Is China birthing a new dictator?

China has a history of periodic tyranny. From imperial leaders of old, to strange and brief surges of power such as the Taipings, to the more modern phenomenon under Maoism. Now one wonders if we are not seeing the rise of a new branch of absolute leader, from the FT:

For more than a decade, a tacit understanding among China’s top rulers has ensured the ruling Communist party does not become a gerontocracy. That understanding, known as qishang baxia or “seven-up, eight-down”, dictates that only leaders 67 or younger can ascend to or remain in top posts, while those 68 or older must retire when the party changes guard every five years.

But as China prepares to enter a “selection year” under the leadership of a very unconventional president, Xi Jinping, there is increasing speculation he may try to dispense with the retirement convention entirely.

If so, it will be the biggest test yet of his authority over the party and further distinguish him from his predecessors Hu Jintao and Jiang Zemin, who took a “first among equals” approach during their presidencies.

“To waive the rule is going to be difficult because it would establish [Xi] as significantly more than first among equals,” says Steve Tsang, a sinologist at Nottingham university.

It would also be the strongest signal to date that Mr Xi could ignore a similar unwritten rule on term limits that would require him to step down from his current position as party leader in 2022.

Mr Xi heads the seven-member Politburo Standing Committee, the party’s most powerful body. Since 2012 he has overseen a draconian anti-corruption campaign and asserted his authority over the military and even economic policy, an area traditionally delegated to the premier.

As a result, he is widely regarded as the party’s most powerful leader since Deng Xiaoping, the architect of China’s reform and opening, if not Mao Zedong, the party’s revolutionary hero.

Mr Xi and his premier, Li Keqiang, will be 64 and 62 respectively when the 19th Party Congress convenes late next year to appoint a new Politburo Standing Committee and State Council, ensuring both men another five years at the top of China’s party-state.

All five other members of the Standing Committee will be required to step down under the current retirement rule.

…For Mr Xi, the 19th party congress will be an unprecedented opportunity to stack top party and government posts with his allies, giving him even more authority. “Just wait for his second term” is a common refrain among the president’s supporters, many of whom admit privately that the party has yet to deliver on many of the bold economic reforms promised at the outset of his presidency.

The dictator is enjoying a surge of popularity. But the rise of this neo-Maoist movement could upend China’s stability

I have admired the reform push in China at times but there is no doubt that it has come with an equally potent constriction of freedoms and demand for adherence to Party discipline. This may seem contradictory, but when one is fighting graft it need not be. As Singapore shows nicely, a one party state can function with the freedoms of capitalism.

For Australia the rise of Xi’s power is a mixed blessing. On the economic front it is so far been more difficult short term with the shift away from investment as a driver of economic growth and consequent falls in commodity prices. But it should work to our benefit long term if the reform process helps lift China from a middle income trap that would otherwise bog its growth down permanently.

It is on the strategic front where Xi’s power is of most concern. Foreign policy tends to reflect the internal predilections of the polity and its leaders. And as Xi asserts Chinese power at home, he is also doing so much more assertively in the region that did his predecessors. Gone are the quiet overtures of the “peaceful rise”, the targeted deal-making that defined the reigns of Hu and Jiang. In its place is an aggressive Chinese economic imperialism reaching out with soft power to engulf regional allies and undermine traditional power relationships, especially those with the US.

Hard power is also being deployed, most obviously in the South China Sea, but elsewhere into Pakistan and Central Asia, jeopardising the regional order that has relied upon US hegemony to order trade relationships and to contain inter-Asian nation historical enmities.

A dictatorial Xi will not make Australia’s position vis its economic and strategic straddle with China and US any more comfortable.  We should be hedging accordingly by reducing Chinese economic influence where it is possible and sensible:

  • by limiting investment to raw materials;
  • banning foreign political donations;
  • reducing immigration to historic norms;
  • tightening and properly policing foreign buying of real estate, and
  • re-engaging with the US.

This is not about choosing the US over China. Those days are long gone. This is about not choosing an uncertain China over the US.

David Llewellyn-Smith

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.

He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.

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  1. “As Singapore shows nicely, a one party state can function with the freedoms of capitalism.” No. Perverted the medical profession and judiciary to crush opposition. Restricted freedom of expression; still runs ideological anti-imperialist/western argument that Singapore doesn’t need an open society.

  2. >As Singapore shows nicely, a one party state can function with the freedoms of capitalism.

    Singapore has had some of the worst oppression in modern history. It all looks really glossy now – but hey, lets just forget about the sheer grinding misery for those at the bottom.

    Meanwhile capitalism is alive and well in China. Are we forgetting that ?

    While a communist state is also providing health and education for 1.4 Billion people. Something Australia fails to even deliver to 20 million.

