Roving thoughts and provocations

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China: The Fragile Superpower

Obama as Chairman Mao

Some China watchers believe that China’s dramatically rising prosperity will inevitably make the country more open and democratic. President Barack Obama’s highly-scripted trip this week provided little to support that claim. As The Washington Post noted, in contrast to 1998, when Bill Clinton, standing in the Great Hall of the People, criticized the Tiananmen Square crackdown and “traded spirited jibes with President Jiang Zemin,” Obama and Hu Jintao held a “Chinese-style news conference of read statements, stares, and no questions.” Nor did the Chinese government make any concessions on the major issues—the valuation of China’s currency, pressure on Iran, action on climate change—that the White House was hoping to see addressed.

Most onlookers attribute the new Chinese intransigence to the comparative shift in the two countries’ positions. China today holds some $1 trillion of U.S. public debt, and American consumers are hooked on cheap Chinese goods. China, meanwhile, has continued to post impressive growth statistics despite the Great Recession.

But it’s a bit more complicated than that. If the Communist Party feels that it’s now attained a position of dominance, why would it prevent ordinary Chinese from watching Obama’s town hall session—something that earlier Chinese leaders were secure enough to allow? If the Chinese are confident in their own economic success, why would they go to such enormous lengths to stage-manage Obama’s visit?

What strikes me about the visit is precisely the lack of any overtly triumphalist note on China’s part. Sure, the Chinese have been rebuffing US calls for a more realistic evaluation of the renminbi, and lecturing the Americans on getting their own financial house in order. But they haven’t been trumpeting the advantages of the Chinese system. One commentary from the state-run Xinhua news agency, for example, gave a remarkably positive gloss on Obama’s visit, praising the Americans for taking care to manage the important relationship between the two countries. And then this quote:

Many westerners do not realize China’s gigantic internal gap in wealth, regional development and public utilities. Some take Shanghai and Beijing for what the whole China is like, others think the Chinese only refer to the Han nationality.

Or take this piece from The People’s Daily, highlighting premier Wen Jiabao’s statement in his meeting with Obama that China doesn’t subscribe to the talk of a “G2”:

China is still a developing country with a huge population and has a long way to go before it becomes modernized, Wen said, stressing “We must always keep sober-minded over it.”

This could be window-dressing, of course. But I think it’s for real: it’s increasingly clear that China’s leaders are perfectly aware of the fragility of their own nation-building exercise. Little acknowledged, is that, as The Financial Times recently pointed out, China’s economy is still “less than a third of the size of the US” and its GDP per capita is “roughly the same as Angola’s.” If you were to ask me what the Chinese fear most, it’s the asset bubble now building in the Chinese real estate and stock markets that are being buoyed up by low interest rates and the artificially low renminbi. Hu Jintao and most of the people beneath him are aware that this bubble could pop just as disastrously as the one that did here—and the result would be profound, destabilizing social unrest.

To be sure, China’s leaders are proud of what their country has achieved. But they’re not idiots. It will take years before lasting status as a Great Power is more or less assured, and they know it.

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