive 279 soft power 224, 225 Xi Jinping’s 8 diplomatic agenda 2 closeness 193 deployment 208 instrument 209 interests 14, 208 manoeuvres 201 partnerships 191–192, 193, 205, 207–208 relations 198, 200, 203–205, 209, 266 security 1 space 197 ties 203, 209 Diplomat, The 283, 288 Discipline and Penalty Code 88 disparities 2, 5 China and India 5 disputes 5, 9, 30, 74, 90, 94, 136, 177, 183, 195–196, 200, 223, 236–238, 240–243, 248–249, 255, 257, 279, 286, 288, 292–294 boundary 5, 9, 236, 240, 279, 293–294 geopolitical 200 intra-party 90 labour 74 South China Sea 196, 236–237, 240 sovereignty 240 tariff 177 territorial 195, 257 trade 9, 94 China and India 9

China and US 94 dissent 52, 60, 66, 212 Doctrine of the separation 30 Document Number 9 55 Doklam crisis 15, 277, 292–293, 296 China’s assertive posture 292 domestic capital investment 106 challenges 7 concerns 97 consumption 106 developments 1, 98 economy 167, 176 financial measures 13 reforms 13, 172–173, 175, 184 sector 184 firms 136, 202 implications 58 innovation 72 market 134, 143, 202 policies 14, 29, 99, 185, 267 political instability 243 politics 10–11, 201, 246 production 12, 133–134, 139, 142–144, 148 sectors 6 security 86 Dongshan Island 280 Douyin 68 DPP see Democratic Progress Party (DPP) drug trafficking 256 Duan Yongji 37 Duterte, Rodrigo 240–242 South China Sea policy 241 Dylan M.H. Loh 164 EAS see East Asia Summit (EAS) East Asia Summit (EAS) 204, 249, 260 East China Sea (ECS) 5, 9, 15, 217, 242, 245, 255–256, 276–280, 285, 288–290, 293, 295–296 East Coast Rail Link (ECRL) 245 Easterlin Paradox 164 Easterlin, Richard 164 Eastern Command 283 Eastern Europe 179, 200 Eastern European Countries 204 Eastern Theatre 276, 281, 283–284 Ebola virus 223 economic affairs 197 benefits 98 capabilities 208 challenges 97, 109

Index  321 clout 5, 151, 166 concepts 26 condition 14 considerations 9 construction 26–27, 39 contingency 5 cooperation 179–180, 194, 201, 203–205, 215, 261, 264, 280 crisis 111, 296 decoupling 219, 250 development 2, 54, 64, 97, 98, 111–113, 132, 199, 244, 249, 258, 290 diplomacy 173, 181, 183 disarray 150 engagement 7, 201 entities 56, 63 environment 64, 71 expansion 9, 38 forces 71 globalisation 201, 222 governance 191 growth 7, 92, 96–98, 117, 137, 160, 163–164, 178, 213, 250, 270, 278 hostilities 218 infrastructure 226 institutions 175 integration 196, 249 interdependence 215, 248, 262 interests 14, 114, 118, 208, 278 issues 26 makeover 37, 213 crypto-Maoist 37 maritime trajectories 265 measures 37, 248 meltdown 96 might 26, 264 motivations 201, 209 nationalisation 12 obligations 69 order 9, 177 outreach policy 16, 277 planning 132 policies 151, 177, 184 policies on 26–27, 106 power 11, 15, 236 production 2 proliferation 11, 256 negative impact of 11 prosperity 3, 152, 165 rebalancing 107 reform 2, 4, 7, 11, 13, 122, 132, 173, 182 relations 280 resources 14, 208

risks 70 sanctions 200 sluggishness 262 socialism 12 spheres 10, 11 structure 33, 178 success 105, 185, 224 sustainability 227 targets 152 threats 288 ties 9, 218, 241, 259 transformation 106, 109, 112–113, 121 wealth 152 economy 5–7, 9–10, 12, 14, 16, 25, 33, 36–37, 39, 49, 51, 64, 68, 71, 85, 96, 98–99, 105–113, 115, 118, 122, 131–132, 134, 150, 161–163, 165–167, 172, 175–176, 178–179, 182, 201–202, 209, 213, 216–218, 221, 226, 244, 248, 250, 255, 262, 268, 278 21st Century 36, 131 control of 36 Asian 5 aspects of digital 68 Chinese 6–7, 12, 14, 16, 37, 39, 51, 96, 99, 106–107, 111, 113, 122, 150, 161, 163, 165, 172, 175–176, 182, 226, 248 backbones of 7 China 68 controlled by CPC 7 developing 5 digital 68, 163 domestic 167, 176 export- 178 global 5, 7, 218 industrial 202 innovation driven 98 knowledge-driven 12, 99 labour-intensive 132, 178 socialist 132 mixed 107, 109 negative impact on 6 non-public 107, 108 overseas 7 planned 49, 131–132 premier 9, 221 private 12, 105–109, 113, 115, 122 privatisation of 64 public sector 105, 108 restructuring of 25 role of the state in 33 slowdown of 110 socialist 33, 109 state 109

322 Index struggling 9 US 213 Western 201, 255 world 5, 85, 99, 262 Ecuador 263 EDGE see Asia Enhancing Development and Growth through Energy (EDGE) education 13, 26, 64, 90, 99, 153, 156, 158, 160, 167, 262–263 compulsory 153 patriotic 90 school 26 EEZ see Exclusive Economic Zone (EEZ) Egypt 179, 198, 263 US’ influence in 198 embarrassment 52 Emirates, United Arab 263 Emission of carbon dioxide 141 empathy 5, 236 ‘Emperor for Life’ 36 employment 6, 51, 93, 105, 107, 155, 160–164, 167, 176 opportunities 155, 167 productive 93 prospects 164 rate 6 sector-wise 162 urban 6, 107 energy 7, 69, 133, 141, 143, 152, 197, 199–201, 220, 223, 226, 243, 288, 291 clean 152 consumption 141 cooperation 200 deals 200 resources 7, 223 supplier of 201 underinvested 133 enforcement campaigns 52 engagements 5, 7, 47, 59, 69, 173, 197, 201, 215–216, 219, 237, 246, 250, 256–257, 265, 268 Asia and US 215 bilateral 257 China and US 219 economic 7, 201 entrepreneurial 69 external 47 regional 265 enterprises 1, 12, 33, 37, 49, 64, 70–71, 92, 105, 107–108, 110–115, 119–120, 122–123, 134–135, 139–140, 142–143, 146–147, 155, 163, 165, 167, 175, 219

collective-owned 114 competitive 139 credit 71 foreign 33, 134, 143 individual 107 non-state 64 private 1, 12, 37, 64, 105, 107–108, 110–115, 119–120, 122 public 107 state 64, 112 state-owned 1, 49, 64, 105, 135, 139, 142, 163, 175, 219 entrepreneurs 12, 53, 58, 64, 105–123 open-minded 108 private 12, 64, 105–123 entrepreneurship 54, 111–112, 163 private 111–112 environment external 94, 268 protection 65, 69 socioeconomic 73 environmental damage 73, 110 degradation 2, 167 ethnic groups 72 minorities 48–49, 56, 227 minority 52 persecution 98 relations 54 unrest 52 Ethos 28, 214 EU and China 199 EU-China 2020 Strategic Agenda for Cooperation 199 Eurasian identity 201 Europe 5–6, 9, 164, 178–179, 198–201, 216–217, 220, 225, 235, 243, 261–262, 291 approach towards China 9 Chinese approach towards Europe 9 market 201 reactions to BRI projects 9 European Union (EU) 9, 16, 78, 136, 161, 198–201, 225, 258–259, 263 Exclusive Economic Zone (EEZ) 238–242 expansionism 201 expenditures 90, 217 defence 217 wasteful 90 exponential parametric function 206–207

