China’s Business Future? Xi for Yourself

 

For all those happy iPhone fans dreaming of that hot new product… if you ain’t got an iPhone14 in your hands yet, don’t hold your breath. Under President for Life, about to begin an unprecedented third team, China’s President Xi and his “zero COIVD” policy just shut down Apple’s manufacturing partners for an essential chip. Welcome to the new “business unfriendly” China. Beginning in the 1980s under Deng Xiaoping, China’s focus had been economic growth. Deng famously said, “Some must get rich first,” and knighted his military insiders as the initial chosen ones. Every Chinese leader since has championed business. Until now.

Nothing underscores Xi’s dramatic break with China’s once seeming goal of being the greatest business/economic power on earth like the late October annual Communist Party Congress in Beijing. Xi ousted moderates in droves. The only members of the party’s leadership – the Standing Committee of the Politburo – were now only absolute Xi loyalists. As New York Times China expert, Li Yuan, notes in her November 7th piece, “In his opening address at the party congress, Mr. Xi mentioned ‘security’ 52 times, ‘Marxism’ 15 times and ‘markets’ three times.”

But what horrified the senior business community and other elites from the People’s Republic of China most is what Xi did in the closing ceremony of that Congress… a visual that really brought home the new reality… that everything in China was going to be different now. It’s the above photograph. Xi ordered his immediate predecessor, economic growth advocate Hu Jintao (who was China’s supreme leader from 2002 to 2012, when Xi took over), forcibly escorted out of the chamber. It was a staggeringly clear message. Old was gone. Growth was no longer the driver.

That China’s economy was faltering, especially because of the persecution of the monied power elite, that zero-COVID policy that was shutting down manufacturing and shipping every day and her prioritizing of “security,” just did not matter. No one was going to challenge Xi. And “security” moved from being a defensive term to an expression of global ambition.

The PRC’s place in the world seemed to be increasingly defined by her massive expansion of military power, evidenced by the construction of a manmade extension on a strategic island in the South China Sea, increasing threats to annex Taiwan and her now, largest navy on earth. Xi, like many other global leaders, has dismissed the United States as a nation so polarized that it was unraveling in an orgy of self-destruction. The US was taking itself down, with a little help from election interference from China and her buddy, Russia.

As Li confronted members of China’s business elite, she confirmed that they got the message. “For decades, China’s business class had an unspoken contract with the Communist Party: Let us make money and we’ll turn a blind eye to how you use your power… Like most Chinese people, they bought into the party’s argument that its one-party rule provides more efficient governance.

“Now, the tacit agreement that entrepreneurs had come to count on is dissolving in front of their eyes. China’s leader, Xi Jinping, used an important Communist Party congress last month to establish near-absolute power and make it clear that security will trump the economy as the nation’s priority… ‘My last lingering hope was dashed,’ said the founder of an asset management firm in the southern city of Shenzhen who contacted me hours after the congress ended…

“Last month’s party congress jolted the Chinese business world with uncertainty. It was seen publicly in the immediate market response: China’s stocks plunged, and its currency, the renminbi, fell in value. I am hearing it in the voices and messages of the many businesspeople I have spoken to in recent weeks who repeatedly call their reaction a ‘political depression.’

“They are not displaying their anxiety in public… All the businesspeople I interviewed for this article requested anonymity for fear of punishment by the authorities. But they are expressing dissent in their own way, pledging to withhold further investment in China or even contemplating leaving their country for another that would exchange a passport for their wealth.

“The party, under Mr. Xi, has taken control of nearly every aspect of society, costing Chinese people agency over their destinies. Members of the business class, especially those working at the top of the technology sector who operated with relatively few restrictions until a few years ago, have taken it especially hard.

“These tech entrepreneurs mostly grew up ‘in the age of ‘economism,’ when money making, economic principles and economic rationality trumped everything else,’ said Minxin Pei, professor of government at Claremont McKenna College in California. ‘Now they see the regime puts politics in command,’ he said. ‘For them, this is incomprehensible.’…

“A well-connected investor in Beijing said his friends who were entrepreneurs now realized they could no longer remain indifferent to politics. At social gatherings, they have started discussing which countries to seek passports from, and how to move their assets offshore. At social gatherings, hosts are asking friends to surrender their phones to be kept in a separate place for fear of surveillance.

“After the party congress, most people in the investors’ circle expect that they will be forced to pay more in taxes or be expected to donate more money to universities and other state-backed charities. They are not planning to make any big investments.” No longer does President Xi care if his actions are bad for business or if working Chinese face a very uncertain future. He has complete control… and no malign actions he might take to fulfil his ambitions are off the table.

I’m Peter Dekom, and with Brexit and coming to terms with Putin’s aggression, Europe is viewed as seriously weakened, Putin’s Ukraine efforts have decimated Russia’s future ability to regain superpower status, and a MAGA rise in power in the United States has negated America’s global influence… so China sees a path to become the most powerful superpower, alone in global dominance.