Page 1 of
2 BEIJING
HANDOVER The China challenge: War or
peace By Francesco Sisci
It is no mystery that the main issue in
the Chinese Communist Party 18th National
Congress, which concludes this week, is political
reform, as both outgoing President Hu Jintao and
Premier Wen Jiabao have said on several occasions
in recent months.
China's political
transition is of massive importance for the world.
The crucial relevance of the whole Bo Xilai affair
is also about political reforms. In a more open
political system, a man like Bo, the disgraced
party secretary from Chongqing, would have been
stopped long before he could cause serious damage,
or he would have amended his ways to run for the
top position with full legality. Yet
political reforms are not simply a Chinese
internal matter. As
China became the world's
second-largest economy and continues its
fast-track development, the issue is no longer the
full integration of China into the world economic
system but also China's full integration into the
global political system.
The harmonization
of China's political system with the rest of world
is of paramount importance to improve economic
integration and also to maintain peace. Although
being ruled by similar political systems is no
guarantee of peace and political integration,
there are few historical examples of wars between
democracies or of wars between authoritarian
systems. Differences in political systems multiply
reasons for distrust and misunderstanding and
could more easily lead to clashes, economic rifts,
and thus war.
Certainly there are a few
things the world can learn from China (its
meritocratic system, its organizational skills),
but since the world has been dominated and ruled
for the past 300 years by Western rules and ideas
it is thus practically impossible that in the next
30 years the same world will accept rules of
Chinese origin.
If China in this period
were to gain massive political and military might
and were to try to impose its own rules on the
world, this could easily cause the world to join
together against China and thus crush the country
and its ambitions.
Therefore, the
harmonization of China and the world has to occur
largely according to Western rules. Yet democracy
is not just a few regulations about how to cast a
ballot. It is about the complex systems and
cultures expressed by these systems and
reinforcing these systems.
China is
largely dominated by a special mix of old imperial
and Leninist structures and culture. It is very
hard to change these structures or even alter them
without risking a confrontation with strongly
embedded vested interests - and threats to
collapse these structures or their interests could
create an almost armed resistance against change.
For the past 30 years, the World Bank has
assisted with the growth and transformation of the
Chinese economy. Yet in the much more difficult
and delicate - both for China and the world -
political reforms, China is not assisted by
anyone. Beijing needs guidance to guarantee that
political changes in the country will help it
integrate into the world and will not set the two
further apart. It is therefore an issue of global
governance, with heavy fallout in terms of peace
and the global economy.
Moreover,
political harmonization is also the basis for
economic harmonization. Without politics,
economics alone cannot bring unity and peace, as
Europe has shown in recent months. The present and
still ongoing euro crisis proves that monetary
union without political unity eventually creates a
monster. Even in the most peaceful and settled
environment, such as Europe now, shaped by decades
of strong cooperation at all levels, including
strategic and military, monetary unity that is not
underpinned by fiscal unity (which is the real
basis of political unity) will not avert
disasters.
Furthermore, in times of great
crisis, it is not clear whether a monetary union
without political unity helps. Many in Germany,
Italy, Finland, Spain, or Greece argue that they
would now be better off without the euro.
If lack of political unity creates huge
problems in a place like Europe, where there has
been strong cooperation at all levels for decades,
one can only imagine what the lack of political
harmony may create in an environment like that of
China in relation to the rest of the world. Here,
we see that between China and the rest of the
world we do not have strong strategic and military
collaboration, there are huge cultural differences
and territorial disputes, there is deep-seated
distrust, and exchanges with the rest of the world
basically involve economic cooperation for
short-terms gains (ie, production in China or
purchase of Chinese-made goods because of cheap
production costs in China).
If and when
production costs in China rise without a parallel
growth in quality, Chinese goods will lose their
advantage and the Chinese internal market may fail
to draw consistent attention from abroad - and
then China could easily be isolated and thus
attacked.
Certainly the euro has been a
major boon for growth and peace in Europe, but it
has two problems: it didn't harmonize the European
fiscal systems, and this problem was combined with
its great volatility with the US dollar (the
standard currency since the end of World War II)
and with the latecomer global currency, the
Chinese yuan. These elements have helped to
creating huge swings in social and political
systems worldwide.
In a conference in
Beijing in November, Robert Mundell indicated the
following major problems in the lack of a global
currency: "Lack of an international unit of
account, lack of an anchor for currency
stabilization, wild swings of major exchange
rates, wild swings of raw material prices,
demand-determined levels of international
reserves."
This fits with the three points
of great economic concern indicated during the
2010 Group of 20 meeting in Paris: "1. Excessive
instability of raw material prices. 2. Excessive
instability of exchange rates. 3. Poor governance
of the system."