    The daily restrictions on life inside China are now no less pervasive that in the west – surveillance, detention laws, sedition, political laws, indefinite incarceration, arbitrary assassination (United States arbitrarily assassinated over 30,000 people in the last 8 years without evidence, due process, or any right of self defence).

    The only significant difference between the United States and China is that the Chinese have a single party – while the US offers two. The Chinese still vote – this may come as a surprise to many. But within the party they vote. Anyone can join the party.

    China is in fact the ultimate capitalist country. When you can point me to a corporation which lets its shareholders vote on their CEO, COO etc we can have a conversation. But right now its just run as any other successful capitalist organisation.

    As far as rights go – China and the FIVE EYES western nations as we are known are now with very limited differential.

    The only REAL difference is that “nostalgic” concept of progressive, liberal democratic freedoms. Which are now mostly gone.

    But I see no where do you mention democracy – instead conflating it with capitalism – the direct antithesis of democracy.

      • H&H….

        You should look into that a bit more after the Patriot act, not to mention the highest incarceration rates in the world….

      • H&H…

        I prefer looking directly at things, uncomfortable or not, as a historian, anthro, sociology and scientific sort first and foremost w/ economics and its related disciplines the latter. I know plenty of people that whilst being intelligent have a penchant for romanticism layered with environmental biases, its a mixed bag where the decent sorts don’t cause much trouble, but as “do gooders” can get in over their heads [see arsenic in India wells – 6K et al], on the other hand the ideologues even as small groups can cause tremendous destruction [see the multifaceted fleaxians known as neoliberalism].

        China has its own ethic memory which will imbue any social system with its traits, empires of the past, communism and now state capitalism. If one has dramas today with China one my ask why the Allies abandoned Chiang Kai-shek [which repeats itself wrt Afghanistan et al], not to mention the long history in Central South America.

        China is looking after its own interests in its own back yard, where if people have issues with their investments in Australia, then that’s an Australian issue, can’t have it both ways wrt America or Mr Market, China has played a good hand so far.

        Disheveled Marsupial…. let us not forget America started out as the London and Plymouth company’s which were folded into the creation of the USA e.g. history echos…

    • Niels

      An interesting view. I’ve not read anything like it.

      Besides… when the younguns (Gen Y) run the joint, it will look different again…

    • I agree that Western powers are losing the high ground on these topics, but comparing China’s freedoms and restrictions to Australia’s is still ridiculous. We have nothing like the great firewall, our education and health are far superior, there are no internal restrictions on where you can live/buy and our means of tracking citizens doesn’t let so many fall through the cracks. China is definitely very capitalist.

    • reusachtigeMEMBER

      Singapore’s system of oppression has made them strong unlike our weak western world! Besides that, I agree with you. We can only hope China, or at least its system, replaces our own.

      • You deserve a spanking for that one Reusa.

        Go directly to China and dont come back until you can play nicely with the local kids.

    • ErmingtonPlumbing

      Yes, the line,
      “As Singapore shows nicely, a one party state can function with the freedoms of capitalism.” Raised my lefty hackles.

      The freedom to exploit is only a meaningfull freedom if you have got some power,…may be thats why Islam is so popular amoungst the worlds Poorest,…everybody still gets a Slave (as long as your a bloke).

      Quite the propaganda victory really, the way most of us Conflate Capitalsim with freedom and democracy.

      • Beautifully said EP.

        And as for @Niels – what a load of crap. Niels, have you even been to China? (outside the shiny new airports and traffic-blocked highways to the Potemkin Village high-rise cities that is) “Providing health and education…” – the mind boggles at this statement, I’m sorry, but you don’t know what you’re talking about.

        And as for the application of surveillance and detention you clearly have no idea what you’re talking about there either. “Law” doesn’t enter in to it – the place is managed by a bunch of paranoid thugs, pure and simple. Nice when the PSB invite you over for a cup of tea and a chat isn’t it?

    • The Chinese communist supported insurgency lead to the anti-Chinese riots, and the separation of Singapore from Malaysia. It was an existential crisis for ethnic Chinese in Malaysia and Singapore, and Lee Kuan Yew never forgave the communist for that.

    • I’m with Chinajim. It’s clear Niels has never even been to China.

      “Anyone can join the party.”

      Wrong. You have to be connected to get CCP membership.

      “The daily restrictions on life inside China are now no less pervasive that in the west”

      Wrong again. Try waiting in line at any government agency to get any one of the dozens of certificates or licenses you must have just to exist or run a business in China … and then be told day after day to “come back tomorrow” (for the uninitiated, meaning come back with a red envelope stuffed with money) and then talk to me about “daily restrictions on life.” Took me about five minutes to change my Victorian drivers license to a Queensland one. Doing the same type of thing in China would take weeks, endless paperwork and probably the assistance of some kind of “agent” (i.e. red envelope broker).

