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From Japan to China bashing
I see two emerging trends. One is in the West, the other is in China. I was at a meeting in Mumbai this week. Everybody there was more interested in the power consolidation in China than in the disarray in Washington. President Trump, who has never been accountable to a board of directors in his life, is running the American government like a private company. We have a drunk sitting in the driving seat of the American government. Let me tell you what that feels like to a Turk in Mumbai.
President Xi Jinping has always been accountable to the huge communist party apparatus, and is now turning the Communist Party of China (CPC) into a constitutional entity. There is order in Beijing and chaos in Washington. Beijing looks at the world in a calm and confident manner, while Washington bashes China, as well as the world order it created.
The West has entered an age of pessimism. This is probably a kind of disillusionment with globalization. It first started with techno pessimism, mind you. It was about robots taking our jobs with artificial intelligence (AI) technology increasing its pace. Now the fear is taking the form of China taking over the world. This is much like the fear of Japan taking over the world economy during the Reagan years. Japan bashing in the 1980s has been replaced by China bashing today. Remember the “Rising Sun”, the 1992 novel of the late Michael Crichton.
That debate was about whether Japanese FDI to hi-tech sectors in the US was beneficial. It’s much like whether “the national security innovation base” of the US should be shared with the Chinese. Just check Trump’s national defense strategy document. The answer is no over there, unlike the Crichton answer back in 1992. And now possible FDI restrictions to Chinese in the US are under discussion. Why? “History repeats itself” says Karl Marx, “First as a tragedy and second time as a farce”. We live in a world where Reagan, the tough Hollywood actor, is the serious part of the saying.
Let me cite two facts. First, robotics and AI is booming in China. Between 2000 and 2016, 1,477 companies were established in the AI sector and their financing reached $2.8 billion according to an AI report by the Wuzhen Institute. The new technological revolution does not require emerging countries to follow the footprints of the old industrial ones. The Chinese know this.
Second, in 2016 around 56 percent of Chinese outbound investments in non-financial sectors were made by non-state owned companies. Compare this to the 19 percent in 2006 ODI by private companies in China. Things are changing.
China is becoming different in terms of private sector activity. Yet the dual legal system of the country is a problem. There is a constitutional order with government, courts, parliament and all the other agencies on the one hand, and there is an all-powerful party apparatus, on the other. Furthermore, Presidency is only one of the three titles Xi Jinping holds, mind you. He is also the general secretary of CPC and the chairman of the Central Military Commission. Presidency here is only a ceremonial job. Note that, there are no term limits for the latter two more important jobs.
The CPC has always been above the law. Not anymore. In 2012, President Xi said that “no individual or organization has been above the constitution” and then he added, in the podium of the Great Hall of the People, “Anyone who acts against the constitution or the law will be held accountable. ” With this constitutional change in 2018, the CPC has not only become part of the constitution but it is also now becoming the government itself.
It’s the talk about a waning communist state freeing all its citizens. Remember the debate between Lenin and Rosa Luxemburg back in the 1920s? We are now going to witness the waning of the party within the state structure. Ending term limits appear to be the price that has to be paid to convince the party cadres, if you ask me. It’s all about doing business with a multi-layered party organization with deep roots in societies. It’s all about politics. As an American, Tip O’Neill, noted years ago “all politics is local.”