Index  323 Export-Import Bank of China (China Exim Bank) 178–180 exports 6–7, 67, 106, 138, 155, 161–163, 167–168, 172, 178, 183, 198, 217, 219, 225, 264 Chinese 155, 161, 163, 167, 183 Chinese to US 155, 167 industrial 6 medical 225 Facebook 68 facial recognition 11, 66, 72, 73, 77, 78 factionalism 90 factions 30, 87, 89–90, 92 bureaucratic 89 Communist Youth League 89 features of 89 ideological 89 Jiang Zemin 89 non-Xi 92 power-seeking 89 Princelings 89 Shanghai 89 types of 89 Xi 89 Far East 215 farmers 48, 59, 155 favouritism 88–89 Fazhi baozhang de shehui zhili zhidu 63 FDI see Foreign Direct Investment (FDI) FEALAC see Forum for East Asia and Latin America Cooperation (FEALAC) Fei Gaoyun 31 Feminist Five 76 Ferrari crash 86 Fidelity International 72 Fiery 238–239, 287, 295 Fiery Cross Reef 238, 287 Fifth Generation (5G) networks 259 Fifth modernisation programme 4 Fifth National Financial Work Conference 177 fighter jets 223, 282–283 J-11 fighter jets 223, 283 financial assistance 9 choices 185 crisis 95, 161, 172, 178, 182, 208, 224, 255, 268 gamble 172 initiatives 173, 183 regional 173

institutions 71, 116, 147, 172–173, 175, 177–179, 182–183, 185 global 172 international 173 publicly-owned 175 liberalisation 177 market 107 reforms 13, 172–176, 178, 182, 184 domestic 172–173, 175, 184 risks 177 security 155 stability 177 domestic 13 financial measures 13 domestic 13 external 13 financial sector 172, 177, 182–185, 199 domestic 184 Financial Stability and Development Committee (FSDC) 13, 177 Finland 194 firms 6, 37, 70, 110–112, 114, 116, 118, 136–137, 143–147, 163, 165, 177, 183–185, 202 Chinese 118, 137, 143–144, 183 credit 70 domestic 136, 202 foreign 177, 184–185 investment 6 non-state 37 private 37, 114, 163, 165 state-owned 110, 112 First Automobile Works 135 fishing vessels 239 flexibility 9, 73–74, 93, 184 FOCAC see Forum on China-Africa Cooperation (FOCAC) FONOPs see Freedom of Navigation Operations (FONOPs) foreign affairs 191, 268 bank 177 businesses 64 companies 6, 52, 71, 75 enterprises 33, 134, 143 financial institutions 172 firms 177, 184–185 investments 172, 177 media 89 ambitions 222 Beijing’s 8 campaign 8 challenges 7–8, 224 Chinese 8–9, 14, 235

324 Index Deng Xiaoping’s 4, 8 ‘keep a low profile’ 36 policies 29 ‘low-profile’ 4, 8–9 new era 4 open-door 4 overtures 8 stratagem 8 Strategy 276 unimaginable 8 Xi’s 8, 14 policymaking 174, 260 spheres 10, 11 trade 179, 213 Foreign direct investments (FDIs) 7, 51, 133, 135, 217, 220, 262 Foreign Investment Law 184 foreign policy 4, 7–9, 14–16, 27, 173–175, 183, 191, 213, 217, 222, 224, 235, 255–258, 265, 269–270, 276–277, 279 action-driven 279 agenda 258 aggressive 270 ambitious 213, 222 behaviour 8, 174 challenges 7, 224 under Xi 8 Chinese 8–9, 14, 235 Deng Xiaoping’s 4, 8 directives 265, 269 ‘low-profile’ 4, 8–9 features of 4 new era 4 overtures 8, 276 Chinese 276 stratagem 8 strategy 276 unimaginable 8 US 217 Xi’s 8, 14 Forum for East Asia and Latin America Cooperation (FEALAC) 204 Forum on China-Africa Cooperation (FOCAC) 197, 204 forums 4, 8, 52, 203–205, 256, 259, 261–262 global 8 international 203–205 multilateral 4, 259 Foucault, Michel 71, 77 Four Comprehensiveness (Four Cs) 2, 13 Fourth Cross-Strait Media Summit 59 Fourth Plenum 4, 33–35, 91 communique of 34

Fourth Plenum Decision 34–35; see also Decision on Some Major Issues Concerning How to Uphold and Improve the System of Socialism with Chin Foxes and rats 87 France 8–9 Fraternal Eastern Parties 48 fraud 66, 70 Free and Open Indo-Pacific (FOIP) 220, 246–249 freedom 5, 28, 52, 65, 71, 77, 164, 198, 242, 246, 266, 287–288, 294–295 model of 5 of expression 52, 65 protection of 65 of speech 65, 77, 294, 295 call for 65 Freedom of Navigation Operations (FONOPs) 239, 246–247 Free Trade Agreement (FTA) 216 free trade zones 33 Friedman, Milton 26 Friends of the Army 48 Friends of the Party 48 FTA see Free Trade Agreement (FTA) Fujian 30–31, 50, 56, 91, 158, 281, 284 Fuzhou 50 G20 see Group of 20 (G20) Gang of Four episode 89 Gansu province 154, 157–158 Gaven Reef 52, 238 General Affairs Department 48 General Agreement on Tariffs and Trade (GATT) 136 General Office of the Communist Party 28, 55 General secretary 1, 3, 26, 28–30, 32, 35, 47, 51, 53–54, 56, 89, 105, 114, 150–151, 192, 212, 235, 279 geo-political order 10 geopolitics 221, 265, 269 contemporary 265 minilateral 269 geostrategic rivalry 236 Germany 8, 9, 141, 144, 179, 202, 217, 226, 259 Gini Coefficient 96 global affairs 5, 8, 221, 259, 279, 290 challenges 7, 200 community 8, 296 economic governance 191

Index  325 meltdown 96 economies 5, 7, 218 expansion capabilities 16 financial initiatives 173 institutions 172 order 172 forums 8 growth 6 issues 191 leaders 99 manufacturing chain 202 market 143–144 military deployment 7, 196 multipolarisation 202 order 7, 173, 208–209, 247, 278, 296 outrage 6 peace 15, 236, 255 powers 14, 185 prominence 9 relationship framework 213 security 199, 266 supply chain 5 Global Financial Crisis of 2007–09 95, 161, 178, 182, 208, 224, 246, 255 global order 7, 173, 208–209, 247, 278, 296 globalisation 7–8, 64, 201, 222, 262 beneficiary of 7 economic 201, 222 impact on COVID-19 8 Global outrage against Chinese goods 6 Global Poverty Reduction and Development Forum 157 Global Times, The 222, 226 global trading system 95 Glosserman, Brad 266 GMS see Greater Mekong Sub-region (GMS) Goldkorn, Jeremy 94 Gongsiheying 37 goods 6–7, 109–110, 116, 160, 163, 198, 217–218, 239, 258–260, 264 American 218 Chinese 6, 218 governance 3–5, 7, 9, 11–12, 15–16, 34–35, 52–53, 62–63, 73, 75–78, 88, 91, 96, 99, 117–118, 120, 176, 191, 224, 236, 258–259, 262, 264, 270, 279, 292, 297 according to the law 34 accountable 12, 99 at source 34 capacity 34 coordinated 34

corporate 176 deficit 92 economic 191 global 5, 258–259, 262, 292, 297 inclusive 12, 99 industrial 120 law-based 34, 63 local 4 model 63, 292, 297 CPC’s 5 Xi Jinping’s 3 model of 3–5, 16, 224 modernisation of 34–35 national 4 poor 4 shortcomings in 52 social 11, 62–63, 73, 75–78 state 34–35 modernization of 34 strict 88 structure 4, 88 system 7, 34–35, 73, 78 systemic 11, 34 reality of 11 government administration 48 central 13, 131, 184 functions of 33, 62 local 13, 65, 71, 108, 111–112, 116–117, 119, 131, 133, 143, 160, 184, 226 setbacks 183 management 11, 62 perception of 52 resources 131 role of 62, 106–107 supervision of media 55 Graham, Euan 266 Great Chinese nation 105 Greater Mekong Sub-region (GMS) 204 Great Firewall 66–68 Great Leap Forward 151 great power 99, 216–219, 235, 255–256, 261, 265 relations 216, 219 The Great Wisdom of Liang Jiahe 36 grievances 11, 62–63, 73, 78, 219 Groot, Gerry 49 Gross Domestic Product (GDP) 38–39, 107, 152, 159, 161, 178, 181, 203–204, 213, 216 Chinese 38, 181 growth 213 Gross national happiness 13, 163 Gross National Product (GNP) 164

