The Emperor Has No Clothes

The Delusions and Illusions of Xi Jinping

A fascinating article has recently been published in National Review Online.  The piece is entitled "The Belt and Road Illusion" and is written by Therese Shaheen, CEO of US Asia International. She was the chairman of the State Department’s American Institute in Taiwan from 2002 to 2004.

A salient point of the article is that when it comes to China, things are not what they seem  In fact, the Chinese Premier, Xi Jinping appears more like a cross between a master illusionist and a con man.

Xi is the master — okay, there’s at least one other leader in his league — of making people respond to his utterances and declarations as though they were fact, distracting his observers to obscure the reality in the background. In the foreground, the world sees China’s conspicuous urban wealth, global companies dominating its sectors, the largest banks in the world, military expansion, and diplomatic energy. This obscures runaway public and private debt, an aging population with no social-support system after decades of the disastrous one-child policy, and rural poverty that approaches the worst found anywhere else in the world.

A present iteration in this vast propaganda effort is the Belt and Road Initiative (BRI).

The latest example of this policy of distraction is the so-called Belt and Road Initiative (BRI), which is feeding the latest source of anxiety about China’s pretensions to great-power status. The Economist recently devoted its cover to “Planet China,” with a focus on the BRI. The unclassified synopsis of National Defense Strategy of the U.S. for 2018 does not mention the BRI by name, but the implication is clear in its statement that “China is leveraging . . . predatory economics to coerce neighboring countries to reorder the Indo-Pacific region to their advantage” with the long-term goal of displacing the United States, first in the region and, ultimately, globally. On August 7, in a dinner meeting in New Jersey with several CEOs of American companies, even President Trump referenced the BRI, calling it “insulting” while addressing his broader priority of stopping China’s unfair trade practices.

If one can believe the more fantastic accounts of the BRI offered by the Chinese government and by foreign governments eager for Chinese investment, the BRI will bind vast tracts of the earth with China through a series of infrastructure projects across the Eurasian landmass. Not content to leave it at that, typically sycophantic PRC propagandists and some of the ever-swooning China analysts outside the country have constructed BRI variants that presage maritime, polar, and even space dominance.

These propaganda efforts have certainly sunk into Western consciousness.  There is a new swaggering, confident power shaping the world to its wont.  It acts without regard to other nations, except as tools or minnows to be manipulated at will.  It is the centre of the world.  All other nations finally will fall in with the destiny of the Central Kingdom--which is to say they will become satellites of Chinese influence, subject to Chinese purposes. It is ruled by the Eastern version of Donald Trump.

But things are not what they seem on the surface, it would appear:

But behind the illusion of China’s economic miracle is a reality that is becoming hard to deny, and there may be whiffs of frustration and disillusionment starting to swirl around Xi as a result. The drivers are many and interrelated, but a quick recap of some of the most compelling is in order. First, China’s debt as a percentage of GDP has nearly doubled in ten years. Every actor in the economy, from the central government to local governments, companies, and households, is dangerously over-leveraged. Second, China faces bubbles of overcapacity in several asset classes, most notably real estate, contributing to cities featuring empty malls and condo developments (about which much has been written of late). Third, China has too many older people and too few young people, a result of terrible social policies. The country faces a decline in the number of workers to retirees: from 5–1 to 2–1 in the next 15 years. Even now, only about a quarter of Chinese workers contribute to the pension system. Finally, China is a country in which massive rural poverty is already the reality. This creates several negative pathologies of its own, including the possibility of widespread cognitive handicaps among the poor.

So China is facing enormous internal problems--problems which cannot be fixed by more rules, regulations, supervision, labour camps, or totalitarian pressure.

The PRC will continue to highlight the BRI as a mainstay of its policy and will continue to market its overseas investment commitments as consistent with the effectiveness of the initiative. But aside from the propaganda value, the reality won’t be much different from the reality of China’s domestic economic circumstances. There are simply too many contradictions, too much dependence on circumstances beyond the government’s control, and a growing awareness in the region and the rest of the world that Beijing’s intentions are not benign. President Xi’s mastery of illusion has peaked; reality is here.