A BET­TER LIFE

How the new era is re­shap­ing China and redefin­ing the ways it en­gages with the rest of the world

China Daily European Weekly - - Front Page - By AN­DREW MOODY an­drew­moody@chi­nadaily.com.cn

When Gen­eral Sec­re­tary Xi Jin­ping de­fined China’s new era in his re­port to the 19th Na­tional Congress of the Com­mu­nist Party of China in Oc­to­ber last year, he not only set a new do­mes­tic agenda for China, in­clud­ing am­bi­tious goals to im­prove peo­ple’s lives and liveli­hoods, but also

“Pres­i­dent Xi was say­ing that the fu­ture of the Chi­nese peo­ple and of the Com­mu­nist Party ad­vanc­ing de­pended on a more ac­tive en­gage­ment with the rest of the world.”

IAN GOLDIN pro­fes­sor of glob­al­iza­tion and de­vel­op­ment at Ox­ford Univer­sity

out­lined a more cen­tral role for the coun­try on the world stage.

Now, more than seven months on, how defin­ing does that speech re­main, and how are China and the world in­ter­pret­ing Xi Jin­ping Thought on So­cial­ism with Chi­nese Char­ac­ter­is­tics for a New Era?

China Daily asked a num­ber of China ex­perts and econ­o­mists to give their as­sess­ment, in terms of whether the new era has re­shaped China’s po­si­tion in the world, given the coun­try it­self fresh mo­men­tum, set the coun­try’s econ­omy on a new course and changed the de­bate about gov­ern­ment sys­tems.

Ian Goldin, pro­fes­sor of glob­al­iza­tion and de­vel­op­ment at Ox­ford Univer­sity and a for­mer eco­nomic ad­viser to Nel­son Man­dela when Man­dela was South Africa’s pres­i­dent, be­lieves the dawn of China’s new era is a “wa­ter­shed mo­ment” for the world.

“Pres­i­dent Xi was say­ing that the fu­ture of the Chi­nese peo­ple and of the Com­mu­nist Party ad­vanc­ing de­pended on a more ac­tive en­gage­ment with the rest of the world,” he says.

“This means a sig­nif­i­cant role for China in the global com­mon is­sues such as fi­nance, trade, pan­demics, cli­mate change and cy­ber­se­cu­rity. They all de­pend on co­op­er­a­tion and more

ac­tive en­gage­ment in the world.”

Kerry Brown, di­rec­tor of the Lau In­sti­tute at King’s Col­lege London

and au­thor of The World Ac­cord­ing to Xi: Ev­ery­thing You Need to Know

About the New China, says that by em­bark­ing on a new course, China is bound to have a dra­matic ef­fect on the rest of the world.

“If China has a new era, then the world is go­ing to have a new era, be­cause of the way China now im­pinges on that new world,” he says.

“China has be­come this very prom­i­nent geopo­lit­i­cal ac­tor in a short space of time. It is not go­ing to be like the United States in its prime. It is go­ing to be much more col­lec­tive in its ap­proach and more of a sta­bi­lizer on the world stage.”

Even be­fore last year’s na­tional congress, China was al­ready show­ing greater global lead­er­ship.

Pres­i­dent Xi’s speech to the World Eco­nomic Fo­rum at Davos in Jan­uary 2017, stress­ing the im­por­tance of glob­al­iza­tion, was in marked con­trast to US Pres­i­dent Don­ald Trump’s iso­la­tion­ist “Amer­ica First” stance and came just be­fore Trump’s in­au­gu­ra­tion.

How­ever, in his re­port to the na­tional congress, Xi gave many the sense that China now had some over­ar­ch­ing view of it­self and what it wanted to achieve.

For­mer UK for­eign sec­re­tary Wil­liam Hague, writ­ing in his col­umn in the Daily Telegraph ear­lier this month, said this was no longer true of the West, with the US and Europe, in par­tic­u­lar, now di­vided on a num­ber of global is­sues.