326 Index Gross regional product 158 groupings 89, 266, 269 Group of Twenty (20) (G20) 204, 261 growth China’s 152, 183, 219 economic 7, 92, 96–98, 117, 137, 160, 163–164, 178, 213, 250, 270, 278 expected forecasts 6 export-led 106 global 6 Gross Domestic Product (GDP) 213 model 106, 161 double-digit 6 rate 6, 92, 135, 178, 213 rates 106, 152, 160, 176 strategy 134 unbalanced 134 Guam 284–285 Guam Express 285 Guam Killer 285 Guangdong 65, 76, 157, 158 Guangxi 31, 154, 158 Guangzhou 52, 135–136 Guanxi 108, 113–114, 117–118 Guizhou province 31, 154, 157–158 Gulf Cooperation Council (GCC) 291 Gulf of Guinea 292 Gulf of Thailand 196 Guojia hulianwang xinxi bangongshi 66 Guojinmintui 37 Guo Ningning 31 Gwadar Port 244–245 Hainan 158, 282 Hambantota port 244–245, 291 Han Changfu 155 Hangzhou 69, 146, 261 Han Weiguo, General 31 harassment 76, 246 hardware, space exploration 25 harmony 54, 63, 75, 123 social 75 health 13, 64, 160, 164, 201, 224–225, 292, 295–296 health care 13, 156, 164 Health Silk Road 225 Hebei Province 27, 48, 155, 158 hegemony 198, 247, 259, 266 regional 266 Western 198 He Guangyuan 137 Heilongjiang 37, 158 He Lifeng 30 Henan 158

Hexin 29, 35 High-Speed Rail (HSR) 244 high-speed train 69, 70 Hilton, Isabel 97 home products 6 Hong Kong 3, 15, 28, 49, 51, 54, 56, 59, 65, 68, 78–79, 92, 94, 150, 216, 227, 277–279, 282, 294–296 developments in 92 extraction bill 65 handover to China 3 20th commemoration ceremony of 3 pro-democracy movement in 68 protests in 94, 294 sovereignty claims in 15, 294 Hong Kong Human Rights and Democracy Act 294 Hong Kong protest movement 65 Hong Kong Special Administrative Region 54 hostility 49, 214, 221, 261 outright 49 housing 69, 76, 156 social 69 street-level 156 HSR see High-Speed Rail (HSR) Hua Chunying 293 Hua Guofeng 36 Hu Angang 86 Huang Kunming 59 Huang Mengfu 109 Huawei 39, 183 Hubei 91, 158 Hu Chunhua, Vice-Premier 31, 90–91 Hu Deping 37, 110 Hudson Institute 131, 246 Hughes Reef 238 Hu Jintao, Chines Primier 2, 28, 30–31, 35, 38, 50–52, 55, 59, 62, 64, 86, 89, 91, 98, 150, 176, 178, 182, 213–216 administration of 214 registration 158, 167 Scientific Outlook to Development 98 system 13, 158 Hukou 13, 33, 158, 167 rural 158 humanity 32 human rights 5, 52, 55, 65, 68, 260, 294 humiliation 166, 227, 256 national 166, 256 humility 95 Hunan 158 Huo Guofeng 26 Hu Yaobang 26, 37, 38, 97, 110

Index  327 ICRC see International Committee of the Red Cross (ICRC) identity Eurasian 201 urban 76 ideological battle against democratic norms 5 belief 13, 174 coercion 98 conformity 28 confusion 27 control over the party 53 controversies 26 corruption 88 debates 51 edict 25 extremities 26 factions 89 framing 109 imperative 25–26, 30 issues 27 movement 29 nuances 26 principles 2, 172 slogans 29 support 108 threat 55 imperialism 10, 27, 150, 151 importer 5 imports 132–134, 136, 138, 141–142, 145, 148, 161–162, 183, 197, 246, 264 Chinese 183, 197, 246 restrictions 136 tariffs 132, 134, 142 technologies 148 income gaps 110, 160 rural-urban 160 household 157 national 159 ratio 157 rural 157 security 164 tax 159 unequal distribution 110 urban 157 India 5–6, 9, 173, 178, 194, 204, 216, 220, 225–226, 249, 255–257, 259, 263–267, 269, 276, 278–279, 288, 292–294 ‘Act East’ policy 265–266 aspirations 265 foreign policy directives 265 military intervention in Sri Lanka 265 multipronged response 264

Project 75I (P75I) 265 India and China 257, 264, 269, 293 relationship 264 India and US differences 266 Indian Army 15, 277, 292–293 Indian Navy 265 strategic vulnerability 265 Indian Ocean 257, 265–267, 290–291 Indian Ocean Region (IOR) 257, 266–267, 269, 290 Indian Ocean Rim Association (IORA) 267 Indonesia 194, 238, 259, 261, 263, 268 Indo-Pacific 5, 8, 14, 214, 218, 220–221, 223–224, 246, 249, 255, 265–269, 279, 291 industrial capacities 202 competitiveness 137, 202 development 131–133, 147, 176 economies 202 exports 6 goals 202 governance 120 groups 134–136 innovation 105, 109 policies 12, 131–137, 139–140, 142, 147 production 6 reorganisation 139, 142 robots 143, 147 strategy 202 structure 132–134, 202 technologies 202, 205 upgrade 201–202 upgrading 105, 109 industrialisation 142, 158, 202 industrial policies 12, 131–137, 139–140, 142, 147 automobile 134–136 comprehensive 131 conventional 133 draft 134 evolution of 131 first 132–133 of the 1990s 142 past 131, 133, 142 reorganisation of 133, 139 second 134 sector-specific 134 structure of 134 industrial robot 12, 144, 147 industries 4–5, 7, 12–13, 72, 75, 111, 117, 120–121, 131–136, 139–148, 154–155,

328 Index 157, 161–163, 165–166, 175–177, 183, 202 10 Key 141–143 advanced 131, 141 auto 136 automobile 12, 134–135, 139 Chinese 139, 142–143 dispersed 12, 133 electronics 134 high-tech 131, 133, 142 industrial robot 12, 144, 147 integrated circuit (IC) 13, 145–147 iron and steel 133, 139–140 irrigation 134 key 141–143, 148 local 154 lucrative 7, 121 machine-building 134 materials 133 mobile phone 12 pillar 134, 142 securities 183 steel 12, 133, 139–140 technology-based 202 traditional 202 inequality 13, 86, 96, 150, 152, 156–160, 167 class 96 regional 96 rural and urban 13, 157–158 steps taken 159 information flow of 87 control of the 87 technologies 7 informatisation 142 infrastructure 38, 67, 154, 156, 158, 162, 164–166, 176, 178, 181–182, 198, 200, 212, 217, 223, 226, 235, 237, 239, 244–245, 250, 258, 266–268, 286–287, 291–293 building 165 civilian 239 connectivity 212, 217 economic 226 military 239 projects 164, 181–182, 244, 268 regional 268 Infrastructure Transaction and Assistance Network (ITAN) 220 Initial Public Offerings (IPOs) 134, 142, 147 injustices 93 Inner Mongolia 25, 158, 278

Xi’s inspection trip to 25 innovation 16, 35, 72, 86, 98, 105, 107, 109, 111, 123, 133, 137, 141–142, 147, 163, 201–202, 263 capability 137, 142 development 86 domestic 72 indigenous 137 industrial 105, 109 technological 107 insecurity 12, 78 Inspection Work Code 88 instability 39, 243, 256, 291 political 243, 291 social 39 Institute of Southeast Asian Studies (ISEAS) 15, 236, 243, 245, 249; see also ISEAS-Yusof Ishak Institute institutional adjustments 7 administration 35 ambiguities 118 guarantee 35 internal adjustments 7 reform 35 superiority 34 ties 122 institutions 4, 7, 10, 34–35, 69, 71, 77, 110, 113, 116, 118, 147, 158, 172–173, 175, 177–180, 182–183, 185, 191, 198, 201, 227, 249, 263, 269, 276 credit 69 economic 172, 175 foreign 172 finance global 172 international 173 publicly-owned 175 financial 71, 110, 116, 147, 172–173, 175, 177–179, 182–183, 185 international 198 legal 10 modernisation of 35 political 10, 116, 118 responsive 34 state 7, 118 integrated circuits (ICs) 13, 143–147 industry 13 production 144–145 sophisticated chips 13 integration, economic 196, 249 integrity 86, 88, 215, 240, 287, 292, 296 political character of 86 territorial 215, 287, 292, 296

