China is stronger, but also weaker than it was a decade ago. These weaknesses can make the difference in the China-America confrontation.
Many things have changed since 2001, when China and the US came close to clashing with the EP-3 incident, in which an American surveillance plane crash-landed on the Chinese island of Hainan after colliding with a Chinese fighter midair.
While the new Trump administration is saber-rattling all around China and threatens trade retaliation against China, each country has its own weaknesses.
The possibility of a World War III has become immediately more real, not only for the threats of the Republican hawks; even the more level-minded democrats are calling to check China’s ambition, as Robert Kagan did recently on Foreign Policy.
But we are just at the beginning of the Trump presidency and many perceptions could be wrong. For instance, problems with abandoning the free trade agreement in Asia (TPP) could be exaggerated.
The US can in theory negotiate bilateral trade agreements where each part would feel privileged with its own access to Washington. This could in turn offset the lures of a competitive multilateral trade agreement coming from Beijing.
Beijing has little reason to feel too confident right now. The country is stronger, but also weaker than it was 16 years ago. These weaknesses are extremely important because they can heavily condition the confrontation with the US in the following months.
China is obviously stronger because it has a much larger GDP, about eight times that of 2001. It is also weaker because it has a much larger middle class that is disenfranchised from politics and committed to stability, but not necessarily to the present government or its structure.
This middle class, now possibly about one-third of the total population, mostly don’t receive benefits for healthcare, education, or retirement from the state. And it doesn’t vote. Therefore, it’s increasingly taxed indirectly via an expensive healthcare system, education, and the fact that there are almost no retirement benefits.
That is, this middle class has to look after itself, but these services could be provided by China or by other countries, to which many try to migrate. And the price-quality ratio is actually better abroad — for the same price, one can receive better healthcare or education than in China.
In other countries, these services are provided by the state and paid for by the state. The state providing services establishes a strong link between itself and individuals. If people have to pay individually for everything, the link between state and citizens becomes looser, and the latter feel free to look for benefits wherever they can find them.
In other countries, the state doesn’t provide these services, but citizens are entitled to vote, thus giving them a voice in changing the taxation system. What in China is preventing pressure for representation from the middle class is the fact that the economy is still growing and people feel they can still hope to improve their income. This in part makes them not fully conscious of their situation.
However, foreign pressures and shrinking business opportunities may hasten the process of giving the middle class a new consciousness. This is not just about indirect taxes, but also about acquired welfare.
Property rights are unclear, which is the second cause of complaints to mayors, after pollution. Pollution, in turn, pits the middle class (who have the means to take care of their health) against the new proletariat (whose daily livelihood depends on dirty jobs).
But the issue of property rights might be easier to solve, because it pits large capitalists and junior officials (owners de jure or de facto of buildings or land) against the middle class, owners of one or more apartments. The state could easily intervene in favor of the small owners. Recently, Donald Clarke pointed out that if even property of one’s own apartment is disputable, then there is huge potential for social fissures in China, now that over 80% of people “own” their homes.
Many common people feel that only members of the slither-thin elite class can feel assured of their future, and thus they look for some safety by buying an apartment abroad or sending their children away to study.
Members of the elite, conversely, feel insecure because they sense the popular resentment and fear they could be overthrown. After all, they are children of the 1949 Communist revolution and went through the Cultural Revolution: they experienced firsthand the ups and downs of politics and history.
Moreover, the global situation is changing rapidly. The growing robotization of industrial production cuts the benefits of delocalization, and the race for cheaper manufacturing sites has moved millions of jobs from China to places like Bangladesh or Ethiopia.
China’s great assets are its potential consumer market, the nimbleness of its entrepreneurs, and its potential to be the center of a vast Asia-Pacific platform. That is, there is little or no future for China as a production and export powerhouse with a closed market, but there is a great potential in developing its domestic market, open it to foreign investments, and becoming more inclusive.
This could offset its weaknesses in a possible confrontation. But most importantly, it could put the country on a very positive and different trajectory.
This story was first published in Limes, the Italian-based on-line magazine providing political analysis of global events.
robert kagan is no democrat. He is a neocon
I’d append "warmonger" or even "fanatic" to "neocon".
Some democrats are neocons as well, e.g. Hillary Clinton.
Indeed, it is to Mr. Sisci’s great discredit to consider Kagan "even" "a more liberal minded democrat"
Robert Kagan. Enough said. The high priests of neocon interenational, the parasites of what is left of a mismanaged Western economies.
The thinking on China is just as sophisticaed, as it was the notion that in Syria, all the Sunnis would stick togehter, and as a majority, just blow away the "regime" after a few shots are fired. Forgetting that it is the urban Sunni elite that would be the last ones to accept the Saudi inspired Salafi cults to rule them. So much for that boneheaded analysis. The crudity of this analysis is mind boggling as well. Reminds me of all the previous version of "why China will not succeed". Remember the learned articles on the problems with Chinese banks, the State managed financial system, and how this will all the the undoing of Chinese miracle. After 2008, the topic is forgotten. Gone with the wind. The flexibility and the emphasis on harmony and stability will serve China right. Patriotism will serve it right. The Confucian style of growing the leadership, will keep it stable. And the spirit of global cooperation without seeking to harm others, is a phylosophy of the new global age, where sovereign, diverse countries, cooperate freely, without coertion, without being forced to change their culture, and the manner in which they choose to develop. These principles enshrined in Sanghai Cooperation Organization now for more then a decade, are building networks of countries united by common interests in competing and harmonizing — but never working to harm others. These are the principles that are finding their way into the global bloodstream, and is undermining the obsolete block mentality, where individual intersts of one country are subjugated to the will of the block in the name of common "good", but in reality, in the interest of imposing their will onto others. The block mentality cannot solve global problems today, it has been proven over and over, but somehow, the West is not getting it. It does not want to, as thinking itself to be the brain of the mankind, the geopolitical visionary, the architect of the new, newer and newest global disorders — it has no impetus to try to understand something DIFFERENT. Until 2008, on-going Greek tragedy, destruction of Middle East and refugees, IMF economic global disaster and economic migrations, Brexit, Trump. And more to come. What would Kagan have to say to remedy any of the messes that he, and his fellow Trotskyites created? Trotskyites know only how to destroy, not how to build, know how to create conflict but not how to harmonize.
Itj may take a lots longer for the realizatoin to sink in. Already, the new president is being sucked into more confrontations. His economic agenda will fall by the wayside, should he not be able to extricate himself. Kagans are circling the wagons, pushing their way in. What the despicable bunch.
Chinese are probably are the least taxed in the world. If they want government provided services they should be willing to pay taxes. Real estate taxes anyone? It will provide plenty of money.
Who are you and what you done to Senor Sisci? The real Senor Sisci was intelligent and well informed. This pile of junk isn’t even worth rebutting!
And where is the Pope hiding nowadays? It’s about time the Pope says something to Trump, maybe the Pope should make an official visit to Mexico to say it.
this guys totally farking clueless about China!
don’t really read any Sisci articles, I go straight to the comments, why? he’s embedded in US foreign policy.