The Domestic Politics Behind China’s International Engagement

International ambitions, domestic politics

In his opening report to October’s party congress, Xi presented China as a team player while reminding the world of its growing influence. In Communist party rhetoric he reiterated China’s commitment to peace, cooperation and development – and to tackling common threats like terrorism, cyber-attacks, infectious diseases and climate change – all areas where China’s role is critical.

Xi also made clear China’s ambitions to reshape the global order and defend its interests. He argued that changes in the global governance system and international order are accelerating. And while he made assurances that ‘China will never seek hegemony or engage in expansion’, he also stated clearly that China will never ‘give up its legitimate rights and interests. No one should expect us to swallow anything that undermines our interests’. Such interests are most obvious on territorial issues – either those relating to potential secession (such as Tibet or Taiwan), or to its claims in the South China Sea. China has not, for example, accepted the 2016 ruling of the tribunal at the Permanent Court of Arbitration in The Hague against its claims to islands and reefs also claimed by the Philippines.

Of course, this combination of increasing global influence and staunch defence of national interests bolsters domestic support for both Xi himself and for the CCP. But their legitimacy is still based more on delivering social and economic development than on generating nationalist sentiment through positioning on the global stage. Domestic, social and economic issues take priority, as can be seen from the fact that Xi’s speech to the party congress discussed home affairs for almost three hours. International relations were only addressed towards the end of his keynote speech.

China’s challenges

China’s international engagement is tailored first and foremost to delivering on domestic social and economic goals that are crucial to underpinning both Xi’s and the CCP’s power and legitimacy. October’s congress committed the party to creating a ‘moderately prosperous society’ by 2020, ‘socialist modernisation’ by 2035, and ‘a great modern socialist country’ that is prosperous and strong by the middle of the 21st century.

The challenge for Xi and his party is to continue improving average living standards while tackling problems such as pollution and inequality. Although China has gone from a low-income to an upper-middle income country over the past 40 years, its per capita GDP is still, at US$16,600, well behind that of the US ($60,000) or UK ($43,600). In his congress speech, Xi articulated this as resolving the new ‘principal contradiction’ – between the demands of the people, and the existing social problems and regional imbalances. In the CCP’s traditional Marxist rhetoric, this signals these problems as a core issue for the party.

The party-state’s specific targets to help raise living standards and reduce inequalities include eradicating poverty by 2021, the CCP’s 100th anniversary, and improving its health and social indicators – life expectancy, infant and maternal mortality rates – to the level of the world’s richest countries by 2030. To this end, it is providing targeted poverty assistance and reforming its health system – pushing to improve primary care, and reduce inequalities in access to services. It is integrating its highly unequal urban and rural social security provisions – a huge challenge, given that many people still live in rural, often remote, areas. In some of this it will need skills and investment from abroad: for example, to train nurses, reform hospital management and improve care for the elderly.

The CCP has also signalled that it is serious about fighting environmental degradation – reducing pollution and plastic waste imports. Industries and factories – including international ones – that emit pollutants are no longer welcome in most cities. But many environmental policies that will make China an important contributor to tackling climate change are driven less by global imperatives and more by efforts to get ahead in developing renewables and other new technologies, and by domestic political concerns arising from popular dissatisfaction with poor air quality.

The CCP leadership sees sustaining economic growth and global engagement as central to its social development goals and to extending China’s influence. In his speech at congress, Xi called for China to ‘promote economic globalisation, develop an open economy of higher standards, and continue to increase China’s economic power’. The aim is for China to be a leading industrial nation – through such initiatives as ‘Made in China 2025’, the target of which is to make China a manufacturing powerhouse. The focus is on moving ahead quickly in high-tech industries and the digital economy to put China at the forefront of emergent sectors.

But openness to inward investment is likely to be increasingly selective and to focus on sectors where China wants funding, new technologies and know-how. In its free trade zones, the Chinese government has lifted a number of restrictions for non-Chinese companies – indicating new fields they want foreign companies to engage in on Chinese soil. Beneficiaries include manufacturers of new energy vehicles or civilian satellites. China will need to balance its needs in these areas with demands for access in others.