Index  329 intellectual property 16, 131, 136, 219, 246 rights 16, 136 theft 219, 246 intelligence 11, 53, 59–60, 163, 259, 267 artificial 163, 259 security 59 sharing 267 interaction 6, 11, 62–63, 94, 115, 200, 262 commercial 6 positive 11, 62–63 state–business 115 strategic 200 interconnectivity 265 intercontinental missiles 25 interest rate 172, 175–176 reform 176 interests 8, 14–16, 34, 54, 63, 67, 73–75, 89, 91, 114, 117–118, 120–123, 141, 182, 191, 199, 201–202, 205, 208–209, 213–216, 218–220, 223, 246–248, 250, 256, 258, 260, 266–267, 277–278, 286, 288, 290–294, 296 common 63, 205 diplomatic 14, 208 economic 14, 114, 118, 208, 278 entrepreneurial 120 fundamental 63 geopolitical 199, 209 joint 202 national 8, 15, 202, 219–220, 246, 266, 277, 292 shared 191 strategic 195, 267, 278, 288, 296 internal-security apparatus 34 international affairs 199, 255 challenges 94, 191 cooperation organisations 204 decision-making 268 diplomacy 201 embarrassment 52 financial institutions 173 forums 203–205 implications 58 institutions 198 media 59 organisations 14, 173, 220, 227 partnerships 191 peace 260 perception 264 sanctions 219 security 203

society 191 technology cooperation 202 transfers 202 International Civil Aviation Organization (ICAO) 280 International Committee of the Red Cross (ICRC) 204 International Criminal Police Organization (Interpol) 205 International Development Finance Corporation (DFC) 267 International Monetary Fund (IMF) 159, 176–177, 227, 259 International Tribunal for the Law of the Sea (ITLOS) 240 International Tribunal ofAjai Law of the Sea (ITLOS) 240 internet 12, 28, 52, 55, 66–68, 71–73, 75, 77, 87, 94, 99, 152, 154, 163, 264 censorship 72 clean-up 67 controlled 87 control on 12 growth 71 nationalism 94 network access 67 penetration rates 52 policing 66–68 propaganda 66 providers 67 Interpol see International Criminal Police Organization (Interpol) intersectionality 256 intolerance 98 intra-party discipline 87 investments 6–7, 12–13, 32, 51, 72, 106, 112, 117, 122, 132–133, 136, 145–147, 165–166, 172, 177–180, 184–185, 197–198, 200, 213, 217–218, 220, 235, 237, 241, 244–245, 259, 262, 264, 267–268, 291 allocation of 133 bilateral 180 BRI-linked 185 capital 106 companies 112 firms 6 fixed asset 6 foreign 172, 177 funds 133 private 112, 117 Iran 78, 225, 248, 256, 263 Iran nuclear deal 248

330 Index Iraq 213, 215, 246, 263 US military involvement in 213 ISEAS 2020 survey 243, 245, 249 ISEAS-Yusof Ishak Institute 15, 236; see also Institute of Southeast Asian Studies (ISEAS) Islamic militant groups 278 Islands 223, 236–238, 256, 286–287, 289–290, 295 disputed 236 Israel 194, 259, 263 Italy 8–9, 94, 225–226 ITAN see Infrastructure Transaction and Assistance Network (ITAN) ITLOS see International Tribunal for the Law of the Sea (ITLOS) Itu Aba 237 Japan 9, 47–48, 94, 116, 141, 143–145, 178, 202, 204, 213, 215–218, 220, 226, 237, 240, 242–243, 245, 248–249, 255–256, 259, 261, 263–267, 278, 284, 288–290, 296 control of the Senkaku Islands 289 claims and contests 289 industrial policies 133 invasion and occupation of China 47 surrender in September 1945 48 territorial sea 296 Japan-US-India Trilateral Infrastructure Working Group 266 Jetfighters 25 Jiangkang chengzhang 108 Jiangsu province 2, 31, 146, 158 Jiangxi 158 Jiang Zemin 2, 29–31, 35, 50, 53, 64, 89, 97, 150–151, 213 as a core leader 97 as general secretary 29 as president 30–31 idea of ‘three representatives’ 2 objectives of 64 ‘three representatives’ 2, 64, 151 Jiben jingji zhidu 106 Jilin 158 Jinri Toutiao 67 JLSF see Joint Logistics Support Force (JLSF) jobs 6, 13, 65, 69, 107, 140, 152, 155, 159, 161–165, 167 public 69 security 13 training programme 155 white-collar 159

Johnson Reef South 238 joint exercises 283 Joint Logistics Support Force (JLSF) 223 joint ventures 114, 135–136, 145, 172, 177 Chinese-foreign 114, 136 Jordan 263 Joshua Wong 94 judicial accountability 184 activities 34 cadres 34 cases 34 issues 33 reforms 97 judiciary 28, 69–71, 98 independence of 28, 98 jurisdictional claims 236, 238–239, 250 disputes 237, 240 justice 98, 257, 258 Kahler, Miles 266 Kai-Fu Lee 72 Kazakhstan 194, 201, 217, 263 Ka Zeng 165 Kenya 292 Kim Jong-un 219, 220 KMT see Kuomintang (KMT) Korea, Democratic People’s Republic of 85, 263 Korean Peninsula 219–220 Korea, Republic of 263 Korea, South 263 Kuomintang (KMT) 47–49, 65, 93, 280, 283 Kyrgyz Republic 263 Kyrgyzstan 194, 263 labour 1, 54, 59, 65, 74, 97, 110, 115, 143, 148, 159, 161–162, 175, 178, 202 creation 54 disputes 74 division of 1, 148 groups 59 market policies 159 NGOs 65 policies 159 rights 115 Lam, Carrie 65 Lancang-Mekong Cooperation (LMC) 204

Index  331 land 4, 7–8, 16, 49, 70, 97, 139, 155, 164, 175, 202, 276–279, 284, 286, 291, 293 allocation of 97 ambitions 7 auction 70 borders 276 reform process of 49 territories 4, 8 on military dominance 4 Lao People’s Democratic Republic 263 Laos 85, 194, 244 Latin America 196, 204, 217 Law on Promoting Medium and Small-sized Enterprises 110 Laws and regulations 184 leaders 5G 31, 247, 259 6G 31 allied 36 ambitions of 212 ambitious 89 anti-corruption 91 central 36 Chinese 117, 145, 150–151, 195, 212 core 88, 97, 105 cult 98 Fourth-Generation 31 global 99 liberal 38 mayoral 36 next generation 90 paramount 25–26, 30, 32, 37, 235 patriarchal paramount 26 policymaking 29 political 4, 13 political legacy of 27 powerful 14, 51, 235 provincial 36 regional 36, 248 revolutionary 89 Sixth-Generation (6G) 31 Southeast Asian 244, 248 spiritual 29 style of the functioning of 3 supreme 30, 35, 192 Third-Generation 31 weak 38 leadership CCP 34, 65, 72, 74, 123 assertive response to the United States 222 central 10, 25, 108 charismatic 11, 92 elimination of 11

Chinese 8, 66, 106–107, 112, 177, 185, 221–223, 269, 285 collective 1, 11, 36, 89, 175, 235 concentrated 35 CPC 3 illustrious core of 36 national 222 party 10, 25, 33–35, 65, 68, 73, 75, 78, 90, 113, 182 instructions of the 34 principle of 34 political 56, 62 public 87 single 1 sixth generational 91 SOE 112 stature 5 strong 97 succession 31 third-generation 29 unified 35 united 35 United Front 49 Xi Jinping’s 2–3, 25, 33, 35, 184 Zhou Enlai’s 48 Leading Small Group (LSG) 51, 57–58, 66, 69 formation of 57 Lebanon 261 legal activism 65 institutions 10 issues 33 reforms 2 rights 108 warfare 293 legitimacy 12, 38, 75, 85, 92–93, 96, 99, 113, 121–122, 156, 166, 178, 182, 197, 257, 260, 265, 280, 285 CPC’s 99 historical 93 performance 92, 96 political 96, 260 regime 113, 122 sources of 85 Weberian scale of 92 Lenin 2, 27, 30 democratic centralism 30 Lhasa, riots in 52 Liangge buneng fouding lun 27 controversial 27 Liaoning 158, 280–282, 295 liberal leaders 38