The necessity of
politically harmonizing China with the world is
not only an external factor. The model of
legitimization of power in China has been, simply
speaking, the following in the past centuries: a
group of people under a charismatic leader would a
lead a successful revolution or invasion that
would topple the existing dynasty and establish a
new one.
The new emperor would be a
semi-religious figure responsible for maintaining
peace in the country and the welfare of the people
until a new revolution, after one or two
centuries, would topple his dynasty. The typical
cycle would also entail redistribution of the land
under the newly established dynasty and expansion
of the tax base (when nobody had the clout to
force the government to accept someone not paying
taxes). [1] Then, in a later period, there would
be a concentration of the land and shrinking of
the tax base, as rich and powerful landowners, who
had accumulated wealth and had squeezed others out
of their land, gained enough clout with the
government not to pay taxes they owed.
The
concentration of land and shrinkage of the tax
base would push the state in turn to increase
taxes while the population grew divided between
"haves", land-owning families, and "have-nots",
landless families. The first would grow richer and
the latter would become poorer. This situation
would create more poor people, who would become
angrier as their ranks swelled, and this in turn,
according to ancient beliefs, would cleave the
ruler from divinity and the people. The people,
helped by the divinity, or heaven, would bring
down the dynasty and establish a new son of
heaven, a new emperor.
This was in ancient
times, until Mao Zedong, who was really China's
last emperor. After that there were no emperors,
but the collective leadership of a few party
elders around Deng Xiaoping and later rule by the
grand technocrats Jiang Zemin and Hu Jintao. But
Mao didn't ask for the support of divinity or
heaven, as he was notoriously atheist, and his
successors tried to get the support of the people.
But without the old religious prop of divinity or
the modern prop of elections, this support is hard
to measure and to rely on.
The old rules
in the West were based also on God and the people.
According to the old saying, vox populi, vox
dei (The voice of the people is the voice of
God). When, with the Enlightenment, God was cast
out of the political picture, Western countries
found a new source of divinity in the worship of
the popular mandate of the vote. The modern saying
could be: vox populi, vox voti.
At
present, China is without God and without the
clear, measurable mandate of a popular vote. This
has de facto left China without heaven and without
people. Moreover, the ancient tradition of land
ownership, land distribution, and land
concentration - which drove the dynastic cycles of
the past - has also disappeared for the simple
reason that land economics is no longer important
in China.
In the past, over 90% of the
Chinese population lived in the countryside, while
at present less than 50% live there, and the
number is decreasing. Contributions to the
agricultural economy in China are also decreasing,
and therefore the ancient cycle of dynastic rise
and fall has ended forever. If the communist power
will be toppled this will not happen with a
peasants' uprising as in the past.
This
has left the Chinese political system like a
balloon up in the air: it has no people, it has no
heaven, it has no land cycle, and it has no major
threats to its rule - but it also has no major
support, no major anchor.
It could be
viewed as very strong, but it could also be seen
as extremely weak, with very little foundation.
Its only real basis for support is its structure:
a Soviet system grafted on to the old Chinese
imperial system. This structure feeds itself and
on the country. This is also the main obstacle for
other advancements of the country and reforms.
Reforming this state structure is also extremely
hard because it is based on and grooms a culture
that has spread all over the country.
Yet,
China needs reform to advance, and the world needs
China to reform its structure to harmonize the
Chinese political system with that of the world.
Political harmonization could help to anchor the
global economy and move the global economy onto a
sounder footing. It could help control prices of
raw materials, help with technological
innovations, and help rein in speculation for
natural resources.
A dollar-yuan agreement
could be somewhat easy because it would involve
only two centers while it would command 35% of the
global economy and possibly about half of all
global growth. It could also be easier because a
crawling peg exists between the dollar and yuan.
But to reach that economic agreement, there must
first be an agreement on political harmonization.
A dollar-euro agreement would conversely
be harder because the systems don't have just two
political entities that could speak to one
another. Behind the fictitious leadership of
Brussels, there is cacophony of voices in Europe,
each with its own priorities, which have not been
reduced despite the ongoing threat of a major
economic, social, and political crisis.
Yet if a political and economic agreement
between China and America were to take place, this
could also lead Europe to join in, and the same
force of attraction could occur for the yen or
pound sterling. This could also help fix the
prices of raw materials, such as oil and gas in
the Middle East and Russia. This would be the
basis for a new political and economic Bretton
Woods.
This could also help with a
military and strategic convergence. Fixing the
exchange rates and political-strategic military
convergence would create a level field for
innovators and entrepreneurs to move worldwide.
Head
Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
Central, Hong Kong Thailand Bureau:
11/13 Petchkasem Road, Hua Hin, Prachuab Kirikhan, Thailand 77110
