Special Repo R t CHINA June 25th 2011 Rising power, anxious state SRchina.indd 1 13/06/2011 14:45 Issue Date: 25-06-2021 Zone: UKPB Desk: SR Output on: 15-06-2011----10:12 Page: SR1 Revision: 0 SPECIAL REPORT CHINA Rising power, anxious state In less than a decade China could be the world’s largest economy. But its continued economic success is under threat from a resurgence of the state and resistance to further reform, says James Miles AT THE HEIGHT of the Qing dynasty, back in the 1700s, China enjoyed a golden age. Barbarians were in awe of the empire and rapacious foreign- ers had not yet begun hammering at the door. It was a shengshi, an age of prosperity. Now some Chinese nationalists say that, thanks to the Com- munist Party and its economic prowess, another shengshi has arrived. Last year China became the world’s biggest manufacturer, displacing America from a position it had held for more than a century. In less than a decade it could be- come the world’s largest economy. Foreigners are again agape. China’s rapid recovery from the global - nancial crisis, and the West’s continuing malaise, have had a profound psychological impact on many Chinese. Emotions ranging from pride to CONTENTS Schadenfreude permeate ocial rhetoric. Dip- lomats treat their Western counterparts with a 3 China’s new leaders tinge of condescension. What is great about so- The princelings are cialism, crowed the prime minister, Wen Jiabao, coming in March last year, is that it enables China to 5 Growth prospects make decisions eciently, organise eectively Beware the and concentrate resources to accomplish large middle-income trap undertakings. In the eyes of some Chinese, and even some foreigners, authoritarianism has 7 Urbanisation gained a new legitimacy. Where do you live? A big parade of missiles, tanks and goose- 9 Local politics stepping soldiers in central Beijing in October Deng & Co 2009, the capital’s rst such display in a decade, was described in ocial reports as a grand cere- 10 Government’s role mony of the shengshi. A group of generals and in industry senior ocials enlisted 60 artists to commemo- The long arm of rate the party’s 60th year in power that year by the state painting a 120-metre-long scroll called A Picture 11 Demography of a Chinese Harmonious Shengshi. The panora- Getting on ma depicted the soaring skylines of China’s great ACKNOWLEDGMENTS cities, interlaced with the mountains, rivers and clouds beloved of tradi- 13 Ideological battles tional painters. There were ethnic minorities dancing joyously in Tianan- Universalists v In addition to those named in the exceptionalists text, the author would like to thank men Square, a rocket taking o, a wind farm and even a mist-wrapped the following for their generous help: Taiwan. In the past couple of years the shengshi has brought the recalci- Bai Gang, Daniel Bell, Kerry Brown, trant island closer, with cross-strait ights and a free-trade deal. Cai Xia, Cui Zhiyuan, Dang Guoying, To some observers in an insecure West, the balance of global power Gao Yu, Eric Harwit, Hu Biliang, Hu Guangwei, Jia Kang, Jin Canrong, Lei is shifting inexorably in China’s favour. Recent book titles capture the Yi, Li Chunling, Li Guoqiang, Li Ling, mood: In the Jaws of the Dragon: America’s Fate in the Coming Era of Liu Zhi, Chris Murck, Anthony Saich, Chinese Hegemony (by Eamonn Fingleton, 2008); When China Rules Mao Shoulong, Pan Wei, Qiu Feng, the World: The End of the Western World and the Birth of a New Global Ren Jianming, Song Guojun, Wang Xuetai, Joerg Wuttke, Yu Keping, Order (by Martin Jacques, 2009); The Beijing Consensus: How China’s Zhang Ming, Zheng Bingwen, Kate Authoritarian Model Will Dominate the Twenty-First Century (by Ste- Zhou and Wu Guoguang. The author is fan Halper, 2010). As William Kirby of Harvard University notes, anxious also very grateful for advice given by books about China’s rise have a long history in the West. There was a others on condition of anonymity. spate of them in the early 20th century: New Forces in Old China: An A list of sources is at Unwelcome But Inevitable Awakening, by Arthur Brown, set the tone in Economist.com/specialreports 1904. But other rising powersJapan, Germany and Americagot even more attention. Today China is the chief object of worry. An audio interview with the author is at Chinese publishers have been cashing in too. Bookshops (which Economist.com/audiovideo/ stock only works of which the party approves) are stacked with volumes 1 specialreports The Economist June 25th 2011 1 Issue Date: 25-06-2021 Zone: UKPB Desk: SR Output on: 15-06-2011----10:12 Page: SR2 Revision: 