"Biggest political experiments at stake as Trump meets Xi"

When Trump meets Xi, two of the world's biggest political experiments will be at stake

Timothy Garton AshSource: B92
(Tanjug/AP, file)
(Tanjug/AP, file)

When the two most powerful men in the world, Donald Trump and Xi Jinping, meet for their summit in the American emperor's summer palace, they will have one thing in common: each is testing his country's political system to its limits.

With independent courts blocking Trump's travel ban, the heads of his security agencies flatly contradicting his claim that Barack Obama tapped his phones and Congress rejecting his flagship repeal of Obamacare, the checks and balances of the world's oldest liberal democracy are at full stretch. But will even they be enough to restrain this erratic, narcissistic, egomaniac bully, in what is rapidly becoming a modern-dress version of 'the Madness of George III'?

In the other imperial capital, meanwhile, Xi continues to consolidate a formidable degree of central control through a Leninist party which is reasserting its leading role in all areas of national life. As the joke goes here in Beijing, Xi is now China's COE – chairman of everything. And the $64 trillion question is whether this re-centralised authoritarian system – part Leninist-Maoist-Dengist, part Chinese-imperial, part entirely novel – can successfully manage the development of an increasingly complex economy and society.

The smog of uncertainty is thicker in Beijing than in Washington, because of the secrecy enveloping the politics of this imperial party-state, but also because this system is something genuinely new. We have no playbook for the evolution of Leninist capitalism.

We can see who loses most directly from Xi's strategy. Most obviously, it's many corrupt officials and business people, targeted by a draconian anti-corruption drive which is also a purge. But it is also the country's liberals. The annual reports of China's supreme people's court and top prosecutor's office singled out for special mention its prosecutions of human rights lawyers and activists. Civil society is squeezed by a Vladimir Putin-style law on foreign NGOs. Hardly a day passes without news of some website, blog or independent Weixin/WeChat post being taken down. Liberal intellectuals, once active in the country's public policy debates, have retreated into inner exile. One scholar jokes that Xi and Trump have another thing in common: they both like attacking liberal intellectuals and media.

If you think, as I do, that free speech is one of the keys to good government, then this is a big loss for China's long-term national development. But unless Xi has an amazing policy reversal up his sleeve, this is where we are.

Recall Albert O. Hirschman's famous triad of exit, voice and loyalty. Voice is working overtime in the political system of the United States, as its founding fathers intended it should, through independent media, independent courts and a vigorous civil society. In China, voice is being reduced to the deferential whispers of the courtier. Exit is on the up – witness the lengths to which wealthy Chinese will go to move their capital and their children abroad. A junior Party intellectual confided to me that he's got some of his money out to Hong Kong – 'not as much as others, but some'. However, there are still formidable reserves of loyalty, grounded in both an extraordinary economic performance over the last 40 years and pride at the way their once impoverished and humiliated country has won global recognition.

The question then becomes whether Xi's system can sustain what political scientists would call its performance legitimacy, as it approaches the middle-income trap. We can already see a host of gathering problems. China powered through the financial and economic crisis with a massive investment and credit splurge. Estimates by UBS suggest its overall (public, corporate and household) non-financial sector debt has soared from around 150% of GDP at the end of 2006 to more than 270% at the end of last year – an alarming level for an emerging economy. Property prices in big cities are crazy. The supply of spectacularly cheap labour from the countryside is drying up.

Due to the one child policy, China has a rapidly ageing population. Corrupt collusion between officials and business people has often resulted in grandiose misallocation of capital. While the anti-corruption campaign tackles this, it also freezes decision-making, as frightened officials prefer to sit on their hands. For political reasons, this regime is heavily backing the state-owned enterprises, whereas giving more space to the private sector (and foreign investors) would be more effective in securing improved productivity and innovation. Trumpian populism threatens the open markets that take China's exports. And so it goes on.

Goldman Sachs reportedly estimates the chance of a Chinese financial crisis in 2017 at 25% and in 2018 at 50%. But what exactly would that mean? Is China heading for a real crash, with a major negative impact on society, or for Japanese-style stagnation, albeit 'with Chinese characteristics', or simply for slower growth? Against the long list of economic challenges, one can compile an impressive list of continuing strengths. For example, a country with severely limited freedom of speech may not have the disruptive innovation of Silicon Valley, but there is still huge mileage in follow-on innovation, copying and improving upon the innovations of others. Weixin/WeChat may have begun as a copy of WhatsApp, but it's now better than it. Proffering my debit card, I feel like a provincial uncle in a city where smartphone payment is a matter of course. And Apple boss Tim Cook was just in town to offer the best of these Chinese innovators a slice of Apple's cash pile and a place on its Chinese App store.

The prospects for China's highly political economy matter not just for the Chinese people and the world economy. The Chinese political system enjoys relatively little procedural legitimacy, unlike Western democracies which have what a China Daily columnist wonderfully calls 'unpredictable' elections. (So much nicer to have predictable ones.) If the legitimacy it derives from economic performance declines, it is likely to draw more heavily on its other major source of support: nationalism. In the worst case, we could see a Chinese version of Putinism, with repression at home and hybrid aggression abroad.

Given the erratic character of the US president, and the array of possible flashpoints between the US and its allies, on the one hand, and the rising Asian superpower on the other – North Korea's nuclear weapons programme, Taiwan, the South China Sea, the East China Sea – the conclusion is clear. The internal dynamics of China's unprecedented political experiment are not just of interest to anyone who cares about China; they may yet be a matter of war or peace.

Timothy Garton Ash is Professor of European Studies at Oxford University, where he currently leads the freespeechdebate.com project, and a Senior Fellow at the Hoover Institution, Stanford University. His latest book is Free Speech: Ten Principles for a Connected World

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