332 Index values 55, 98 liberalisation 107, 113, 175–177 financial 177 political 113 Li Hongzhong 36 Li Keqiang, Premier 33, 91, 110 Lin Biao case 89 Line of Actual Control (LAC) 278, 293 Ling Jihua 55 Lin, Justin 147 Little Pinks 68 Liu He, Vice-Premier 30, 37, 132 Liu Jie 31 Liu Qiang 31 Liu Shaoqi 37, 48–49 Liu Xiaobo 52 Liu Yongfu 155 Liu Yuan, General 37 Li Weihan 49 Li Wenliang 4, 65, 99, 225 early warning about Coronavirus Disease 2019 (COVID-19) 4 Li Yang 112 Li Yunze 31 Li Zhanshu, National People’s Congress (NPC) Chairman 30, 36 LMC see Lancang-Mekong Cooperation (LMC) lobbying 118, 120 political 118, 120 localisation 135–138, 142, 144–145, 147 ratio 135–136, 142, 144, 147 lockdowns 6, 225 Logistics Exchange Memorandum of Agreement (LEMOA) 266 Lombok Strait 288 Long March 33 Lou Jiwei 97 Lowy Institute 164 Lu Feng 137 Lynch, Daniel C. 97 China’s Futures; PRC Elites Debate Economics, Politics and Foreign Policy 97 Macao 51, 54, 56 Macao Special Administrative Region 54 Macau 28 Machiavelli 173 Prince, The 173–174 machinery and electronics 26, 134 machinery sectors 4, 6, 26, 134, 141 macro-economy 107

Made-in-China 2025 (MIC 2025) 12, 39, 72, 98, 131, 133, 140–143, 147–148, 163, 202, 208–209 action plans for 143 effectiveness of 131 features of 133 initiative 208–209 key industries in 141 policies of 143, 147 purpose of 202 target(s) of 141, 142 Mainland China 50, 65, 258, 294 Malacca Strait 288 Malaysia 32, 238, 244–245, 248, 261, 263, 286 Maldives 244, 263, 265, 292 Man-made islands 238–239, 287 manufacturing 5–7, 111, 134, 137–138, 141–142, 161–163, 201–202, 205, 209, 217 bases 5–6 capacity 202, 205 chain 202 industries 7 supply chains 6 Maoism 27, 36 re-embrace of 36 Maoist 25–28, 36–39, 118 chuxin 26 ideology, restitution of 39 norms, resuscitation of 37 one-voice chamber 26, 39 values 28 Mao Zedong 1–4, 10, 13–14, 16, 26–27, 30, 33, 35–36, 47–50, 74, 77, 92–93, 97, 106, 118–119, 150, 174–175, 182, 184, 212, 226–227, 235, 276 authoritarian order 26 Chairman of CPC 1, 4, 36 death 49 disinterest in United Front 49 ideology 10 political persecution by 1 politicking 49 power 48 reign 212 ziligengsheng strategy 33 marine 196, 223, 240 technologies 223 marine hub 196 maritime 4, 7–8, 16, 98, 164, 220, 223, 236–243, 250, 255–256, 263, 265, 267–269, 277–279, 281, 286–287, 290 ambitions 7

Index  333 claims 256, 278 expansion 98 military dominance on 4 objectives 223 order 268 Maritime Silk Road (MSR) 164, 178, 213, 243–244, 262, 290 markets 6–7, 16, 33, 37, 70–72, 92, 105–107, 110, 113, 115, 120, 122, 131–138, 143–144, 155, 159, 162–163, 165, 168, 172–173, 175–177, 182, 184, 197–202, 208, 213, 244, 262, 264, 268 access 107, 197, 268 Chinese 135–136, 144 developed 6 domestic 134, 143, 202 emerging 173 European 201 failure 107, 120 financial 107 forces 37, 131–133 free 175, 213 global 143–144 interlinked 172 international 7, 155 monopolisation 110 new 7 policies 33, 159 regulation 199 security 70, 177 transformation 122 Marxist–Maoist truths 28 Marx, Karl 2, 10, 38 mass line 74 Mauritius 265 McKinnon, Ron 175 McKinsey Global Institute 216, 264 McNally 117, 121 Medcalf, Rory 268 media 11, 28, 52, 55, 58–59, 65, 68, 73, 89, 97, 137–138, 154, 156, 167, 221, 226, 246, 263, 293 censorship 11, 52, 68, 72, 98, 235 Chinese 97, 138 companies 59 coverage 55 foreign 11, 89 censorship of 11 international 59 party’s grip on 52 social 11, 65, 68, 73 state 59, 154, 167, 221, 226 supervision of government 55

Taiwan’s 59 warfare 293 medical care 160 Medium-Range Ballistic Missile (MRBM) 217 Megvii and Sense Time 72 Mekong region 266 Mekong River 236 dam-building along 236 Memoranda of Understanding (MoUs) 293 merchant ships 265 Miao Hua 31 MIC2025 see Made in China 2025 (MIC2025) Middle East 178, 198, 215–217, 243, 259 Middle-income trap 97–98, 278 Middle Kingdom 32, 150–152, 167 migration 158, 199 illegal 199 military 4–5, 9, 15, 25–26, 28, 30–31, 36, 53, 59, 74, 87, 89, 166, 194, 196, 201, 208, 212–213, 215–216, 218–220, 223, 227, 235–236, 238–239, 241, 243, 245, 248, 250, 257, 259, 261–267, 276–297 advancement 216, 285 adventurism 295–296 bases 5, 236, 239, 284–285 budget 212 Chinese 4, 223, 241, 278, 281, 283 deployment 196 diplomacy 15, 276, 279, 290, 296 dominance 4, 264 drills 223, 239, 281, 283, 294–295 exercises 223, 236, 262, 266, 280–281, 283–284, 288–289, 295–296 grouping 220 incursions 289 infrastructure 239 installations 284 loyal to the party 87 modernisation 245, 277–279, 284, 290–291 muscles 15, 236 national 223, 276 power 236, 238 preparedness 223 supremacy 257 threats 288 US 9, 213, 245, 284–285 Military Area Commands (MACs) 276 Central Theatre 276 Eastern Theatre 276, 281, 283–284 Northern Theatre 276

334 Index Southern Theatre 276 Western Theatre 276 military exercises 223, 236, 262, 266, 280–281, 283–284, 288, 289, 295–296 military-maritime 223 Millennium Development Goals (MDGs) 153 Miller, Alice 89, 92 minilateralism 257, 266 Ministry of Civil Affairs 64 Ministry of Electronics Industry (MEI) 137–138, 145 Ministry of Industry and Information Technology 144 Ministry of Justice 73 Ministry of Machine-building Industry 137 Ministry of Natural Resources 71 Ministry of Public Security 71 minorities 48–49, 52, 56–57, 72, 99, 227 ethnic 48–49, 52, 56, 227 regions 57 Turkic 72 Minxin Pei 95 China’s Crony Capitalism: The Dynamics of Regime Decay 95 China’s Trapped Transition: The Limits of Developmental Autocracy 95 Coming Crisis of China’s One-Party Regime, The 95 misbehaviours 70, 78 Mischief Reef 238–239, 287 missiles 25, 94, 217, 239, 277, 280–281, 283–285, 287, 295 anti-ship 239, 284 cruise 287 ballistic 280–281, 285 intercontinental 25 live-fire 295 mobile phone 12, 137, 138 industry 12 modernisation 4, 15, 34–35, 73, 107, 109, 160, 245, 265, 277–279, 284, 290–291 agricultural 160 infrastructural 160 institutions 35 military 245, 277–279, 284, 290–291 party’s 73 Modi, Narendra, India’s Prime Minister 265, 293 Mohammed Morsi, Egyptian President 198 Mongolia 25, 158, 194, 263, 278

monopolisation 110 market 110 monopoly 11, 52, 76, 107 CPC’s 11 on news outlets 52 MRBM see Medium-Range Ballistic Missile (MRBM) MSR see Maritime Silk Road (MSR) multilateral arrangements 248 Multilateral Development Banks (MDBs) 181, 183 multilateral forums 4, 259 multilateralism 248, 257 multilateral organisations 191, 197, 215, 227, 258 regional 215 multinational corporations 202 multinationals 33, 39 Chinese tech 39 multipolarisation 202 global 202 multipolarity 200 Multi-Purpose Vehicles (MPVs) 137 Muslims 77 mutual assistance 54 benefit 193 defence pacts 267 distrust 70 goals 202 logistics agreement 266 respect 192, 216, 257 strategic support 200 trust 194, 196, 205, 288 understanding 260–261 Myanmar 194, 245, 263, 269, 292 Namibia 292 Nanjing 31, 69 Nanjing Military Region (NMR) 31 national development 105 ethos 214 humiliation 166, 256 income 159 interests 8, 15, 202, 219–220, 246, 266, 277, 292 leadership 222 military 223, 276 rejuvenation 15, 93, 280, 286, 290 security 1, 15, 59, 63, 75, 145, 183, 241, 244, 266, 276–277, 293 National Association of Securities Dealers Automated Quotations (NASDAQ) 146