      And it’s not just for foreigners. If you’re not connected, being an internal migrant, i.e., moving from one province to another, is harder than moving from one European country to another, or harder even than being an illegal immigrant in the US. (At least illegal immigrants in the US can send their kids to school, something that is out of reach for internal migrants with their hukou in a different province.)

      Which brings me to the next point. The world is awash with predictions about how China will or won’t rise up to challenge the US militarily/economically. I would offer a counter prediction (which I would rate as having a low probability, but still worth considering): China breaks up, much like the Soviet Union did, into its constituent provinces, which, let’s face it, already function on many levels like different countries, with their own administrative systems and distinct cultures and dialects/languages.

      I remember when we used to hear about if China’s economic growth slipped below 7% it would be all over red rover for the CCP. Well, these days the official growth rate is somewhere near there, and the assumed actual rate much lower, but everyone seems to have forgotten about this magic number. If that prediction does still hold, it could very well be the catalyst for what I posit above.

      • McPaddy, when I lived in Chengdu we woke up one Saturday to find there was no power. Not too bothered, we went out for breakfast and this and that. Came back in the afternoon to find the power was still out. We went down to the office of the compound manager to see what was going on only to find an angry crowd of residents milling around. Turned out the whole time we had been there, and longer, the entire power supply for the compound had been provided through some kind of chabudou illegal hook up from the power lines in the street outside. This was a fairly new “luxury” gated compound with a security entrance, five buildings with around 30 floors in each building, landscaped gardens, a tennis court, swimming pool, restaurants etc. When my gf translated that the manager was saying the power would not be reconnected, I thought she meant not today or tomorrow, because of the weekend. But no, he was saying to this angry crowd, many of whom had old people and children at home, that the power would not be reconnected, full stop. The police were there too. Didn’t seem to be doing anything though.

        And I can’t even bear to think about listing all the chabuduo issues with the apartment itself… I can laugh about it now… just.

      • Mc Paddy,
        I have lived in China 10 years and never heard of this. Absolutely correct, its what will bring China down or prevent them taking a higher place. Its ingrained in the place in all dealings. Its also why any dealing with Chinese needs to consider this. The only thing missing is use of mobile phones and driving, especially the combination of the two.

  3. Can’t wait to see the new Australian army ration packs. Dehydrated deconstructed-coffee, pulled pork w/ smashed avocado and an $8 donut.
    Millennial Division – cue Adagio for Strings

    • And I’m sure millenials can’t wait to be dragged into fights that have nothing to do with them just so a bunch of old pricks can rest assured that the big bad terrorists are being punished.

  4. reusachtigeMEMBER

    I’m all for strong leaders who enforce their power. These systems are far stronger than our weak failed democracy. Putin is demonstrating this for Russia, and they are now far stronger and greater than they have been in decades. But China’s system is even stronger still and they have a huge focus on housing investment which together with a strong and hard leader should make them even more powerful. We can learn so much from them. Maybe one day we will be lucky enough to experience their system. We can only hope for such salvation!

  5. The West needs to come out of its self-inflicted depression. Democracies always have and always will be THE strongest, most successful form of governing, simply for its long term stability and because free people will always be a stronger, more productive force.

    I am not going to be nuanced about it either. We need to stop doubting ourselves and ignore all the propaganda and claptrap being fired at us on social media by paid trolls and agents.

    I had big hopes for China once when I got to know its people as friendly and warm. I could easily see them becoming part of the global population through enterprise. Lately though it seems as if the country is starting to fall into the trap of totalitarianism, with international conflicts being a symptom of leadership trying to strengthen its position.

    If I was Chinese I would flee the country too using the pathways of Aussie education and Aussie real estate. Any amount of money lost on Aussie real estate is worth the freedom gained / retained.

    • Lol doesn’t look like you have any understanding of China, the Chinese or their motives. No it’s a lot simpler than that. People escape to Australia for the lifestyle:
      – Better Air
      – Dumber natives, less academic competition compared to dog-eat-dog back home
      – Laid back culture instead of full speed ahead all the time
      – Less crowding

      What they DON’T come to Australia/Canada for are:
      – Political freedom (Chinese people don’t give 2 craps about politics or the UN’s anglo definition of ‘universal values’, but the outliers certainly gets all the western MSM attention)
      – Economics (As evident by all the good suburbs with characteristics that Chinese care about, infrastructure, school, hospital and transport are being bid beyond your poor Aussie’s ability to even borrow with the most lax lending standards in history)

      You see, if Chinese really treasured the so called ‘freedoms’/universal values, they can renounce their citizenship which enables them to transfer an unlimited amount of money offshore as a one time special exemption. Alas nobody does that and everyone likes to keep their shadow dual citizenship.

