China’s Looming 2019 Deadline

In 2019, China will be celebrating an important centenary. That year will mark the 100th anniversary of the "May 4th" movement, which arose from riots among university students over what were seen as the despicable terms that had been imposed on China by the Treaty of Versailles.

This event took place in a China which had recently (1911) overthrown the several-thousand-years-old imperial regime. The country was attempting to regain its sovereignty, which had been eroding for decades following the First Opium War (1838-1841). It joined the allies in World War I, expecting to have a place at the table that would determine the post-war settlement.

The Chinese were outraged when they discovered that, as a result of a series of secret deals, the German spheres of influence in China, especially in Shandong province, were transferred to Japan — rather than being returned to China. As a consequence, May 4th marked the birth of modern Chinese nationalism.

Two years later, in 1921, the Chinese Communist Party (CCP) was founded — and was, by 1927, under the leadership of Mao Zedong. The CCP was an amalgam of communism and nationalism, but one in which communism was the means to the nationalist end — not the other way around.

When three decades and a few months after the founding of the May 4th movement, in October 1949, the Red Army proclaimed victory and the People's Republic of China (PRC) was formally established, from the balcony on Tiananmen Square in Beijing (where his portrait still hangs), Mao declared: "The Chinese have stood up! Never will China be humiliated again."

China today is a dramatically different place than it was when Mao died in 1976. The current official CCP line that Mao was "70% correct and 30% incorrect" is, of course, a load of hogwash. It only reflects the Orwellian "newspeak" that permeates CCP oratory.

In any case, how can you calculate such things? Mao is directly responsible for the famine that killed millions following his catastrophic "experiment" with the Great Leap Forward (1958-1961) and for the appalling brutalities of the Cultural Revolution (1966-1976).

The CCP leadership embarked on reforms and opening in 1979, not because of a sudden falling in love with Adam Smith and the market principles of capitalism, but because it faced economic, social, political and moral bankruptcy. The reform program was launched by the Party leadership mainly to save its skin.

Whatever the causes of the reform may have been, the consequences are nothing short of amazing. China, which until the early 19th century was, by far, the dominant global economic power and was subsequently reduced to a global economic dwarf mired in poverty, is back — big time!

It will surpass Japan this year as the world's second-biggest economic power — and many pundits predict it will be in first place within the next couple of decades.

Until 2001, China was not even in the WTO, but today it is the world's biggest trading nation. While 30 years ago the vast majority of Chinese could hardly travel within the country, let alone outside it, today there are close to 60 million outbound Chinese tourists. In 2009, China surpassed the United States as the world's largest car market. And the list goes on.

Of course, all is not a bed of roses. China's rapid industrialization has, among other things, caused an enormous amount of deadly pollution. Corruption is endemic.

There has been a considerable deterioration in the quantity and quality of public goods, especially in respect to health, social welfare and education.

In addition, income inequality is acute. China is reckoned today to have a Gini coefficient (which measures disparities in national income) as high as that of the United States. The recent suicides at Foxconn and the strikes at Honda are the tip of the iceberg.

China's success is not without contradictions — and, indeed, some of the major challenges are due to the successes.

Without any pretension of having a crystal ball, it is, I think, a reasonably safe bet to make that in 2019 (or thereabouts) the PRC — as currently constituted on Leninist principles; that is, the Party in full control — will have ceased to exist.

In making such a forecast, history is an important witness. The Soviet Union (which lasted from 1922 to 1991) also knew its times of success and glory — perhaps the apogee being the launch of Sputnik in 1957 — yet it failed by one year to reach its 70th birthday.

In fact, the only case, to my knowledge, of a national party remaining in power for over 70 consecutive years (and only just) was Mexico’s Institutional Revolutionary Party (PRI). And its rein ended too. Even Cuba — which had its revolution in 1959 — still has ten more years than China under the 70-year rule.

In this scenario, I do not foresee any catastrophes or “black swans” over the course of the nine (or thereabouts) remaining years of the PRC. I count on an evolutionary process whereby both the successes and the contradictions will converge into the dismantlement (and possible reincarnation) of the CCP and the establishment of a pluralist political system.

China will follow — albeit with its own "characteristics" — the road which South Korea and Taiwan took a couple of decades ago. The middle class wants more freedom, the workers want more voice, the peasants want less corruption and oppression — e.g., in the forced reclamation of their land.

These forces are already at work. That is why I emphasize the evolutionary nature of the process. The outcome I foresee in 2019 (or thereabouts) would be the "natural" culmination of current trends.

The China of post-2019 would therefore not be dramatically different from what it is today — except more urban, more prosperous, freer and more pluralist. It will also be a bit more confusing, as newly established parliamentary pluralistic institutions invariably are.

When I say that I envisage no black swan in the process of the outcome I am proposing, this does not exclude the possibility of black swans — and clearly there cannot only be one outcome.

The outcome I predict is the one I believe to be the more plausible. However, things could go awry. Black swans could disrupt the process.

The emergence of the post-1979 PRC, once it had embarked on the radical reforms initiated under the leadership of Deng Xiaoping, can best be illustrated with the comment written in a 2005 article in Foreign Affairs by the leading intellectual and reformer Zheng Bijian: "The most important strategic decision the Chinese leadership took [in 1978] was to embrace globalization."

The last 30 years bear out that Chinese nationalism and globalism are not antithetical. They have coexisted quite well.

The main risk to China — and ipso facto to the world — would be if this symbiosis appeared no longer to be true and if Chinese nationalism of an aggressive, xenophobic and exclusivist nature should be reawakened.

To prevent the new huge kid on the block from becoming a bully, the block has to ensure that the kid is welcome and not dealt with unfairly.

The best means of accomplishing that is to strengthen the global block's institutions — in particular, the rules-based multilateral trading system incorporated into the WTO — and hence, to conclude the Doha Round.

Protectionism, in respect both to trade and investment, and prejudice and the use of double-standards against China would be the most certain causes for a negative scenario.

The point therefore is not that the established global powers, in fact primarily the United States, should play pussy-cat to the Chinese dragon, but rather that the dragon should not feel that the rules are being re-written and the goal posts moved.

If the protectionist calamity can be avoided, then one can feel reasonably confident that in the course of 2019 (or thereabouts) a transformation will occur in China that will benefit the Chinese people and the rest of the planet.