The once in five years upcoming Congress of China’s ruling Communist Party, to be held this autumn, would in every circumstance be a major global political event. But this year’s Congress will be even more significant because it will formally consolidate Xi Jinping’s position as China’s most powerful leader since Deng Xiaoping and Mao Zedong. In official terms, Xi is already designated as the ‘core’ of China’s leadership. But this position is likely to be extended formally into the ideological and policy fields in what may be termed ‘Xi’ism’. Given Xi Jinping’s position, it is therefore crucial for understanding China’s dynamics to accurately understand the basic features of Xi’ism and what distinguishes it from previous policies by China’s leaders.
The Development of Xi’ism
Adopting the strong terminology of an ‘ism’ to characterise China’s policies highlights the new situation existing within China and internationally to that which confronted previous Chinese leaders. Given there may be shock at the real content of global trends, and how these are reflected in China, a non-Chinese source will be used to establish them – IMF projections published accompanying its latest World Economic Outlook.
Two simultaneous realities, one domestic Chinese and one international, characterise ‘Xi’ism’. The conclusion which flows from their interrelation in turn clearly explains why Deng Xiaping’s dictum ‘hide brilliance, cherish obscurity’ has been modified to explaining China’s analysis to a global audience in events such as Xi Jinping’s widely reported speech to this year’s Davos World Economic Forum.
- Domestically, China is in transition within five years to a self-defined criterion of ‘moderate prosperity’ and within a decade to the World Bank’s definition of a ‘high income economy’.
- Internationally, China’s chairmanship of the G20 during 2016, and other initiatives, confirm that it hopes for, and plays a role in aiding, growth in advanced economies. But China cannot depend on this. The IMF data projects, although this is not yet widely recognised, that following the international financial crisis advanced economies face prolonged average growth slower than after the Great Depression started in 1929.
Given that slow global economic development makes it harder for China to achieve its target of a high-income economy China concludes therefore it must pro-actively take not only domestic initiatives but aid world growth – that is the logic behind China international policies such as One Belt One Road (OBOR) which aims to help provide the underpinnings of an ‘all Asia, growth centre.
International Situation Facing China
Analysing first the situation in the Western economies facing China, the term ‘Great Recession’ is generally used referring to events after 2007, but several analysts have gone further – notably former US Treasury Secretary Larry Summers reference to ‘secular stagnation’ and IMF Managing Director Christine Lagarde’s to a ‘new mediocre’. But nevertheless it may still come as a shock to many to realise that IMF economic projections imply that the common phrase that Western economies face the ‘deepest economic problems since the Great Depression’ in one crucial aspect understates the situation.
IMF projections show that by the end of 2017 the total 12% growth in advanced economies after 2007 will be slower than the 15% in the decade after 1929. Strikingly, by 2021, fourteen years after 2007, the IMF projects total growth in the advanced economies will be less than half that in the 14 years after 1929 – 21% compared to 50% after 1929. As relative stagnation in the Western economies will not be accompanied by a corresponding slowdown in Asia a striking transformation of the world economy is projected in the next half decade. Taking a ‘core’ definition of China’s OBOR region (developing Asia, East Asia excluding Japan, the former USSR, Iran, Iraq, Turkey):
- At current exchange rates projections from IMF data show in 2016-2021 the OBOR region will account for 45% of global growth – compared to North America’s 24% and the EU’s 10%.
- In purchasing power parities (PPPs) the OBOR region would account for 57% of world growth – compared to North America’s 14% and the EU’s 11%.
World economic growth consequently more depends on the OBOR region’s success than on North America or the EU and China’s ability to use global development is chiefly dependent on the OBOR region’s success. Internationally, therefore, Xi Jinping faces a fundamentally different situation to previous Chinese leaders.
China’s Domestic Situation
But simultaneously China’s domestic situation has been transformed by cumulative growth since its 1978 economic reforms. In 1949 only approximately 10 countries had a lower per capita GDP than the China Mao Zedong took leadership of. China had considerable social achievements prior to 1978, China’s life expectancy rose from 73% of the world average in 1949/50 to 105% in 1976, but China’s 4.9% annual average GDP growth in 1950-78 was roughly comparable to the world average 4.6%.
In contrast China’s leaders from Deng Xiaoping until the international financial crisis produced rapid growth. In 1978-2007 China’s annual average GDP growth rate was 9.9%, achieving the transition from a ‘low income’ to an ‘upper middle income’ economy by international classification. The result is that on current growth rates China will achieve the World Bank’s definition of a ‘high income’ economy early in the next decade. To understand the global impact of this it should be noted that high-income economies by World Bank classification in 2016 were only 15.6% of the world’s population whereas China alone is 18.5%. Therefore, China achieving high income status will more than double the number of people living in such countries – a transformation of the world economy.
Xi Jinping is therefore the first Chinese leader facing a simultaneous combination of China’s transition to a high-income economy with low Western growth. This combination, therefore, produces China’s new policy configuration – ‘Xi’ism’.
Xi Jinping’s organisational position was already consolidated by his official designation as the ‘core’ of China’s leadership. But the previous most powerful leaders of China, Mao Zedong and Deng Xiaoping, are also officially designated in terms of their analysis of the periods of their leadership in terms of ‘Mao Zedong thought’ and ‘Deng Xiaoping theory’. It is therefore likely that China’s Communist Party Congress will also ideologically and in policy terms formalize Xi Jinping’s position in terms of what amounts to Xi’ism.
