Setbacks mount for China

Earlier this year, China seemed to be on the ascendancy and its influence abroad seemed inexorable. However, President Xi Jinping and his Communist Party of China (CPC) are finding that things are not going as smoothly as they hoped, as others dig in their heels.

A number of Asian countries - including Malaysia, Myanmar, Pakistan and Sri Lanka - have recently voted in governments that are not as pro-China as their predecessors. Of course, there are numerous complicating factors involving such elections - Pakistan being a case in point, where the military determined the outcome - but there has been a clear turning against China and its so-called debt trap diplomacy policies.

 

The latest country that can be added to the above list is the Indian Ocean territory of the Maldives, where voters reacted strongly to the dictatorial Abdulla Yameen by throwing him out in the 23 September election. Yameen's five years in power was tumultuous as he jailed political opponents and judges, controlled the press and embraced China while amassing unsustainable levels of foreign debt.

Opposition leader Ibrahim Mohamed Solih said, "The message is loud and clear: the people of the Maldives want change, peace and justice. I would like to call on President Yameen to accept the will of the people and begin a smooth transition of power as per the constitution."

Even before the national electoral committee announced the election result, India and the USA both applauded Solih's victory, clearly an attempt to pressure Yameen into conceding defeat. China has been carefully currying favor in the Maldives, so this strong reversal will sting.

China has been willing to use its enormous financial clout to influence regional countries, aided by a swaying USA and its irascible president. Number three of the Chinese communist catechism is "mutual non-interference in each other's internal affairs", yet China is frequently accused of cultivating political influence in other countries. One "soft" way of doing this is via networks of party-controlled Confucius Institutes, but there are many more nefarious ways of doing so.

For instance, former diplomat Bilahari Kausikan in Singapore warned about Chinese influence operations in the island state. Following up on the release of a report by the Select Committee on Deliberate Online Falsehoods, he described many Singaporeans as "naïve".

Kausikan warned of Beijing's attempts to impose a Chinese identity on the multiracial city: "Chinese influence operations are more dangerous in a fundamental - indeed, existential - way.They appeal to ethnic pride which is all too often only a tiny step away from ethnic chauvinism. This can strain social cohesion in a way Western influence operations do not."

When in Beijing recently, Malaysia's new Prime Minister Mahathir Mohamad announced he was canceling two megaprojects because of debt fears. He told Premier Li Keqiang in the Great Hall of the People, "We do not want a situation where there is a new version of colonialism."

Xi has carefully painted himself as an international statesman who is reliable and responsible. He has attempted to challenge American global leadership in a number of areas, enough for the Trump administration to brand China as a "revisionist power" and "strategic competitor".

The economic relationship between China and the USA - arguably the most important in the world - took yet another nosedive after President Donald Trump enacted tariffs charged on USD200 billion of imports from China. This is merely his latest gambit in the trade war as he rails against the need for American companies doing business in China to hand over technologies, and the widespread availabilityof state subsidies for Chinese companies.

Now, however, Xi is receiving domestic criticism because of his aggressive push on the world stage. They feel China would not be in this awkward position if Xi had been following Deng Xiaoping's dogma of "hiding strength, biding time". Instead, they argue that Xi has gone too far too quickly.

Two of Xi's blue-ribbon projects have been the One Belt, One Road (OBOR) initiative and "Made in China 2025", the latter being an attempt to dominate advanced technologies but one that the CPC has been publicly diminishing in recent weeks.

OBOR has garnered a growing clamor of criticism for creating deep debt, ignoring employment for locals and damaging the environment in host countries. Again, Xi has been facing criticism because he is investing so much money in other countries - often with no or very poor returns - instead of spending it on domestic needs at home.

In a communist country where materialism is ironically rampant, unease and anger will spiral when bank balances and wallets are hit by a trade war. A domestic backlash is thus beginning to gather momentum.

The CPC often trumpets how it has lifted millions out of poverty. However, is the party taking credit for something that the hardworking people themselves have achieved? Indeed, while many have become more prosperous, China now has one of the most unequal wealth distributions in the world. The Gini coefficient, a measure of income inequality, has risen 15 points to 50 from 1990-2015. A reading of 0 would mean all have an equal income.

There is also concern about the economic data coming out of China. Official proclamations about elements such as GDP growth, debt and retail sales magically always seem to comply with government objectives, but there are serious question marks about underlying data. An example is the Statistics Bureau reporting industrial profit growth of 16% for 2018. However, calculating the changes month by month instead reveal a profit decline of 8.1%.