China’s high profile Belt and Road Initiative (BRI) has seen it invest mainly in infrastructure projects to connect it with markets in Europe and beyond. But even this is underpinned by domestic economic concerns. As well as potentially transforming relations with central Asia and Eastern Europe, and bringing investment and trading links, a key driver of BRI is China’s need to find venues for its excess production, including in cement and steel. With Xi Jinping understood to be personally behind it, the BRI will continue to receive substantial investment from China’s policy banks. The initiative has already expanded rapidly to include a growing number of countries worldwide, beyond the original focus of links between China and Europe.

Xi’s backing also means that many Chinese businesses – both private and state-owned – are competing with each other for a role, as this investment from China is channelled through a range of mechanisms and instruments. But such competition does not prevent these businesses from sometimes acting on behalf of the CCP. Chinese businesses and individuals abroad are often pressed to promote Chinese interests, as we have seen from recent debates over Chinese influence in Australia and New Zealand.

CCP power, political innovation and social control

Xi Jinping is in a powerful position to push forward reforms that carry his signature. And despite CCP rhetoric on China’s ‘consultative democracy’ and promoting rule by the people, his congress speech set out ambitions to strengthen the position of the CCP, by reinvigorating party committees and cells, and enforcing party discipline. Since 2012, the CCP has massively expanded its presence in social, non-governmental organisations – with the number of party organisations more than doubling. In a next step, the CCP is now eyeing expansion in private, even fully foreign-owned enterprises.

For more than six decades, the CCP has been a barely-challenged power in the Chinese political system. Its leading role is enshrined in the constitution of the People’s Republic of China. However, the CCP is not the revolutionary party it once was. Despite its monopoly on political power, it recognises the continuous need to innovate and adapt to changing circumstances. In order to improve governance and the delivery of public goods it embraces the latest technologies, such as the internet, big data, and even artificial intelligence. The Chinese leadership plan to establish a so-called ‘social credit system’ have been quickly taken up by local governments and even private IT companies. Competing experiments are collecting and analysing the personal data of individuals and organisations, to calculate a score for not only credit worthiness but also political reliability and may soon give the CCP unprecedented social controls. In times of increasing distrust and the demand for more sophisticated instruments to predict and influence the behaviour of individuals, China might become a role model for authoritarian governance in the 21st century.

OPEN IN VIEWER

In terms of what this means for engaging with China: we need to understand that while the CCP does not direct all its businesses and citizens as they operate at home and abroad, it is developing a set of tools to influence their behaviour in its own interest. An automated system of control and surveillance, with transparency concerning rules and costs for non-compliance will affect Chinese and non-Chinese actors alike.

Complex futures

If China can sustain its current economic growth then BRI will continue to deliver investment, as well as indebtedness and control over ports of strategic importance. However, in some regions that originally cheered for Chinese investments, there are growing doubts about the benefits. Central and Eastern European countries (CEECs) are a case in point. Since 2012, a group of 16 countries from the Balkans to the Baltic Sea has held so-called ‘16+1’ summits with China. After a honeymoon phase, many politicians in CEECs are now disappointed with the results. Domestic companies have not been considered for tenders, and infrastructure projects run by Chinese construction companies are felt to have so far brought few benefits. This indicates some of the risks to those in the UK government looking to China to compensate for damage to UK trade, post-Brexit.

In dealings with China, there are many opportunities, but we should remember that the CCP has significant power at home. By raising living standards and delivering economic growth and global influence China secures considerable domestic support while critical voices are muted (and even under threat in Hong Kong). The CCP can marshal considerable resources to its goals – resources that exceed what you would expect from a country at its per capita GDP level – in part because of the absolute size of its economy. These resources can be beneficial internationally, most notably in tackling climate change. China’s ambitions are not inherently pernicious or expansionary, but should not be mistaken for simple global generosity. For this reason, European nations should be clear on their own interests and core principles, and be prepared – as China – to defend them. They have the ability to leverage influence if they act together – and for this reason it is important that the UK, post-Brexit, works in close cooperation with its European allies to understand and engage with China.