Trump’s Presidency and Russian Relationship: The Future
Much has been said about Donald J. Trump’s love affair with Russia. Questions deserve a thorough and honest investigation. As distasteful and risky it may be, the best outcome of the enquiry is accusations continue to swirl, Trump limps through three more years, and in 2020, he is crushed at the ballot box. The world moves on. If removed from office, odds are Trump whips his base into a frenzy. Only the height and duration of civil unrest is in question. A worse case is that Trump emerges emboldened, eager to settle Putin’s longstanding challenge.
Putin Mocks Trump
The competition is real. Putin’s economic and political dominance gnaws Trump. Putin knows this. So, he taunts the President and dares Trump to employ the same ruthless tactics he exploited to consolidate power and possibly become the world’s richest man. Since Trump only sees green, he took the bait. The race is on to be the world’s first trillionaire.
Russia’s population is 142 million. Its $3.86trn translates into a measly $26,900 per capita GDP. In contrast, the 326 million people of the United States generate $18.62trn in GDP, nearly five times Russia’s total. The US per capita GDP of $57,600 more than doubles Russia’s. Despite Russia’s meek economy and reports that Putin has embezzled up to $200bn in assets, Putin remains incredibly popular in Russia.
The apathy regarding this unparalleled heist makes Trump and Putin salivate over what they could jointly pilfer from the world economy. To advance their contest, the pair will identify a common threat. US-Russia relations will warm. Under the guise of “Peace through strength,” Russian sanctions will be lifted, and the Magnitsky Act repealed.
The administrative state in retreat, animal spirits will run wild. Trump’s name will be emblazoned across the globe. Countries desperate for jobs will be compelled to forge deals sponsored by Putin and Trump. Ethics be damned, the race to the bottom of the $120trn global economy will prompt a wave of corruption never seen before. Every facet of human decency will be compromised: environmental regulations, free and fair-trade by-laws, intellectual property, and human rights protections. The collusion is real.
In time, complicity will turn to double-crossing. It’s the Trump-Putin way. Makeshift “me-first” trade deals will collapse. Boycotts, divestitures and sanctions will be commonplace. Cooperation will evaporate. New political boundaries will be drawn with little world condemnation.
It doesn’t have to happen this way. Patience is a virtue. The checks and balances of the three branches of government are powerful mechanisms to thwart overt corruption.
Yet, for the impatient who seek Trump’s impeachment or removal via the 25th Amendment, be careful what you wish for. Only Trump can tame his army. To assume Trump will plead mercy at the feet of the administrative state contradicts Trump’s lifelong persona. He will relentlessly counterpunch and encourage his followers to do likewise. The short and long-term political and social risks are astronomical.
If Trump stems the tide, consolidates power and aggressively partakes in Putin’s race for two terms, the risks outstrip his forced removal. The consequences will be multi-generational.
Rope-a-Dope Is the Key to Containing Trump
The only path that possibly prevents extensive collateral damage is to check Trump into policy oblivion. Legislators must play rope-a-dope for as long as it takes, even three years if necessary. If Democrats take back both houses in 2018, the tactic will not set up Trump and his base for a final knock-out punch in 2020. For that to occur, numerous members of the GOP must join the effort. They too must throw periodic jabs at Trump then absorb a barrage Trump’s counterpunches.
With foes in every corner, even Trump – the self-proclaimed greatest counterpuncher in history—and his base will wear themselves out well before 2020. Then the decisive knockout punch can be delivered at the ballot box—without collateral damage.
Trump is severely wounded. If he gracefully and peacefully surrenders the Presidency, great. But don’t expect it. Rope-a-dope deployed by both parties is the countries best hope for a peaceful end to the Trump Presidency. Any other scenario risks the once unthinkable; an ‘American Spring’.
2018 Winter Olympics: North and South Korea will March under a Unified Flag
North and South Korean athletes are set to march together in the opening ceremony for the 2018 Winter Olympics, to be held in Pyeongchang.
On Wednesday, South Korea’s Unification Ministry announced that following talks which began earlier this month, both teams have agreed to participate together under the Unified Korea flag – the first time since 1992.
The two nations, who are still officially at war with one another, have also agreed to field a joint women’s ice hockey team and organise a joint cultural performance. Skiiers from both Koreas will train together at a resort in the North and Pyongyang has reportedly said it will allow a small delegation of supporters to attend.
This represents the first major breakthrough in years. Although some cynics are worried North Korea will use it to buy time for the development of its weapons programme, there are promising signs that the Winter Olympics could help to cool rising tensions in the area.
As a sign of good faith, combined drills held by the South Korean and US army have been suspended for the duration of the Olympics.
Hacks on Cryptocurrency Exchanges Linked to North Korea
A report has linked a hacker group, responsible for targeting crypto-investors and exchanges, to the North Korean state.
The attacks took place against South-Korean crypto-exchanges and included attempts to harvest users’ passwords. The report does not say if the attacks were successful.
The report, by internet technology company, Recorded Future, has identified the attackers as the group Lazarus, known to be associated with the hermit kingdom. The malware was similar to that used against Sony Pictures in 2015, the WannaCry ransomware attack in 2017 as well as the Bangladeshi bank heist in 2016.
Attacks began when cryptocurrencies started to rapidly increase in value. It is believed North Korea favours attacks on cryptocurrency because they are not linked to any bank or government, making attempted heists less politically incendiary.
North Korea has shown a great interest in crypto-currency, potentially as a means for funding itself. In 2017, the elite Pyongyang university started to run courses on the virtual tender.
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