“It was a relief to me when some­times the for­eign min­is­ters of Aus­tralia or Canada would say, ‘Let’s have a bot­tle of wine and dis­cuss the strat­egy of the Western world’, which we would pro­ceed to do,” he wrote.

“Three or four years ago, for lead­ing for­eign min­is­ters to dis­cuss their com­mon global strat­egy was hope­ful but still re­al­is­tic. Today, it would seem ridicu­lous.”

Hague says very few coun­tries now have any sort of global strat­egy, but China has one.

“Most sig­nif­i­cant, China has one, set out by Xi Jin­ping, with goals for the coun­try’s strength and role in world af­fairs.”

Much of the suc­cess of the new era is seen as de­pend­ing on China achiev­ing three ma­jor goals.

The first, now just two years away, is to dou­ble China’s 2010 GDP per capita by 2020 and to be­come a “mod­er­ately pros­per­ous so­ci­ety”, thus also elim­i­nat­ing all ex­treme poverty, in time for the 100th an­niver­sary in 2021 of the found­ing of the CPC.

China’s next cen­te­nary goal is to mark the 100th an­niver­sary of the found­ing of the Peo­ple’s Repub­lic of China in 2049, when the coun­try will emerge as a “great mod­ern so­cial­ist coun­try in ev­ery di­men­sion”.

Xi also set out a com­pletely new tar­get in his re­port, that for 2035, at the half­way point be­tween the “Two Cen­te­nary Goals”.

Key to this tar­get is ad­dress­ing the en­vi­ron­men­tal degra­da­tion that has re­sulted from the in­dus­tri­al­iza­tion of the econ­omy in China’s first phase of mod­ern­iza­tion, since re­form and open­ing-up in the late 1970s, and to cre­ate a “Beau­ti­ful China”, which has res­o­nance in clas­si­cal Chi­nese lit­er­a­ture.

Also im­por­tant is re­duc­ing the dis­par­i­ties be­tween ur­ban and ru­ral de­vel­op­ment and giv­ing peo­ple from im­pov­er­ished com­mu­ni­ties greater ac­cess to pub­lic ser­vices.

China has also set the goal that, within 17 years, it will be­come a global tech­nol­ogy leader.

With China re­port­ing 6.9 per­cent GDP growth in 2017 — the first an­nual ac­cel­er­a­tion in seven years — and a higher-than-ex­pected 6.8 per­cent in the first quar­ter of this year, the most im­me­di­ate tar­get, that for 2020, should be eas­ily achieved with growth of a lit­tle more than 6 per­cent from now on.

This ef­fec­tively in­volves China break­ing out of the so-called mid­dlein­come trap, un­der which a coun­try achieves a cer­tain in­come level and then gets stuck there, that has be­fallen so many Latin Amer­i­can coun­tries, in par­tic­u­lar.

Ge­orge Mag­nus, as­so­ciate of the Ox­ford Univer­sity China Cen­tre and a lead­ing ex­pert on China’s econ­omy, now be­lieves this tar­get will be eas­ily reached, de­spite ear­lier con­cerns that the econ­omy might be over­reach­ing to achieve it.

“The ma­jor ques­tion now is where growth goes from the 2020s on­ward, and whether there is a move away from set­ting quite am­bi­tious tar­gets or whether tar­gets are aban­doned al­to­gether,” he says.

What is now at­tract­ing a lot of at­ten­tion is China’s aim to be a global tech­nol­ogy leader and make break­throughs in such ar­eas as ar­ti­fi­cial in­tel­li­gence and ro­bot­ics.

The 2035 tar­get to achieve this has cer­tainly in­ten­si­fied ef­forts on the ground.

Cai Rui, the 41-year-old deputy di­rec­tor of the Dalian In­sti­tute of Chem­i­cal Physics, one of China’s na­tional-level sci­ence in­sti­tutes, says lo­cal gov­ern­ments are now knock­ing on the door of in­sti­tutes like his in or­der to ad­vance the na­tional tech­nol­ogy ef­fort.