Index  335 National Bureau of Economic Research (NBER) 162 National Bureau of Statistics (NBS) 6, 153–154, 162 National Congress of CPC 1–3, 85, 96, 172, 276 19th Congress 1–3, 85, 96 national constitution 89 National Defense in a New Era 286 National Development and Reform Commission (NDRC) 30, 69–70, 136–139, 144, 163 National IC Industry Investment Fund 146 National Industrial Policy 133–134, 142 effectiveness of 134 of 1990s 133–134, 142 nationalisation 12, 121 economic 12 nationalism 8, 32, 92–94, 133, 135, 221–224, 227, 258, 294 Chinese 92–94, 222, 224, 227 internet 94 pronouncement of 93 renewed 8 rise of 133, 135 state led 93 National Museum 93, 150 National People’s Congress (NPC) 1, 30, 36, 53–54, 65, 71, 92, 151, 155, 260 12th Congress 53, 54 16th Congress 108 2018 Congress 92 removed the two-term limit on the presidency 1 National Peoples’ Political Consultative Conference 108 National Public Credit Information Centre 70 National Security Commission 34, 63 National Security Strategy (NSS) 218 Natuna Islands 238 naval exercises 213 Navallo, Katrina S. 168 navigation 239, 242, 246, 256, 287–288 operations 239 Navy Armed Police Force 223 Navy boat 241 negotiations 73, 120, 168, 183, 196, 208, 216, 238, 241–242, 244, 249 peaceful 196 neighbourhood 15, 264, 267, 269, 277–279, 288, 296 strategy 15, 277 Nelsen, Harvey 95

Nepal 263 Netherlands, the 225 Netizens 67, 68 New China TV 222 New Citizens Movement 65 New Development Bank (NDB) 13, 178–179, 181–182 New Rural Cooperative Medicare 160 news 4, 52, 67, 78, 91, 155, 193, 195–197, 199 suppression of 4 New York Times, The 59, 222 New Zealand 58, 263 Ng Eng Heng, Singapore Defence Minister 247 Nigeria 263, 292 nihilism 27 nine-dash line 236–238, 240, 242 Ningxia 57, 157–158 non-alliance principle 191, 209 non-Communist democratic parties 50 Non-Governmental Organisations (NGOs) 11, 63–65, 69, 75 CCP supervision 64 charitable activities 64 establishment of 64 independent 11, 63, 65 labour 65 non-registered 65 registered 64, 65 registration 64 repression of 65 supervision over 65 party 65 under tighter party control 64–65 Non-Party Cadre Department 48 non-party groups 49 Non-Performing Loans (NPLs) 176 non-private sector 159 non-state sector 37 norms 5, 28, 37, 39, 67, 89, 92, 173, 191, 208–209, 238, 242, 248–249, 259, 287 21st global 39 democratic 5, 89 Maoist, resuscitation of 37 social 67 norms and values 191 North Asia 48 Northeast Asia 276 Northern China 222 Northern Theatre 276 North Korea 213–214, 216, 219–220, 256 denuclearisation of 256 nuclear tests 213 spread of 5

336 Index North Korea and US 219 ties 219 Novel Coronavirus 4–5, 225, 292, 296; see also Coronavirus Disease 2019 (COVID-19) NSS see National Security Strategy (NSS) nuclear non-proliferation 199 nuclear-powered attack submarines (SSN) 289 nuclear tests 213 Obama and Hu Jintao 216 meetings 216 Obama and Xi 214, 217–218 parity 214 Obama, Barack, US President 14, 212–220, 245–247, 259–261 administration of 14, 214–219, 245, 247, 259, 261 Asia strategy 214–215 ascent to presidency 213 open critique of the Chinese state 212 OBOR see One Belt One Road (OBOR) Office of Overseas Chinese Affairs 11, 58 oil and gas 33, 70, 145, 200, 241, 245, 289, 294 crude 145, 200 exploration 241 natural 200, 289 oligopolisation 112 Oman 261, 292 One Belt One Road (OBOR) 214, 217, 277 initiative 214 one-child policy 33 ‘One-China’ policy 214, 278, 280 one-party rule 105, 270 one-upmanship 28, 35 one-voice chamber 11, 26–27, 39 Maoist 26, 39 online communication 68 control of 68 online behaviour 68 online inspection and control 71 operationalisation 120, 269 opinion on Accelerating the Development of Mobile Communications Industry 138 Opinion on Accelerating the Domestic Production of Wind Power Generation Equipment and Technology 138

order economic 9, 177 equitable 3 geo-political 10 global 7, 173, 208–209, 247, 278, 296 Indo-Pacific 8 international 14, 212, 214, 216–217, 243, 246, 249, 258, 290 post-COVID-19 7–9, 223, 226 assessment of 9 regional 15, 248, 250, 267, 278 world 3, 174, 199, 221, 256 ‘Sino-centric’ 3 Orwell, George 32 Outline of the National Industrial Policy 134 Out-of-Pocket (OOP) 160 outrage 6, 222 global 6 public 222 Overseas Chinese Affairs 11, 50, 58 P-5 (Permanent Five) 5 Pacific Command 239 PAFMM see People’s Armed Forces Maritime Militia (PAFMM) Pakatan Harapan (PH) 244–245 Pakistan 244, 263–265, 292 Palestines, the 263 Pan-Asianism 269 pandemic 4–8, 10, 14, 77, 214, 220–226, 279, 292, 295–296 accused China 4 global 4, 7, 224, 292 Panopticon 71–72, 77 PAP see People’s Armed Police (PAP) Papua New Guinea 263 Paracel Island 223, 237, 243, 247, 286–287, 295 Paris agreement on climate change 248 participation 11, 14, 62–63, 69–70, 73, 75, 77, 97, 116, 201, 215, 238, 280 public 63 partnerships 7, 14, 179, 191–203, 205, 207–209, 220, 243, 247–248, 257, 262, 265, 290 aim of 192 building 14, 196, 201, 203, 205, 208–209 comprehensive 191, 193–194 cooperative 193–194 developmental 7 diplomacy 14, 191–193, 197, 201, 203, 208–209 characteristics of 192

Index  337 diplomatic 191–193, 205, 207–208 frameworks 201 international 191 notion of 191 policy 191 statements 192 strategic 191–203, 205, 209, 243, 265 all-round 201 comprehensive 192–200, 209 strategic cooperation 193 types of 194, 202 party see also People’s Republic of China (PRC) adaptation and modernisation 73 authorities 29, 35, 93, 114, 118 cadres 53, 182–183 cliques 35 control 32, 64 credibility of 87 dictatorship 32, 34–35 discipline 2, 87, 183 expansion and inclusiveness 53 function of 33 governance over 88 grip on power 51 grip on the media 52 ideological control over 53 ideology 53 leadership 10, 25, 33–35, 65, 68, 73, 75, 78, 90, 113, 182 instructions of 34 principle of 34 membership 53, 114 monopoly on news outlets 52 perception of 52 policy 49 regulations 29 resiliency 60 right to rule 92 style of functioning 3 supervision over NGOs 65 party and government 55, 121 party and state 1, 4, 11–12, 26–27, 30, 33, 63, 66, 69, 71–73, 77–78, 96, 98, 105–106, 108–109, 111–115, 117–122 control 33 nature of 33 organisational structure 119 political supremacy 121 process of separation 1, 98 system 12 party and state apparatus 33 party-building 114–115 policy of 114 party constitution 89, 227

party-state-military apparatus 26, 30 patents 141, 204–208 applications 141, 205 international 205 statistics 205 variable 205, 208 Pax Sinica 7, 9 Peace 15, 32, 63, 194, 199, 236, 247, 255, 260, 263, 284, 287 global 15, 236, 255 international 260 Peking Order 1, 3–4 Peking University 28, 76, 77, 137, 157 Peking University Marxist Society 77 Peloponnesian War 173 Pence, Mike, US Vice President 131 speech on China policy 131 People’s Armed Forces Maritime Militia (PAFMM) 285 People’s Armed Police (PAP) 31, 52, 285, 294 People’s Bank of China (PBOC) 175, 177, 180, 184 People’s Congresses (PCs) 115–117, 143 membership in 115 People’s Daily 36, 59 People’s Liberation Army (PLA) 3, 5, 15–16, 30, 52, 223, 236, 241, 276–281, 283–285, 290–291, 293–296 89th anniversary of 276 ambitions 279 live-fire drills 281, 283 military drills 281 missile test 281 modernisation of 15 politicking of the 16, 277 reform and restructuring 15, 277 reforms 279 restructuring of the command-andcontrol apparatus 15, 30, 276, 277 role in CPC 293 transformation of 16 People’s Liberation Army Air Force (PLAAF) 280–283, 295 People’s Liberation Army Navy (PLAN) 277, 281–283, 289 People’s Political Consultative Conferences (PPCCs) 48, 115–117 People’s Republic of China (PRC) 3, 14, 16, 25, 31, 48, 59, 72, 78–79, 97, 133, 152–154, 158–159, 162, 193, 195–197, 199, 212–213, 235–237, 241–242, 250, 280, 285 70th anniversary of the founding of 25, 284

