The Communist Party of China has just celebrated its 100th anniversary by highlighting its economic track record at the helm of the Asian superpower. President Xi Jinping sought to capitalize on this occasion to further improve his standing within the party. Moreover, another recent anniversary went more unnoticed: July 9th marked half a century since the first visit to China by US Secretary of State Henry Kissinger. This milestone was the starting point of the US-China rapprochement in the 1970s, and is worth reflecting on, given the recent tensions between the two countries.
In this EsadeGeo Exchange podcast, Óscar Fernández, senior researcher at EsadeGeo, comments these two events and their local and global significance with Dr Yu Jie, senior research fellow on China at Chatham House.
Óscar Fernández: Hello everyone and welcome to a new EsadeGeo Exchange on Do Better. My name is Óscar Fernández and I am a senior researcher at EsadeGeo. In today’s podcast we look at two very symbolic anniversaries related to China: the 100th anniversary of the Chinese Communist Party and the 50th anniversary of the first visit to China by US Secretary of State Henry Kissinger. To help us analyse these events we have a special guest: Dr Yu Jie, a senior research fellow on China at Chatham House, which is one of the world’s top think tanks, an associate fellow at LSE IDEAS, and a former guest lecturer at the Esade MBA. Welcome Dr Yu and thank you for being with us today.
Yu Jie: Well, thank you so much Oscar. I’m delighted to return to Esade.
Óscar Fernández: On 1 July, the Communist Party of China celebrated its 100th birthday and the party put on quite a show. Can you tell us what the celebrations consisted of and what message the party was trying to send to the Chinese people and the world?
Yu Jie: Well, as you said it’s quite a show. The party is sending three messages. Firstly, the longevity of communism in China, what has lasted 100 years, and this differs from the Soviet Communist Party which lasted about 95 years. Secondly, I think that President Xi Jinping is trying to tell the 95 million party members that the party is the only organisation that can run China in the decades or centuries to come. He has told everyone that China has reached one of the two centennial goals that he announced when he came to power, which is to say that by 2021 China has become a moderately prosperous society. The third message to the rest of the world is that China has arisen and is a strong global power. China is not interested in receiving lectures from the western liberal democracies. We heard that message very clearly and we also heard the roar of approval from the Chinese audience in Tiananmen Square. I think these are the three key messages that he is very keen to send.
Óscar Fernández: It’s easy to forget that in early 2020 some analysts claimed that Covid-19 could be a Chernobyl-like event for the Communist Party. Now it seems like the party and Xi Jinping have emerged even stronger from the crisis. Would you say that the party has reached its peak in domestic popularity at the centenary of its foundation and precisely when China’s worldwide reputation has taken a hit because of the management of the Covid-19 crisis?
Morale is extremely high throughout society, and the party has also managed to become popular among the younger generations
Yu Jie: Regarding trust in China’s government, we need to take a longer perspective. Some ten years ago and before Xi Jinping came to power, the party was very troubled by corruption, and the ordinary population had little trust in the party. Xi Jinping introduced an anticorruption campaign and whatever the political purpose he may have had, his campaign was incredibly popular among the people. The Chinese population felt that the party now speaks for them, and not just for the party elite and the entrepreneurial classes. So, I think confidence in the party has been rising. We don’t really know whether it has peaked, but I perceive – although I haven’t been in China for the past year or so – a strong sense of confidence among the population. Morale is extremely high throughout society, and the party has also managed to become popular among the younger generations, which place great trust in it. Therefore, confidence in the party may not yet have reached its peak . The party is rather flexible in terms of ideology but ruthless in terms of economic management. So, I think that at the end of the day the party must make a trade-off regarding the social contract to justify its legitimacy. Ultimately, this has not changed since the Tiananmen event in 1989, which is to say that it is economic performance that will justify the legitimacy of the party – and so far the population is relatively satisfied.
Óscar Fernández: You mentioned ideology and the economy. Prominent economists like Branko Milanović argue that China can no longer be called a communist country. In today’s China, more than 80% of GDP is produced by the private sector and more than 90% of employment is in private and self-employed sectors. Is it fair to say that after Deng Xiaoping launched his reforms in the late 1970s, the Communist Party of China has become less communist and more Chinese? What communist features has the party preserved?
Yu Jie: One of the key features that the Communist Party has preserved is this idea of the ‘principal contradiction’. This is very much a communist dogma term that refers to the most pressing challenge that a national government faces. The principal contradiction was announced to have changed in the 19th Party Congress in 2017 and it now addresses the higher standard of living sought by the population. The key challenge for China is to reduce the income gap between rich and poor. The Communist Party is ideologically flexible, but still retains certain key elements of Marxism-Leninism and that’s why it still calls itself a communist party. Nevertheless, we cannot deny that the private sector dominates Chinese employment. And by returning to the world stage, China is enjoying the benefits of the previous rounds of economic globalisation – and China is becoming richer by increasing its ties with major trading partners such as United States and European Union. So, although it remains communist, China has enjoyed the benefit of trading with capitalist societies around the world.