He says that when he re­turned from the US in 2010 and “went to the city gov­ern­ment and talked to them about sup­port­ing ideas, the re­sponse was of­ten quite slow. Now they just come to us and ask for our ideas.”

In ad­di­tion, there has been an ex­po­nen­tial rise in the num­ber of sci­ence, tech­nol­ogy, engi­neer­ing and math­e­mat­ics grad­u­ates in China. Ac­cord­ing to the World Eco­nomic Fo­rum, China

had the high­est num­ber of such STEM grad­u­ates in the world in 2016, with 4.7 mil­lion — more than eight times the 568,000 in the US.

The 2017 EU In­dus­trial R&D In­vest­ment Score­board, a re­port pub­lished in De­cem­ber by the Euro­pean Com­mis­sion, pointed to an 18.8 per­cent in­crease in re­search and de­vel­op­ment spend­ing by some of China’s top com­pa­nies in 2016. This com­pares with an in­crease across the Euro­pean Union of 7 per­cent, a 7.2 per­cent in­crease in the US and a 3 per­cent de­crease in Ja­pan.

Un­til re­cently, the view in the West was that the qual­ity of Chi­nese re­search and de­vel­op­ment was not at the level of that in either the United States or Europe, but this per­cep­tion is be­gin­ning to change, as China be­gins to make break­throughs in key tech­nolo­gies.

Rui, who has first­hand ex­pe­ri­ence at re­search facilities in both the US and China, does not be­lieve that there is now any great dis­par­ity.

“I just don’t think this is true. China is a big coun­try and we have many dif­fer­ent uni­ver­si­ties. I think peo­ple here are of­ten more dili­gent and de­voted to their stud­ies,” he says.

It is the prospect of the US fall­ing be­hind in key tech­nolo­gies that is seen to be be­hind many of the tensions that now ex­ist be­tween the world’s two largest economies.

Michael Spence, win­ner of the No­bel Prize and pro­fes­sor of eco­nomics at New York Univer­sity’s Stern School of Busi­ness, says that be­ing be­hind in dig­i­tal tech­nolo­gies, which will be cen­tral to de­fense and se­cu­rity, would be par­tic­u­larly un­com­fort­able for the US.

“I think China is on the way there (to be­ing ahead), and I don’t re­ally know how to pre­dict the Amer­i­can re­sponse.”

Mean­while, for China’s new era to be suc­cess­ful de­pends on eco­nomic re­form, as Xi made clear in Oc­to­ber, when he said the “prin­ci­pal con­tra­dic­tion” of China’s de­vel­op­ment had to evolve.

In the 40 years since Deng Xiaop­ing’s re­form and open­ing-up in the late 1970s, that con­tra­dic­tion was be­tween “the ever-grow­ing ma­te­rial and cul­tural needs of the peo­ple and back­ward so­cial pro­duc­tion”.

It was essen­tially re­solved by in­tro­duc­ing mar­ket re­forms that led to China be­com­ing the man­u­fac­tur­ing work­shop of the world as well as its sec­ond-big­gest econ­omy.

Xi says the aim now is to ad­dress a new prin­ci­pal con­tra­dic­tion that be­tween “un­bal­anced and in­ad­e­quate de­vel­op­ment and the peo­ple’s ever-grow­ing needs for a bet­ter life”.

To do this, it needs to move to­ward a high-qual­ity growth model and away from one de­pen­dent just on man­u­fac­tur­ing ex­ports and in­fra­struc­ture in­vest­ment.

For this, there needs to be a fo­cus on con­tin­ued sup­ply-side re­form, a re­duc­tion of ex­cess ca­pac­ity, par­tic­u­larly in State-owned en­ter­prises, and a re­duc­tion of in­come and re­gional in­equal­i­ties, as well as ef­forts to tackle pol­lu­tion, im­prove the reg­u­la­tory and ad­min­is­tra­tive environment and en­sure greater fi­nan­cial sta­bil­ity, in­clud­ing deal­ing with the is­sue of debt in the econ­omy.

For some, such as Zhu Ning, Ocean­wide pro­fes­sor of fi­nance at Ts­inghua Univer­sity, it is no longer about chas­ing GDP num­bers.