338 Index people-to-people contact 4, 201 Permanent Court of Arbitration (PCA) 286–287 persecution 1, 98 personality 1, 10–11, 13, 26, 36, 173–174, 235 cult of 10–11, 36, 235 traits 13, 174 petition-signings 55 petrochemical industry 134 petroleum industry 5 Philippine Navy 241 Philippines and US alliance 241 Philippines, the 116, 237, 239–242, 247, 259, 261, 263, 281, 286, 288, 295 Pivot to Asia 212, 215–217, 259 PLA see People’s Liberation Army (PLA) PLAAF exercise 281–283 PLA-Navy 241 PLAN exercise 281, 282, 283 PLAN live-fire drills 283 PLARF see PLA Rocket Force (PLARF) PLA Rocket Force (PLARF) 277, 284 pluralism 73, 78 police-state apparatus 32, 38 AI-enabled 32 policies 3–4, 7–10, 12, 14–16, 26–30, 32–33, 36–37, 48–49, 52, 56–57, 64–65, 68, 76, 85, 87, 90–92, 94, 98–99, 105–112, 114, 116–117, 119–123, 131–143, 147–148, 150–152, 156–160, 162–163, 168, 173–179, 182–185, 191, 199–200, 213–215, 217, 219–220, 222, 224, 235, 237–238, 241, 245–246, 250, 255–258, 260, 265–270, 276–280, 283, 288, 290, 294, 296 ‘Act East’ 266 ‘keep a low profile’ 36 “America First” 219, 262 ambitions 222 burdens 116 campaign 8 central 65 challenges 7–8, 224 Chinese 8, 9, 14, 235 choices 174, 182–183 decisions 87 defense 29 Deng Xiaoping’s 4, 8 design 107 directives 92, 265, 269 document 85, 132 domestic 14, 29, 99, 185, 267

economic 26–27, 106, 151, 177, 184 outreach 16, 277 ethnic minority 52 external 99 foreign 4, 7–9, 14–16, 27, 29, 173–175, 183, 191, 213, 217, 222, 224, 235, 255–258, 265, 269–270, 276–277, 279 governmental 132 grasp 48 guidelines 108 hard-edged 213 industrial 12, 131, 132, 133, 134, 135, 136, 137, 139, 140, 142, 147 reorganisation 139 labour 159 local 114 market 33, 159 measures 109, 131, 142 medical care 160 MIC2025 143, 147 modernisation 4 monetary 7 national 133 new 10, 108 one-child 33 ‘One-China’ 214 partnership 191 party 49, 114 political 26 preferential 107, 142 private sector 110 pro-market 33 pronouncements 163, 182 religious affairs 52 relocation 156 reorganisation 139 repressive 235, 246 South China Sea 238, 241 state 119 strategic 56 towards Asia 14 US 14, 250 wage 159 ‘low-profile’ 4, 8–9 new era 4 open-door 4 overtures 8 stratagem 8 strategy 276 unimaginable 8 Xi’s 8, 12, 14, 16, 68, 90, 258 Japanese 133 policymaking 28–29, 62, 112, 114, 117–120, 174–175, 260

Index  339 foreign 174, 260 local 114 monetary 175 Politburo 1, 26, 29, 31–32, 47–48, 51, 53, 56–57, 59, 86, 89–91 meeting 32, 57 Politburo Standing Committee (PBSC) 1, 11, 26, 29–30, 31, 51, 59, 86, 91 retirement age 31 political activists 68 affairs 88, 197 agenda 105, 185 alliance 194 autonomy 250 beliefs 13, 174 benefits 98 capital 51, 246 challenges 52, 78, 97, 109 change 66, 106, 121 character 86 choice 98 clout 151 consciousness 29, 35 consensus 2 conspiracy 240 control 111, 115, 123 cooperation 203–205, 207 crisis 97 criticism 66 culture 72 decision-making 105 demands 55, 119 difficulties 7 elites 2, 197 environment 50–51, 63, 113, 224, 255 flexibility 9 foes 35 goals 15, 276 heart 1 ideology 2, 174 incorporation 106, 109, 113 influence 117, 165, 198, 256 instability 243, 291 institutions 10, 116, 118 issues 26 landscape 30, 182 leadership 4, 13, 56, 62 legacy 27 legitimacy 96, 260 Leninist system 97 liberalisation 113 lobbying 118, 120 mileage 8 model 4

movements 16 opposition 11, 63, 65 party system 5 persecution 1 policies 26 power 117, 183, 209 priority 56 prisoners 55 privileges 117 protest 11, 63, 66 reform(s) 2, 38, 55, 78 regime 63, 73 relations 196, 235, 280 reservations 7 resources 117 rise 106 risks 29, 165 concept of 29 rules 29 signalling 56 skills 30, 32 socialism 12 spectrum 3 stability 63, 76, 77, 260 support 108 supremacy 121, 122 system 4, 122 ties 215 trajectory 1 unrests 7 politicking 16, 49, 277 politics 10–11, 50, 68, 76, 95, 113, 121, 174, 183–184, 199, 201, 215, 246, 266, 269, 277 Chinese 121 domestic 10–11, 201, 246 factional 95 local 113 power 174, 277 pollution 52, 97, 141 problems 141 polyheuristic approach 174 Pompeo, Mike, US Secretary of State 246 populism 168, 222 ports 5, 178, 235, 243, 280, 291 post-Cold War 14, 212, 214, 265–266 post-coronavirus (COVID-19) 1, 5, 7–9, 14, 214, 223, 226, 292, 295 order 7–9, 223, 226 assessment of 9 poverty 2, 13, 32, 91, 151–157, 159–160, 166–168 alleviation programmes 2, 13, 91, 152–156, 166–167

340 Index of philosophy 32 zero 13 poverty headcount ratio 154 powers 1, 3–12, 14–16, 25–26, 28–36, 38–39, 48–51, 53, 60, 62, 64, 66, 69, 73, 77–78, 86–90, 95–96, 99, 105, 117–118, 122, 150, 152, 154, 165–166, 168, 173–174, 178, 180–183, 185, 191–192, 195, 198, 202, 208–209, 212–213, 214–219, 221–227, 235–238, 243–246, 249–250, 255–259, 261, 264–266, 268–269, 276–280, 285–289, 292 absolute 212 American 9, 213 balance of 224, 238, 259 benign 15, 236 ceded 31 concentration of 1 control of 12 decision-making 35 economic 11, 15, 236 effort to hold 49 emergent 15, 35 aggressive 35 exercise of 34, 236 global 14, 185 grab 35 growing 15 hegemonic 256 levels of 1 major 8, 174, 185, 195, 237, 243, 245, 249, 255, 258 Mao’s 48 military 236, 238 misuse of 87 monopolistic 33 multipolar 195 near-absolutist 30 neo-imperial 224 official 87 over-concentration of 36 parity 14 policymaking 28 political 117, 183, 209 politics 174, 277 projection 255, 264, 285, 287, 289 real 88 regional 265, 277 reins of 31 relations 122, 216, 219, 258 responsible 173, 259 revisionist 14–15, 218, 236, 246 rising 7, 269

soft 11, 60, 185, 224–225, 258 struggle 89 submissive 223 uncontested 51 Xi’s 10, 34 pragmatism 93 PRC see People’s Republic of China (PRC) jurisdictional claims 236 presidency 1, 36, 88, 192, 215, 241 Chinese 88 removal of term limit 1, 91 presidential term limit 1, 11, 89, 91 princeling 25, 30, 31, 33, 36–37, 89 conservative 33 principles 2, 34, 172–173, 182, 240, 242, 249, 258, 261, 270 ideological 2, 172 separation of function 1 socialist rule of law 34 privacy 67, 71, 78 protection of 78 private businesses 12, 64 control over 12 capital 121, 122 companies 37, 67, 75, 105, 110, 112, 114, 122 investments 112, 117 entrepreneurs 12, 64, 105–123 economy 12, 105–109, 113, 115, 122 entrepreneurship 111–112 enterprises 1, 37, 64, 105, 107–108, 110–115, 119–120, 122 private sectors 6, 12, 37, 53, 71, 105–113, 118–120, 122–123, 159, 219 development 105–106, 112–113, 120, 123 obstacles and problems of 106 policies 110 reform 107 strengthening of 105–106 Proceedings of the National Academy of Sciences 164 production 2, 6, 12, 111, 133–135, 138–140, 142–145, 148, 155, 166, 175, 226 agricultural 155 capacities 139 domestic 12, 133–134, 139, 142–144, 148 economic 2 IC 144–145 industrial 6

