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China’s giant struggle

About the author

The leadership of the People's Republic of China (PRC) faces economic and social challenges in 2009 that match anything comparable in the state's sixty-year history. The visit by China's prime minister Wen Jiabao to the World Economic Forum at Davos and to the Britain, Germany and Spain signals that in many ways this leadership is both more confident than ever, yet acutely aware of how its power is constrained by its interdependence with others.

Kerry Brown is an associate fellow on the Asia programme, Chatham House, and director of Strategic China Ltd. He is the author of Struggling Giant: China in the 21st Century (Anthem Press, 2007)

Also by Kerry Brown on openDemocracy:

"Beijing's political tightrope-walk" (12 March 2008)

"Taiwan and China: an electoral prelude" (4 April 2008)

"China on Olympic eve: a globalisation of sentiment" (10 July 2008)

"The Olympics countdown: Beijing to Shanghai" (6 August 2008)

"China changes itself: an Olympics report" (20 August 2008)

"China's nervous transition" (22 September 2008)

"China in 2009: a year for surprise" (14 January 2009)

Wen's speech at Davos, in which he made the case that the United States's economic-policy model bore great responsibility for the global economic crisis, reflects both realities: it was a mark both of how far China has come and how much its fate is bound up with its biggest trading partner. His positive appraisal of China's relationship with Britain (and his endorsement, including in a meeting with his counterpart Gordon Brown, of the ideas of Adam Smith's The Theory of Moral Sentiments) was likewise a striking display of diplomatic engagement.

The unflappable Wen proclaimed a "deep friendship between Chinese and British people" even in the face of an (Iraqi-style) protest in the form of a hurled shoe from an angry demonstrator. Those who recall the negotiations around the handover of Hong Kong to the People's Republic of China (PRC) in 1997 might be astonished to hear such language, for at the time Britain was denounced each day in Chinese media for "hurting the feelings of all Chinese people". The British government's launch on 22 January 2009 of a strategic document outlining a new "framework for engagement" with China is evidence of a repositioning that seems to suit both sides. As if in confirmation, recent figures for Chinese investment to Europe show that Britain has overtaken Germany as the largest destination for Chinese investment; proof that with the PRC, good money always follows the politics. 

The frontline

The domestic backdrop to the artful niceties and unexpected flurries of Wen Jiabao's foreign trip is awesome. A single figure tells a larger story: 20 million workers have lost their jobs as a result of the collapse of export markets for China's manufactured goods (moreover, the true figure is almost certainly millions higher). People of all backgrounds are affected: for example, university graduates who find that the decent positions they hoped for no longer exist. In part as a result, competition for scarce civil-service jobs is more intense than ever.

Wen's repeated comment that China's greatest problems are internal seems vindicated, if not in the way that he would have wished. The result of the crisis is that the government's priority now is to maintain growth at a rate fast enough to create jobs and enough prosperity to keep discontent from boiling over. The lofty environmental and energy-efficiency goals contained in the "five-year-plan" (2006-10) will need to be suspended as short-term calculation reigns.

The available reports of the multitude of current protests across China indicates that anger is being directed at factory-owners (some of whom closed down and fled without paying wages) and local officials. China's central government (or, much more dangerously, the Communist Party) are not being  specifically targeted. If that happens, the calculations will start to change.

The scholar Yasheng Huang argues that the 1989 protests were containable because they did not reach into the countryside (see Capitalism with Chinese Characteristics, Entrepreneurship and the State [Cambridge University Press, 2008]). Chinese economic policy in the two decades since has been largely urban-orientated, and in some ways created greater poverty in the country's rural areas.

Hu Jintao and Wen Jiabao's government has taken limited remedial action: lifting tax burdens on peasant farmers, allowing farmers to use their land as collateral for loans, talking about "people-centred socialism". Huang points out that education provision in rural China deteriorated in 1993-2003 to such an extent that an extra 30 million illiterate people appeared in Chinese government statistics in 2006. Chinese farmers are, relative to other social groups, poorer than they were two decades ago. Any large-scale discontent here is the central government's deepest fear. 

The mountain

That time has not yet come. But both Hu Jintao and Wen Jiabao are aware that with a difficult and tense domestic year in prospect, China needs to avoid unnecessary political confrontation abroad or at home.

Among openDemocracy's recent articles on China:

Chang Ping, "Tibet: looking for the truth" (8 May 2008)

Li Datong, "China and the earthquake" (2 June 2008)

Emily Lau, "Tiananmen, 1989-2008" (4 June 2008)

Li Datong, "Death in Shanghai, law in China" (15 September 2008)

Jeffrey N Wasserstrom, "China's long march to modernisation" (7 October 2008)                             
 Wei Jingsheng, "China's political tunnel" (22 January 2009)

The approach to the twentieth anniversary of the Tiananmen Square protests, in May-June 2009, will be especially nervous. Some on the more moderate wing of the party expect a form of rehabilitation to be announced - for the event itself (still labelled a "counter-revolutionary" incident in official Chinese political discourse) and for the late Zhao Ziyang (ousted as party secretary because of his apparently emollient stance towards the students).

This is unlikely, though the symbolism of this anniversary (especially 4 June, the date of the crackdown) makes it particularly sensitive. It will be followed by the sixtieth anniversary of the founding of the PRC itself on 1 October 2009. The bombastic celebration that might be expected could sit ill alongside the economic and social effects of a continuing downturn.

There is enough reason here for the Chinese government and the party, behind all their confident language, to feel vulnerable. China's dependence on its export markets, its linkage to the performance of the American economy, were evidently more fundamental than almost anyone realised. The policy response to recession has to take account of the deep interdependencies that have been forged.

In this context, Hu's forthcoming talks with Barack Obama and other leaders, including at the G20 summit on 2 April 2009 in London, are even more urgent. China's year of build-up to the Beijing Olympics was - with the Tibet crisis, Sichuan earthquake, and food scandals along the way - tough if (in the end) triumphant; this year of inescapable economic problems and potent anniversaries may make it look easy in retrospect. Hu Jintao in particular, the man with real power in the party and therefore the state, will be tested as never before.

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