Observers should be suspicious of all official data and proclamations from the Chinese government and CPC. The strictly authoritarian state is very good at massaging information to make itself look good, but reality is probably a lot worse than the authorities would allow us to believe. Incidentally, local government debt rose USD2.58 trillion to USD17.66 trillion by the end of August.

There has clearly been a miscalculation in the CPC about how to approach the USA, with analysts and policymakers taken by surprise by Trump. For example, initially most saw Trump's bellicosity as just a bargaining position, with no conception that he would follow through. Of course, this should not be a surprise given Trump's unpredictability.

Last week Trump imposed sanctions against the Equipment Development Department of the People's Liberation Army (PLA) for buying Russian S-400 missiles and Su-35 fighters. Although these sanctions essentially change nothing, they do reflect American frustration at China. In a furious response, Beijing canceled scheduled military-to-military talks as well as further trade talks.

In 2017, the USA imported USD506 billion in goods from China, while the latter imported USD110 billion's worthfrom its competitor. It is easy to see who will be hurt more by the trade war.

Right now, Xi must be very concerned about the impact of the trade war. China's rate of economic growth has been slowing in recent years since it is unsustainable, and this dispute with the USA will surely have a major impact. The CPC is always extremely sensitive to public discontent at home. When the public's pockets begin to suffer, the CPC will be hard-pressed to suppress waves of indignation.

What is remarkable is how quickly Sino-US relations have soured. It must be remembered, however, that the two have implacably opposed values and they do not make natural bedfellows at all.

However, Xi, who manipulated his country's legal ordinances to remain president for life, is likely to still be in power long after Trump has been voted out. Therefore, there is a sense that Xi can simply outlast Trump. Certainly, he will not wish to back down on signature projects such as OBOR, for he has personally invested his reputation on it.

OBOR should not be compared with the post-World War Two Marshall Plan. The latter rebuilt war-torn Europe largely using American largesse, whereas OBOR is all about China gaining overseas influence. It has taken these smaller countries too long to figure out the dangers entailed by OBOR, including ceding control of infrastructure to China as has occurred at Hambantota in Sri Lanka.

Myanmar and Nepal are two other nations wanting to halt construction projects or to renegotiate terms. Former Australian foreign minister Gareth Evans described Cambodia and Laos as "wholly owned subsidiaries of China".

China is finally feeling criticism over its secretive pogrom against the Muslims in the far west of the country. Even long-standing ally Pakistan has finally raised its voice over Beijing's horrific treatment of this Uighur population, with an estimated one million people currently incarcerated in political re-education centers. This is part of Beijing's crude but brutal efforts to neutralize Uighur culture and to dilute or nullify Islam.

A State Department official said the USA was "deeply troubled by the Chinese government's worsening crackdown on Uighurs, Kazakhs and other Muslim members of minority groups in Xinjiang. We are working closely with our interagency partners to ensure significant consequences for those who commit serious human rights abuse abroad, including the situation for Muslims in Xinjiang."

There are rumors that the Trump administration is about to launch a government-wide barrage against China in the coming month. This will include revelations about hostile Chinese actions against the USA, its malign activities such as cyberattacks and electoral interference.

As part of its dystopian character, China is rolling out a mass surveillance system, the largest such network in the world. Called Skynet, it already features 170 million cameras, with plans to install another 400 million by 2020, all connected by artificial intelligence technologies such as facial recognition. This year China will buy USD20 billion worth of CCTV cameras, accounting for nearly half the global market.

Ironically, however, China might struggle with its Skynet program because of a trade war. This is because components such as tubes that create a laser beam inside cameras are sourced from Western countries, and some governments in Europe and the USA are stopping shipments to both China and Hong Kong. The South China Morning Post quoted one Chinese researcher as saying, "The national security authorities are deeply concerned. They are taking action."

The CPC remains profoundly paranoid about dissent, and it seeks to suppress it wherever it might appear. Most recently, that was in Hong Kong. On 24 September the territory's government took the unprecedented step of banning a political party, the Hong Kong National Party. This is the first time a political group has ever been banned in Hong Kong, and interestingly the government used the Societies Ordinance from the colonial era to do so.

However, the Hong Kong National Party is a fringe group and has little public support. This action of pulverizing a peanut with a sledgehammer simply shows the communist leadership's paranoia. It also reflects how even the Hong Kong government is able to institute bans at Beijing's behest without feeling any need for justification.