0 SPECIAL REPORT CHINA 2 on the China model and the failure of liberal economics. The get has overtaken that on defence for the rst time. The govern- Chinese Academy of Social Sciences struck a rare note of modes- ment has been reviving a Maoist system of neighbourhood ty in a report last October. It rated China a mere 17th in a global surveillance by civilian volunteers. In the past few months the league of national competitiveness. But it pointed out that the police have launched an all-out assault on civil society, arresting country had risen from 73rd place in 1990 and had left India, dozens of lawyers, NGO activists, bloggers and even artists. The which was ranked 42nd, in the dust. China’s aim, the report said, Arab revolutions have spooked the leadership. From its perspec- should be to reach the top ve by 2020 and be second only to tive, the system looks vulnerable. America by 2050. Its universities are producing swelling legions Chinese leaders have other reasons to fret. Late next year, of scientists, but it seems there are still not enough of them to al- probably in October, the party will hold a national congress, the low the country to join the top ranks just yet. 18th since its founding 90 years ago. This meeting, a smaller one of the party’s central committee immediately afterwards and a All change session of the legislature in March 2013 will endorse the biggest For all the chest-thumping, though, China’s leaders are shue in China’s leadership for a decade. The president, Hu Jin- more cautious than either their underlings or the state-con- tao, and Mr Wen will step down from the pinnacle of power, the trolled publishing industry. They avoid the term China model nine-member standing committee of the Politburo. A younger and do not publicly boast of a shengshi, even though they allow generation will begin to take over. Leadership changes on this their media to talk of one. Indeed, they appear more nervous scale always make ocials anxious. Although the most recent now than at any time for over a decade. They have massively in- one, in 2002, passed without incident, earlier such transitions creased spending on domestic security, which in this year’s bud- triggered dramatic events: a coup in 1976, debilitating power 1 2 The Economist June 25th 2011 Issue Date: 25-06-2021 Zone: UKPB Desk: SR Output on: 15-06-2011----10:12 Page: SR3 Revision: 0 SPECIAL REPORT CHINA 2 struggles in 1986-89 and mass unrest in 1989. Just because the last CHINA’S NEW LEADERS one went well does not mean this one will. The new leadership will not have such an easy ride with The princelings are the economy, which on average has grown by over 10% a year since 2002, despite the trauma of the global nancial crisis. Chi- na’s demographic advantagean abundant supply of labour in coming the countrysideis beginning to wane. In a few years the work- ing-age population will peak. Without huge and politically risky Next year’s changes in the leadership will bring on a policy changes it will become increasingly dicult to maintain new generation of privileged political heirs the rapid rate of urbanisation that has been one of the main driv- ers of growth. Looking towards the 2020s, many Chinese econo- THE RUGGED REMOTENESS of Chongqing, a region in mists worry about falling into a middle-income trap: losing south-western China about the size of Austria, made it an competitiveness in labour-intensive industries but failing to gain ideal temporary home for the government during the Japanese new sources of growth from innovation. invasion in the 1930s-40s. In the 1960s Mao Zedong moved strate- China’s leaders will nd it enormously dicult to rebal- gic industries there to protect them from a feared Soviet invasion. ance China’s economy so that growth is led by consumption Recently Chongqing has become a stronghold of something rather than by exports and investment. Their eorts will be ham- rarely seen in China since Mao’s day: charismatic politics. pered by the growing clout of state-owned businesses. In the The region’s party chief, Bo Xilai, is campaigning for a place past decade these have risen from the ashes of tens of thousands on the Politburo Standing Committee in next year’s leadership of government-owned enterprises dismantled in the 1990s. shue. He looks likely to succeed. Like every other Chinese poli- Their numbers are now much smaller, but their economic and tician since 1949, he avoids stating his ambitions openly, but his political inuence is enormous and growing. courting of the media and his attempts to woo the public leave Banks are still almost entirely in government hands.