By Peter Zhang
Amid intense trade negotiations between Beijing and Washington on April 1, General Secretary Xi Jinping’s 2013 speech to the new members of the Chinese Communist Party’s Central Committee was published.
It was an important speech, as evidenced by its appearance in QiuShi (“Seeking Truth” in Chinese), an official journal of the Chinese Communist Party (CCP). And soon thereafter, Xi’s speech was simultaneously published by People’s Daily and Xinhua News Agency, which are two other prominent mouthpieces of the Party.
The simultaneous publication of Xi’s years-old speech indicated something significant: a deep concern by the CCP pertaining to the current standoff between China and the United States. The speech was notable especially for a prophecy by Xi. Citing Marx and Engels’ doctrines, Xi claimed that socialism would inevitably vanquish capitalism, despite the fact that the fall of capitalism is a very distant prospect.
Indeed, the timing of this publication appears to be no accident. Multiple media sources have reported that Xi called an urgent meeting on Jan. 21, summoning top provincial leaders to Beijing to hear his stern warnings about mounting risks the CCP faces in this Year of the Pig.
In addition to the economic slowdown prompted by the trade dispute with the United States, and by China’s rising debts, the CCP is gravely concerned about grassroots rumblings stemming from acute social and political threats.
CCP Leaders Showing Anxiety, Worry
The tone of the government at the highest levels is one of heightened alert. There is a palpable fear that the foundation upon which the Party relies may be crumbling.
At the January meeting, Xi raised “seven risks”: 1) politics; 2) ideology; 3) economy; 4) technology; 5) society; 6) the external environment; and 7) Party-building. Xi urged his subordinates to resort to tough measures to avert these risks, which he said are both real and pressing.
In his government report at the People’s Congress on March 5, Premier Li Keqiang was visibly nervous on camera, bringing up the word “risk” 24 times; the word “difficulty” 13 times; and the word “stability” more than 70 times.
In terms of the economy, Li anticipates that local debts in 2019 will grow to 2.15 trillion yuan ($320 billion)—800 billion yuan more than in 2018—which will surpass the new tax reduction amount. This year, the total government expenditure will be some 23 trillion yuan, an increase of about 6.5 percent from 2018.
Economists questioned the validity of Li’s claim that the reduction of 2018’s corporate tax amounted to 1.3 trillion yuan, while the annual tax revenue increased by 8.3 percent, reaching some 15.6 trillion yuan. With the government’s tax reduction plan, the 2018 tax revenue should be decreasing, not increasing.
Based on 2018 data from the International Monetary Fund, the United States ranks No. 8 in terms of GDP per capita ($62,606), while China is No. 67 ($9,608). China’s economy simply isn’t where it needs to be in order to mount a serious challenge to the United States.
Following in the footsteps of Google, Microsoft, and UK-based ARM, Japan’s Panasonic announced that it would suspend its business with Huawei on May 23.
Prominent academic institutions such as Massachusetts Institute of Technology, Stanford University, University of California–Berkeley, and Oxford University have all ceased to cooperate with Huawei as well.
The Trump administration’s ban on Huawei, along with the 25 percent tariff on $200 billion of annual Chinese imports, has caused sharp pains with enormous potential to affect China’s economy.
Bringing Red China to Terms
Trump’s top trade negotiator, Robert Lighthizer, was a member of President Ronald Reagan’s team that addressed the U.S. trade deficit with Japan in the 1980s. The Plaza Accord, signed by West Germany, the UK, France, Japan, and the United States, coupled with a 100 percent tariff on $300 million worth of Japanese imports in 1987, played a critical role in averting the tide of Japanese goods flooding into the U.S. market.
However, while a trade agreement with a democratic country such as Japan will likely work, as such countries tend to honor the rule of law and international norms and covenants, any agreement (trade or otherwise) with the deceptive communist regime in China will not, based on its past record, lead anywhere.
In response to Beijing’s tariff retaliation, on May 23, Washington was set to offer $16 billion in an effort to help U.S. farmers hit by the trade conflict with Beijing. The decline in exports to China has actually been offset by the increase in exports to Mexico and other countries.
Despite the temporary hardships that may occur, the Trump administration is prepared to bring about structural change in doing business with China, in addition to ending, once and for all, Beijing’s theft of U.S. technological know-how.
What’s Really at Stake
The current trade dispute between China and the United States, after all, isn’t only about the trade deficit. More significantly, it is about whether the United States and the rest of the world can afford a rising communist superpower that is reminiscent of the former USSR in terms of both military and ideological threats.
The Red Dragon is set to disrupt the world order and undermine every code of morality or law around the world that helps form our humanity. As bluntly stated in Xi’s speech, his totalitarian socialism aims ultimately to vanquish capitalism and democratic institutions.
Rational longtime China-watchers would hope to see the trade war weaken, if not vanquish, the communist regime in Beijing and thereby bring about fundamental social changes that are long overdue inside that Orwellian state, replacing it with an open society governed by the rule of law.
As pointed out by Winston Churchill in his speech at the House of Commons on Oct. 22, 1945: “The inherent vice of capitalism is the unequal sharing of blessings. The inherent virtue of socialism is the equal sharing of miseries.”
The modern world simply cannot afford a USSR-styled communist China in the 21st century.
Peter Zhang contributed this article which was previously published on EET. He is a researcher on political economy in China and a graduate of Beijing International Studies University, the Fletcher School of Law and Diplomacy, and the Harvard Kennedy School.