The key challenge for China is to reduce the income gap between rich and poor
Óscar Fernández: In recent years, and ever since Xi Jinping came to power, what would you say were the main changes within the Communist Party? Would you characterise Xi as an ideologue? In that case, what is his ideology and how has it influenced the party?
Yu Jie: Two things are clear. Firstly, China will not return to the era of the Cultural Revolution – those traumatic ten years of disorder that China and Xi Jinping himself suffered [from 1966 to 1976]. Secondly, I think Xi aims to introduce an omnipresence for the Communist Party across all aspects of society and including the corporate governance of private companies. Xi is also very keen to tell the rest of the world that the Chinese Communist Party and China as a nation are embarking on an unprecedented experiment – and the leadership wants to continue with this experiment. This idea of an experiment also implies that the Chinese model would not be replicable by the rest of the world. China simply wants to do its own thing. That is why there was a strong rebuttal when President Biden suggested that democracy is now under attack by the Chinese Communist Party. Xi and his colleagues want to make sure that China is left alone to do this experiment.
Óscar Fernández: Let’s look at the future because in 2049 the Communist Party is hoping to celebrate another big anniversary – it will be 100 years since the foundation of the People’s Republic of China. You mentioned some goals that were set for this year’s anniversary. What goals has the party set for 2049 and what threats does it most fear? Do they come from outside China’s borders? From the Chinese population? Or from within the ranks of the party itself?
Yu Jie: You are referring to the second centenary goal – which is that by 2049 China will have become prosperous and a member of the club of mid to high-level income countries. That is the mission of Chinese Communist Party. Will China be able to achieve that goal? There are three challenges which I listed in a recent article. The first challenge is to make income distribution more equitable; the second challenge is to allow the market to play a much bigger role in determining economic activities; and the third challenge is to maintain a sound economic relationship with its trading partners – while keeping itself ideologically apart.
If China’s relationship with the US and the European Union continues to worsen this would surely reduce the capacity for China to export, and therefore, the economic wellbeing of migrant workers will also be impacted
I consider these three challenges are intertwined and no single goal is necessarily more important than the others. To give an example on income inequality, in China we have many billionaires, and we also have many migrant workers in factories that produce the goods for export to Europe and America. If China’s relationship with the United States and the European Union continues to worsen this would surely reduce the capacity for China to export, and therefore, the economic wellbeing of these migrant workers will also be impacted. Now, secondly, on this market issue: we all know that market forces act as an invisible hand to distribute resources. But for certain social measures such as schooling, social welfare, and property prices, government intervention is needed to ensure equitable access. So where is the boundary between the party and the market to be placed? Strengthening market forces may further reduce the opportunities for impoverished workers and make it harder for the population to achieve a better economic wellbeing. Everything is intertwined. And here is an alarming number. You quoted the economist Branko Milanović when he suggested that China should no longer be considered a communist country. However, China has its own numbers and the Chinese Premier Li Keqiang last year famously suggested that 40% of the Chinese population lives on less than 112 dollars a month. This is alarming when you compare China to the United States and other advanced economies.
Óscar Fernández: This leads nicely into my next question, which is about another anniversary that did not receive as much media attention as the centenary of the Communist Party. 9 July, 2021, was the 50th anniversary of the first visit to China by US Secretary of State Henry Kissinger. Can you tell us why this was so important at the time and what it meant in the context of the Cold War?
Yu Jie: It was important because China was isolated back in the 1960s and 1970s and Mao Zedong was on a mission to revolutionise the world order. But obviously, the entire experiment failed miserably. At that time, China was extremely isolated and needed partners – although I wouldn’t say allies – to stabilise itself. Moreover, the relationship with the Soviet Union was turning from bad to worse. And therefore, China desperately needed another great power as a friend. The events also reflected the mindset of President Richard Nixon, who wrote an article for Foreign Affairs in 1967 arguing that an angrily isolated Chinese population would create a further difficulty for the United States when competing with the Soviet Union. That is why this was an important historical milestone. From the Chinese perspective, the visit by Kissinger opened the door for China to establish diplomatic relations with many other countries around the world. And just before the visit, Communist China took its seat in the UN Security Council and that was another historical milestone. The Kissinger visit laid the foundation for further Chinese economic reforms from 1979 onwards, and so I consider that this week in February 1972 [when Nixon became the first US president to visit the People’s Republic of China] was the week that changed the world.