“The fo­cus is now on the de­vel­op­ment of the over­all econ­omy. Peo­ple have crit­i­cized China’s growth about be­ing all about growth’s sake and not about de­vel­op­ment,” he says.

To move to a high-qual­ity growth model will be a sig­nif­i­cant chal­lenge for China.

Eco­nomic growth is nor­mally driven by a com­bi­na­tion of la­bor and cap­i­tal in­puts. How­ever, in China’s case, the work­ing pop­u­la­tion will de­cline faster than that of most ma­jor economies, be­cause of the legacy im­pact of the for­mer one-child pol­icy. The econ­omy will also be­come less cap­i­tal-in­ten­sive, if re­bal­anc­ing is to be achieved and debt lev­els are to be re­duced.

Ac­cord­ing to Mag­nus, of the Ox­ford Univer­sity China Cen­tre and also au­thor of Red Flags, a book on China’s econ­omy that is to be pub­lished later this year, the only op­tion for China will be to in­crease the pro­duc­tiv­ity of the econ­omy, which he says will be a ma­jor chal­lenge.

“Of all the ar­eas of new era eco­nomic think­ing, the fo­cus on tech­nol­ogy is prob­a­bly the most im­por­tant. This is where the im­prove­ments in pro­duc­tiv­ity are likely to be gen­er­ated,” he says.

“You just can­not keep grow­ing in­vest­ment be­cause you will end up with prob­lems of over­ca­pac­ity, overindebt­ed­ness and ma­l­in­vest­ment.”

One of the more im­por­tant as­pects of the new era is Xi’s con­cept of glob­al­iza­tion. Cen­tral to this is the Belt and Road Ini­tia­tive, which was launched in 2013.

Xi said in his re­port to the na­tional congress in Oc­to­ber that it was about a vi­sion of “shared growth” with the rest of the world.

At the Belt and Road Fo­rum for In­ter­na­tional Co­op­er­a­tion in Bei­jing in May last year, it was em­pha­sized that

Belt and Road is not an in­stru­ment of China’s for­eign pol­icy, but some­thing that all na­tions can par­tic­i­pate in.

Martin Jacques, au­thor of When China Rules the World: The End of the Western World and the Birth of a New

Global Or­der, says that many peo­ple un­der­es­ti­mate the level of sup­port there is for the Belt and Road, par­tic­u­larly in de­vel­op­ing coun­tries.

“There re­ally is a lot of sup­port for it. There is now also se­ri­ous progress be­ing made with the ini­tia­tive. It has a sym­bolic sig­nif­i­cance and will have its own grav­i­ta­tional force over time.”

One of the es­sen­tial mes­sages of the new era is win­ning the bat­tle against poverty, which Xi has seen as a scourge since he was Party sec­re­tary 30 years ago of Ningde pre­fec­ture in Fu­jian prov­ince, where he im­ple­mented a se­ries of poverty-re­duc­tion mea­sures.

This is one of the rea­sons the new era has so much res­o­nance in Africa, in par­tic­u­lar, where 400 mil­lion peo­ple still live be­low the poverty line.

Hugh Pey­man, a for­mer head of Asian re­search for both Mer­rill Lynch and Dres­d­ner Klein­wort Ben­son and au­thor of the newly pub­lished China’s Change: The Great­est Show on

Earth, be­lieves this could prove to be the last­ing legacy of China’s new era.

“Bri­tain’s legacy to the rest of the world was the con­cept of the rule of law,” he says “The great Amer­i­can legacy was mod­ern man­age­ment sys­tems, and the es­sen­tial legacy of China’s could be on how to han­dle lag­gard com­mu­ni­ties, what we now call the ‘left be­hind’ and now a phe­nom­e­non in the West again.”

There was much dis­cus­sion at the time of the na­tional congress that China was of­fer­ing a dif­fer­ent model of po­lit­i­cal gov­er­nance to the word as an al­ter­na­tive to Western lib­eral democ­racy. This has also had res­o­nance in emerg­ing economies, par­tic­u­larly those in Africa.

