The Economist: Party Like It’s 1793? China’s New President Should Scare The Crap Out Of The Rest Of The World

China’s New President Should Scare The Crap Out Of The Rest Of The World

The Economist | May 4, 2013, 9:12 AM | 14,577 | 66


IN 1793 a British envoy, Lord Macartney, arrived at the court of the Chinese emperor, hoping to open an embassy. He brought with him a selection of gifts from his newly industrialising nation. The Qianlong emperor, whose country then accounted for about a third of global GDP, swatted him away: “Your sincere humility and obedience can clearly be seen,” he wrote to King George III, but we do not have “the slightest need for your country’s manufactures”. The British returned in the 1830s with gunboats to force trade open, and China’s attempts at reform ended in collapse, humiliation and, eventually, Maoism. China has made an extraordinary journey along the road back to greatness. Hundreds of millions have lifted themselves out of poverty, hundreds of millions more have joined the new middle class. It is on the verge of reclaiming what it sees as its rightful position in the world.

China’s global influence is expanding and within a decade its economy is expected to overtake America’s. In his first weeks in power, the new head of the ruling Communist Party, Xi Jinping, has evoked that rise with a new slogan which he is using, as belief in Marxism dies, to unite an increasingly diverse nation. He calls his new doctrine the “Chinese dream” evoking its American equivalent. Such slogans matter enormously in China (see “Xi Jinping’s vision: Chasing the Chinese dream”). News bulletins are full of his dream. Schools organise speaking competitions about it. A talent show on television is looking for “The Voice of the Chinese Dream”. Countries, like people, should dream. But what exactly is Mr Xi’s vision? It seems to include some American-style aspiration, which is welcome, but also a troubling whiff of nationalism and of repackaged authoritarianism.The end of ideology

Since the humiliations of the 19th century, China’s goals have been wealth and strength. Mao Zedong tried to attain them through Marxism. For Deng Xiaoping and his successors, ideology was more flexible (though party control was absolute). Jiang Zemin’s theory of the “Three Represents” said the party must embody the changed society, allowing private businessmen to join the party. Hu Jintao pushed the “scientific-development outlook” and “harmonious development” to deal with the disharmony created by the yawning wealth gap.

Now, though, comes a new leader with a new style and a popular photogenic wife. Mr Xi talks of reform; he has launched a campaign against official extravagance. Even short of detail, his dream is different from anything that has come before. Compared with his predecessors’ stodgy ideologies, it unashamedly appeals to the emotions. Under Mao, the party assaulted anything old and erased the imperial past, now Mr Xi’s emphasis on national greatness has made party leaders heirs to the dynasts of the 18th century, when Qing emperors demanded that Western envoys kowtow (Macartney refused).

But there is also plainly practical politics at work. With growth slowing, Mr Xi’s patriotic doctrine looks as if it is designed chiefly to serve as a new source of legitimacy for the Communist Party. It is no coincidence that Mr Xi’s first mention of his dream of “the great revival of the Chinese nation” came in November in a speech at the national museum in Tiananmen Square, where an exhibition called “Road to Revival” lays out China’s suffering at the hands of colonial powers and its rescue by the Communist Party.

Dream a little dream of Xi

Nobody doubts that Mr Xi’s priority will be to keep the economy growing–the country’s leaders talk about it taking decades for their poor nation to catch up with the much richer Americans–and that means opening up China even more. But his dream has two clear dangers.

One is of nationalism. A long-standing sense of historical victimhood means that the rhetoric of a resurgent nation could all too easily turn nasty. As skirmishes and provocations increase in the neighbouring seas (see Banyan), patriotic microbloggers need no encouragement to demand that the Japanese are taught a humiliating lesson. Mr Xi is already playing to the armed forces. In December, on an inspection tour of the navy in southern China, he spoke of a “strong-army dream.” The armed forces are delighted by such talk. Even if Mr Xi’s main aim in pandering to hawks is just to keep them on side, the fear is that it presages a more belligerent stance in East Asia. Nobody should mind a confident China at ease with itself, but a country transformed from a colonial victim to a bully itching to settle scores with Japan would bring great harm to the region–including to China itself.

The other risk is that the Chinese dream ends up handing more power to the party than to the people. In November Mr Xi echoed the American dream, declaring that “To meet [our people’s] desire for a happy life is our mission.” Ordinary Chinese citizens are no less ambitious than Americans to own a home (see “The property market: Cat and house”), send a child to university or just have fun (see “The music scene: Anarchy in the PRC”). But Mr Xi’s main focus seems to be on strengthening the party’s absolute claim on power. The “spirit of a strong army”, he told the navy, lay in resolutely obeying the party’s orders. Even if the Chinese dream avoids Communist rhetoric, Mr Xi has made it clear that he believes the Soviet Union collapsed because the Communist Party there strayed from ideological orthodoxy and rigid discipline. “The Chinese dream”, he has said, “is an ideal. Communists should have a higher ideal, and that is Communism.”

A fundamental test of Mr Xi’s vision will be his attitude to the rule of law. The good side of the dream needs it: the economy, the happiness of his people and China’s real strength depend on arbitrary power being curtailed. But corruption and official excess will be curbed only when the constitution becomes more powerful than the party. This message was spelled out in an editorial in a reformist newspaper on January 1st, entitled “The Dream of Constitutionalism”. The editorial called for China to use the rule of law to become a “free and strong country”. But the censors changed the article at the last minute and struck out its title. If that is the true expression of Mr Xi’s dream, then China still has a long journey ahead.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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