Index  341 robot 144 Project 75I (P75I) 265 propaganda 11, 27, 52, 58–59, 65–66, 68, 91, 166–167, 222 active 11, 68 CCP 65 channels 52 internet 66 traditional 52 workers 66 prosperity 3, 15, 32, 54, 90, 107, 152, 158, 165–167, 194, 196, 199, 236, 247 common 32, 107 economic 3, 152, 165 shared 196 protectionism 74, 107 public debt 106 enterprises 107 intellectuals 67 jobs 69 leadership 87 messaging 55 opinion 65, 68 outrage 222 participation 63 resources 88 sectors 6, 107, 108 security 75 services 62, 107, 159–160 transport 69 punishment 26, 70, 88 Purchasing Managers’ Indices (PMIs) 6 Purchasing-Power-Parity (PPP) index 213 Pu Zhiqiang 76 Qinghai 57, 157–158 Qiu Zhanxuan 76 Qiyejia jingshen 108 quad 2.0 see Quadrilateral Security Dialogue 2 (Quad 2.0) Quadrilateral Security Dialogue 2 (Quad 2.0) 220 Quadrilateral Security Dialogue (Quad) 220, 256–257, 264–268 Qualcomm Ventures 72 RCEP see Regional Comprehensive Economic Partnership (RCEP) real estate 38, 70–71, 106 recession 5, 224 reciprocity 89 rectification campaign 49

re-education camps 99 Reform and Opening 49–50, 53 stages of 50 reforms 1–2, 4, 7, 11–13, 15–16, 26–27, 29, 32–38, 47, 49, 51, 54–56, 74–75, 78, 88–89, 92–93, 95–98, 106–109, 113, 117, 119, 122, 132, 142, 152, 156, 159, 161, 172–178, 181–184, 213, 219, 223, 276–279, 293, 296 60 areas of 33 comprehensively deepening 32–33 betrayal of 36 conditions for 55 Deng Xiaoping’s 1, 36 negative impact of 11 economic 2, 4, 7, 11, 13, 122, 132, 173, 182 domestic 175 economic structure 33 era 1, 113, 119 financial 173, 175, 184 domestic 172–173, 184 free-market 213 income tax 159 initiatives 34, 92, 172, 184 Xi-Li 92 institutional 26, 35, 38 interest rate 176 intra-party 89 judicial 97 lack of 97 land 13, 49 domestic 13 process of 49 legal 2 legislative 117 mixed 12 multidimensional 33 political 2, 38, 55, 78 private sector 107 process 1, 89, 182, 183, 276 programmes 36 regulatory 176 structural 172 subversive mistakes in 33 supply-side 92 tax 159 UFWD 54 Xi’s 11, 184 refuges 219 regional affairs 279, 290 alliances 248 connectivity 268

342 Index development 262 disparities 2 domination 264 elections 38 engagement 265 financial initiatives 173 foreign policy 265 hegemony 266 inequalities 96 infrastructure 268 issues 191 leaders 36, 248 multilateral organisations 215 multipolar power 195 power 265, 277 security 94, 196, 199, 237, 248–249, 260–263, 266, 276–277 order 94 strategic objectives 279 regional affairs 28, 296 Regional Comprehensive Economic Partnership (RCEP) 9, 216–217 regional connotation 15, 277 regionalism 262, 266 Asian 262 regional order 15, 248, 250, 267, 278 China-oriented 15 Sino-centric 267 regional outlook 16, 277, 279 regions 8, 14, 31, 52, 57, 98, 117, 153–154, 156–158, 209, 276, 278, 286, 290, 293, 296–297 disputed 293, 296 minority 57 regulations 29, 56–57; see also Regulations on the Work of the United Front of the Communist Party of China (Trial) Article 10 57 environmental 52 irrational 107 party 29 Regulations on the Work of the United Front of the Communist Party of China (Trial) 56 rejuvenation 11, 15, 32, 47, 49, 53, 56, 58, 60, 93, 105, 151, 165–166, 214, 268, 276, 280, 286, 290, 296 national 15, 93, 280, 286, 290 relations/relationships 4, 8, 12, 14–15, 33, 47, 49, 54–56, 59, 66, 71, 75, 77, 85, 88, 98, 105–106, 108–109, 112–120, 122–123, 165, 167–168, 191–192, 196, 198–201, 203–205, 209, 212–221, 224, 235–238, 242–243, 245, 248, 250, 255,

257–258, 261, 264, 266, 270, 278, 280, 283, 292, 294 ASEAN and China 14–15, 242 asymmetric 117 bilateral 198, 200, 209, 215, 257 China and India 257, 264 China and Southeast Asia 235–236 China and United States 8, 14, 214–215, 217–218, 224, 237–238, 245 clientelist 117, 165 cross-strait 54 diplomatic 198, 200, 203–205, 209, 266 economic 280 equal 192 framework 213 great power 216, 219 international 167–168, 191, 221, 255 long-term 192 major-power 258 mutually beneficial 192 political 196, 235, 280 power 122, 216, 219, 258 promising 201 Sino-America 255 Sino-Southeast Asia 238, 245 special 191 stable 192, 224, 278 state and business 12, 105–106, 108–109, 113–114, 118–119, 122–123 entrepreneurs 105 market 106 society 118 religion 77 religious activities 75, 77 affairs 11, 52, 58 beliefs 2 groups 49, 77 repression 77 Religious Affairs Bureau 11, 58 Renminbi 172, 184, 259 Renmin University 163 repression 65, 73, 76–77, 175 religious activities 77 Research and Development (R&D) 135–136, 141, 264 residence permit system 33 resources 7, 14, 33, 49, 88, 92, 106–107, 110, 112–113, 116–117, 119–120, 131, 137, 141, 146–147, 158–159, 175, 198, 200–201, 208–209, 223, 226, 237, 240, 246–247, 265, 268, 289, 295

Index  343 allocation of 33, 92, 107, 116 economic 14, 208 energy 7, 223 mineral 201 natural 110, 198 political 117 public 88 rights to 240 state 116 responsibility 5, 63, 67, 91, 107, 245, 255, 260, 268–269 revolutionary base 27 rights civic 98 civil 28, 98 historical 286, 289 intellectual property 16, 136 labour 115 legal 108 people’s 34 property 16, 107, 117, 136, 175 sovereign 240–241, 243, 293 to rule 92 riots 52, 86 Lhasa 52 Tibet 86 Urumqi 52 Xinjiang 86 risks 25, 53, 65, 70, 73, 165, 174, 176–177 economic 70 financial 177 internal 53 political 165 preventing 25 rivalry 3, 49, 212, 221–222, 224, 236–237, 247, 250, 264 China and US 212, 221 geostrategic 236 intra-party 3 strategic 250 Road to Revival 93, 150 Roberts, Margaret 68 Robotics Industry Development Plan for 2016–2020 144 robots 12, 141–144, 147 indigenous 144 industrial 143, 147 production 144 sales 143–144 Rongcheng 69 rule of law 2, 33–34, 37, 63, 71, 85, 98 realization of 34 socialist 34 Rule of Law Decision 33, 34; see also Decision on Certain Major Issues

Concerning Comprehensively Advancing Rule of Law rules and regulations 4, 13, 29, 34, 51–52, 56–57, 67–69, 78, 107, 116, 133, 136, 173, 175–177, 184–185, 191, 220–221, 242–243, 245–246, 248, 287 discriminatory 177 political 29 rules-based order 220–221 rumours 67, 99 rural development 98, 160 households 157 Hukous 15