THE TTALK QUOTES
On Global Trade & Investment
Published Three Times a Week By:
The Global Business Dialogue, Inc.
Washington, DC   Tel: 202-463-5074
No. 29 of 2018
FRIDAY, JUNE 1, 2018

Click HERE for Wednesday's China quote from Jonathan Kallmer

CHINA: SOMETHING NEW
 
"For the first time, China is an illiberal state seeking leadership in a liberal world order."  
 
Elizabeth C. Economy 
May/June 2018  (publication date)
 
CONTEXT
Elizabeth Economy is a China scholar at the Council on Foreign Relations.  More formally she is the C. V. Starr Senior Fellow and the Director for Asia Studies at the Council.  She has a new book on China, The Third Revolution: Xi Jinping and the New Chinese State.  We have ordered it, but we haven't read it yet.  Today's quote is from her article in the current issue of Foreign Affairs, which has the title "China's New Revolution: The Reign of Xi Jinping." 

If we are reading her thesis correctly, the first revolution, the least subtle of the three, was Mao's defeat of the nationalist forces and the establishment of the Peoples Republic of China in 1949.   Deng Xiaoping, she explains, "oversaw a self-proclaimed 'second revolution,' in which he ushered in economic reforms and the low-profile foreign policy that produced China's economic miracle."  Part of those reforms involved some pullback of the Communist Party's intrusion into the lives of Chinese citizens.

But it is modern China's third revolution, the one playing out today under the leadership of President Xi Jinping, that is Ms. Economy's special focus.  Any doubt that President Xi was creating something new was put to rest for many this past March when President Xi managed to set aside the Chinese constitution's two-term limit for the president of China, thus giving himself an open lease on that high office.  More to the point, the primacy of the party is being reasserted in more areas within China and the country's foreign policy is, to say the least, robust.

It is easy enough to find statements from President Xi to the effect that China and Chinese practices are the models the world should follow.  There was his Davos speech in April 2017, in which President Xi said, "China will keep its door wide open and not close it."  The following month, President Xi spoke to students at the China University of Political Science and Law in Beijing.  He said:

We should have confidence in developing our own legal disciplines and contribute to global rule of law with Chinese wisdom and practice.

Sometimes, of course, the "global rule of law" is inconvenient, and in those instances, it may simply be ignored.  Ms. Economy cites the Law of the Sea case brought against China in 2013 by the Philippines and decided three years later.  She writes:

In 2016, when the International Court of Arbitration rejected Chinese claims to wide swaths of the South China Sea, Beijing simply dismissed the ruling and carried on with its land-reclamation and militarization efforts there.

But every cloud has its silver lining.  For Ms. Economy, the silver lining in the 3rd or Xi-led revolution is clarity.  She doesn't say it quite that way, but the idea is that with policies like Made in China 2025, China has made its national aspirations clear and the U.S. should now clearly respond to these new realities.  In her new book, she writes:

One of the great paradoxes of China today, for example, is Xi Jinping's effort to position himself as a champion of globalization, while at the same time restricting the free flow of capital, information, and goods between China and the rest of the world.

In her Foreign Affairs article she argues that:

The good news is that Xi has made his revolutionary intentions clear.  There is no excuse now for the United States not to respond in equally unambiguous terms. 

And in the heart of her article she suggests that:

It's time for the Trump administration to take a fresh look at the notion of reciprocity.

Among other things, she suggests, that might mean barring Chinese from investing in sectors in the U.S. where U.S. investment is prohibited in China "such as telecommunications, transportation, and construction."  She suggests the possibilituy of similar actions in areas as disparate as education and the developments in the South China Sea.  Yet, if anything, her discussion of U.S. thinking about reciprocity is even more forceful than her examples.  She writes:

U.S. policy makers have long considered reciprocity a lose-lose proposition that harms relations with China without changing its behavior.  Instead, they have acted under the assumption that if the United States remains true to its democratic values and demonstrates what responsible behavior looks like, China will eventually follow its lead.  Xi has upended this understanding because he has stalled, and in some respects reversed, the political and economic reforms begun under Deng and has transformed the United States openness into a vulnerability.
COMMENT
We puzzled over a couple of elements of today's featured quote.  You might ask why.  It's a fairly straightforward statement.  Still we wondered, what does she mean by "for the first time?"  And how is she using the term "liberal" both in the reference to an "illiberal state" and that to "a liberal world order."

As for the first, Mao may have proclaimed China a model for the world, but he wasn't really speaking to the world, and certainly the world wasn't listening. Deng Xiaoping's priority was self-consciously parochial: China's economic development.

President Xi too is interested in economic development, but his focus is as much on the effective use of the economic power China already has as it is on future growth.  More to the point, President Xi is speaking to the world and the world is listening. 

Regarding the term "liberal," it is a word with a growing number of meanings.  We think Ms. Economy was referring to such long-standing liberal concepts as individual rights, rule of law, and limited government, and if so she has certainly highlighted a jarring aspiration on China's part and a growing dilemma for everyone else.
SOURCES & LINKS
China's New Revolution is a link to the Foreign Affairs article by Elizabeth Economy that was the source for today's featured quote.
 
The Third Revolution takes you to the page on the Amazon website devoted to this new book by Elizabeth Economy.
 
At Davos is the text of President Xi's speech to the World Economic Forum in April 2013.
 
Xi to Law Students is an article on President Xi's meeting with law students in Beijing in the May 2017. 

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