    • Lately though it seems as if the country is starting to fall into the trap of totalitarianism, with international conflicts being a symptom of leadership trying to strengthen its position.

      Could not agree with you more.
      Off I go to research into which country (or corporation) has had the most number and most diverse international armed conflicts in the last 50 years

    • “Lately though it seems as if the country is starting to fall into the trap of totalitarianism, with international conflicts being a symptom of leadership trying to strengthen its position.”

      That’s a symptom of an expanding power. Nothing more, nothing less. This trait isn’t contained to any type of economic ideology or political system.

    • Pretty much how the USofA got started…. England and Europe’s markets and power architecture had become rigidly stratified, hence lower ranking family members and relatives moved for the opportunities the virgin continent offered, the poor were imported via the penal – indentured system for cheap labour.

      The problem today is there are no more virgin continents or large untouched land masses with weak natives to exploit, so as like America during its Robber Barron – Roaring 20s the blue bloods – nouveau riche offspring and assorted relatives seek to exploit some place without the impediments faced back at home. Same thing occurred in the USSR after the fall imo, until the Chicago boys found out the hard way that the Cossack’s and ex-KGB were a force to be reckoned with.

      Disheveled Marsupial…. getting a bit too Easter Island-ish…. by the time they changed the rules of the game the damage was done….

    • Except you don’t need Aussie real estate to gain residency. Chinese buying real estate is purely for profit motive.

  6. Hey China used to be a great place to live for any half way influential Laowai (white-guy), the Police would protect you if you wanted them involved. In Shanghai it was common knowledge among the street level bad guys that the Police had a zero tolerance policy when it came to violence against foreigners (well the white guys at least). More interesting were the steps that the higher ups within the crime underworld were taking to develop relationships with influential foreigners, this meant that the underworld in this regard (Laowai safety) policed itself. Over the years you heard so many weird stories of petty street thieves (purse snatching etc) where a few days latter a very bruised and battered purse snatcher returned the purse and paid recompense to the Loawai and the Police never even needed to lift a finger.
    As foreigner in many parts of China you were free to do practically anything you wanted to do. Shenzen was still dangerous but almost everywhere else was extremely safe especially in rural areas of China. I used to travel extensively in the south west of China visiting some real remote areas and never had a problem.

    OK what’s the point of this: Really just to say that Freedom is always relativistic, in the above I was free to undertake what might have seemed like foolish and risky endeavors because the systems was deliberately and differentially protecting me. The Petty thief did not enjoy similar protections or similar freedom, matter of fact he paid dearly for any and all transgressions.

    I think Australia needs to decide what sort of freedom they want (as a nation) and what price they’re prepared to pay for said freedom. Over and above this its just about making sure the geo political Check’s that you write don’t bounce.

  7. I doubt that the ‘6 up 7 down’ rule can be abolished without another ‘cultural revolution’. The rule is set in place to preserve the unity of the CCP, and the only way it will require a massive purging of all opposition.

  8. Good observation HnH and your ‘concern’ (worry) is evident. The developments in the So China Sea have a threatening ‘feel’ about them no matter what Carr / Keating have to say. My take is that only Australian commercial interests are being considered here as that is all ‘they’ know. Info keeps arriving that suggests we are being way too naïve in what’s actually developing in the (our) region.

    “The NGA’s work is supporting military analysts who regard the Chinese island-building campaign over the past decade as a new form of modern warfare that uses information warfare tools, such influence, cyber attacks and deception to achieve strategic objectives.”

    • Surely China wants the resources of the South China Sea (fishing rights, petroleum rights) and the military installations are to ‘assert’ and enforce those rights? President Duterte of the Philippines is telling the Americans to piss off and is making overtures to China now, and they are one of the major players in the SCS dispute (such as it is). In the end, the strong country (China) will get what it wants, more or less. Isn’t that – sorta kinda – what we did with East Timor?

  9. A new Emperor is trying to rise….
    Will the rest of the party allow?

    The real question is just how much control he has over the PLA and Security Apparatus. If his hold is strong then there isn’t much the rest can do…. All power comes from the point of a gun.

    This means that he needs to keep the PLA very very very happy = more money and more aggressive military moves….

  10. Xi has the One Belt One Road thingy well organised, lots of countries involved. He has coverage of so much plus external actions which to me indicates he is in for the longer term.
    The long term cycles are moving power from the west to the east for a 200 year rise according Martin Armstrong as I recall. Thats China and Russia both according to him.