From the Chinese perspective, the visit by Kissinger opened the door for China to establish diplomatic relations with many other countries around the world
Óscar Fernández: We don’t have to go back so many decades to remember better times in US-China relations. Joe Biden and Xi Jinping met in China when they were both vice-presidents as recently as 2011. Biden addressed a group of high school students in the presence of Xi and announced: ‘We don’t fear a rising China, we welcome a rising China, not only for you, but for our own self-interest’. How much has the picture changed ten years later and what do you expect of the Biden-Xi relationship?
Yu Jie: The relationship has changed a lot on economic, technological, and political fronts. On the economic front, China has consolidated its status as the second-largest economy in the world, and China is also now rebalancing its economy inwards so that it is more driven by consumption and less by exports. For precisely this reason, China is perhaps prepared for a worsening US-China relationship. On the technology fronts, we find that in certain sectors such as AI, robotics, and quantum computing, China is already the leading force and challenges the Americans as global champions in terms of technological innovation. Obviously, within the mindset of US policy makers, technology should only be controlled or monopolised by America or by American allies – and should not be controlled by communist China because it has a different political ideology. Biden, Trump, and Obama have raised the alarm on this point. And thirdly there is an ideological question. President Xi has abolished term limits and introduced the centrality of the party across the whole of society. The American administration perhaps realised that its previous policy of engaging China to induce economic change – and ultimately encourage political change that would make China more like a liberal democracy – would fail as a policy. This realisation prompted the American administration to change tactics in terms of engagement with China. I can only see that the relationship will not be easy and perhaps will go from bad to worse. This is ultimately a competition on all fronts – not just an economic and military competition. This is also competition of ideas.
In certain sectors such as AI, robotics, and quantum computing, China is already the leading force and challenges the Americans as global champions in terms of technological innovation
Óscar Fernández: In a recent piece on Foreign Affairs, Wang Jisi, a professor from Peking University, argued that before Donald Trump’s presidency there was an implicit understanding between US and China. The US would not openly attempt to destabilise China’s internal order. And likewise, China would not intentionally weaken the US-led international order. Do you agree that this understanding existed? And if so, do you think that it is now broken?
Yu Jie: Well, the understanding certainly existed during the Obama era, and that’s why the United States and China were able to address certain global issues such as climate change and international financial governance. But again, as I said earlier, China has now grown much stronger, and this challenge makes the political elites in the United States uncomfortable about letting a communist party run the world’s second largest economy. After four years of Donald Trump, a rather erratic president, many of the rules and institutions of American democracy have been disrupted. And therefore, there is a sense of self-doubt coming from United States, and this feeling is magnified by the awareness of an external challenge.
Óscar Fernández: You mentioned the strategic reasons why the US reached out to China in the 1970s. With some analysts speaking now of a new Cold War, do you think we will see a similar move in the coming years – but in reverse – with the US reaching out to Russia to isolate Beijing?
Yu Jie: Nowadays we can all accept that in terms of economy, Russia is only a secondary player. So even if Biden wanted to get close to Putin to establish some kind of partnership, at the end of the day, this wouldn’t much help to counter China. We are living in a complex world that is economically intertwined much more closely than at the time of the Cold War – but is also much more politically polarised. No matter how bad the political relationship between China and United States, world trade has always been the best friend for China – and for the Chinese government. It is ironical that because of China’s economic might there is an economic closeness between both countries. Perhaps this will prevent the relationship going further into freefall. However, I don’t know how long this will last because Beijing is also signalling that China and United States are entering a period of protracted war or competition. The phrase ‘protracted competition’ was used by Mao Zedong to describe China-Japan relations back in 1937. We are facing a similar scenario in an elongated conflict between two great powers. So even if the United States reaches some type of diplomatic rapprochement with Vladimir Putin, Russia is not the same economic animal as China, and that’s where the difficulties arise. I’m not saying that China has done everything 100% correctly – and it takes two to tango. China has also made mistakes over the past three years. For example, in terms of diplomacy, China creates confusion by trying to speak tough to represent a sense of inner strength. However, speaking more softly, but behaving more diligently, would show more inner strength.
What we are going to see is an all-fronts competition that includes ideology, economics, technology, and people’s mindsets
Óscar Fernández: So, let me ask you one final and very brief question. I mentioned before that some analysts are referring to the current scenario as a new Cold War. Do you agree with this way of framing US-China relations?
Yu Jie: No. I disagree. It is not a new Cold War. What we are going to see is an all-fronts competition that includes ideology, economics, technology, and people’s mindsets. It is a competition at all levels, but not exactly a Cold War. The Cold War was mostly an arms race with added ideological conflicts, and the economic aspects were left aside because the Soviet Union was an isolated economy. So, I would not necessarily consider that we are in a new Cold War.
Óscar Fernández: Okay. Thank you very much, Dr Yu Jie, for your time today, and for helping us analyse these two important moments for China, in particular the centenary of the Communist Party. Thank you.
Yu Jie: Thank you, Oscar.
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