Jacques, the Bri­tish au­thor and aca­demic and also a for­mer ed­i­tor of Marx­ism Today, be­lieves it has opened a wider de­bate.

“There is a big cri­sis of gov­ern­ment that has taken place in the West. The de­bate about China has shifted. The idea that China of­fered a dif­fer­ent model of gov­er­nance used to be dis­missed. It is no longer dis­missed. It is not yet that they want to copy China in the West, but that they now see the China sys­tem as a vi­able model and not one that is go­ing to evolve into some­thing else.”

For Pey­man, what is in­creas­ingly im­press­ing peo­ple in the West is a gov­er­nance sys­tem that sets longterm goals.

“China has a very long-term ap­proach with goals now right up to the mid­dle of the cen­tury. It has its own method, also putting the poli­cies in place to achieve those goals, such as es­tab­lish­ing pi­lot schemes and im­ple­ment­ing them.”

For some, China’s new era has yet to have the same res­o­nance out­side of China that it clearly does within the coun­try it­self.

“Peo­ple out­side of China are wait­ing to see the ideas that un­der­pin it and what will be the sub­stan­tial parts of the new era from China’s side that will af­fect them,” says Rana Mit­ter, di­rec­tor of the Ox­ford Univer­sity China Cen­tre.

“Those out­side of China are much more aware of the Belt and Road Ini­tia­tive.”

Brown be­lieves that one of the most im­por­tant as­pects of the new era is that it gives China a new nar­ra­tive.

“There is a pleas­ing sym­me­try. We have had 40 years of re­form and open­ing-up, and now China is mov­ing into its next phase with all the cen­te­nary goals and be­com­ing a pow­er­ful mod­ern coun­try,” he says.

“China needs a new theme mu­sic, and new era pro­vides that.”

For Jacques, it rep­re­sents a so­ci­ety that is mov­ing for­ward in con­trast to the West, where in­comes are stag­nat­ing and liv­ing stan­dards are fall­ing 10 years after the global fi­nan­cial cri­sis

“There is an im­por­tant shift that has taken place in China as a re­sult of the new era,” he says.

“There is a new at­mos­phere, a cer­tain ex­u­ber­ance, self-con­fi­dence and elan that you can see among the Chi­nese pop­u­la­tion that you no longer get in the West.”

ZHANG XUEFEI / XINHUA

Vis­i­tors tests Huawei P20 se­ries mo­bile phones dur­ing Huawei’s new prod­uct an­nounce­ment in Paris.

ZOU HONG / CHINA DAILY

Martin Jacques, au­thor of WhenChi­naRules­theWorld:TheEnd­oftheWestern Worl­dandtheBirtho­faNewGlob­alOrder

PRO­VIDED TO CHINA DAILY

For­mer UK for­eign sec­re­tary Wil­liam Hague says the West no longer has a grand strat­egy.

LI MIN / CHINA DAILY

YANG SHIYAO / XINHUA

Fux­ing trains on a pro­duc­tion line in Tang­shan, He­bei prov­ince. Fux­ing trains were pro­duced do­mes­ti­cally and re­search is un­der­way on even faster trains.

NICK. JB MOORE / FOR CHINA DAILY

Rana Mit­ter, di­rec­tor of the Ox­ford Univer­sity China Cen­tre

PRO­VIDED TO CHINA DAILY

Ian Goldin, pro­fes­sor of glob­al­iza­tion and de­vel­op­ment at Ox­ford Univer­sity

ZOU HONG / CHINA DAILY

Zhu Ning, Ocean­wide pro­fes­sor of fi­nance at Ts­inghua Univer­sity

PRO­VIDED TO CHINA DAILY

Hugh Pey­man, a for­mer head of Asian re­search for both Mer­rill Lynch and Dres­d­ner Klein­wort Ben­son

NICK. JB MOORE / FOR CHINA DAILY

Kerry Brown, di­rec­tor of the Lau In­sti­tute at King’s Col­lege London

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