National Security

The China Way

Chinese Capitalism
Xi Jinping
Xi Jinping
Xi Jinping, BRICS summit 2015 | Photo: James Faddis | Chinese, China, Trade, Trump, Rules,

One Nation, Two Systems

China finds itself divided in its political philosophy. The People's Republic of China (PRC) began as an avowed communist state, but in 1997 after much negotiation over Hong Kong's future, there evolved a concept that paved the way for contemporary China's evolution today. The new concept was added to China's constitution as Article 31. This key clause established "special administrative regions" that allowed certain areas of the country to operate differently than most others. Preoccupied with the overriding aspect of established law, the communist leaders created the legal underpinnings for "one country, two systems".

This form of economic schizophrenia has been amazingly successful, even though perhaps a political "bastardization" of the Marxist Leninism on which modern China and its revered late leader, Mao Tse-tung, supposedly based his revolution. The Chinese always have been given credit for being practical. They saw quickly that their original mentor and supporter, the USSR, had been unable to continue to maintain its dominance because it didn't effectively evolve in economic terms. The new Russian Federation did not make the same mistake. It was the acceptance of politically approved private enterprise by the new Russian structure that gave the Chinese leadership the political justification to expand their Article 31.

It would be a mistake, however, to think that the broad discipline approach to Mao's initial formulation of the PRC has been lost. Interestingly, it is this discipline that is credited by many in Beijing's leadership as to why and how Article 31 has worked so well. They still refuse, however, to recognize officially that disciplined capitalism is far more than a similarly disciplined Marxist socialism. One discipline is enforced by law and logic, while the other is enforced by dogma and political control.

The creation of the new Shanghai Stock Exchange in 1990 was an indication at the time that China was on its way to change. The expectation that Hong Kong would be turned over by Great Britain was still being negotiated, but the ground was being laid already by Chinese financial interests. Knowledgeable European financiers were positioning themselves for what would come to fruition in 1997 and beyond.

There has been a tendency among analysts to view China's growth as a regional and world political economic power as strictly domestically driven. While not taking anything away from their ingenuity in science and technology, as with most world powers – including the United States, China's growth industrially and in world trade has been aided substantially by foreign investment finance. Therefore, it is no surprise that except for the recent challenge posed by the Trump administration tariffs, China's advance in international trade and finance has continued apace.

In the military sphere, China has made great strides in its technological intelligence gathering – which of course has offshoots in the civilian sectors. Part of the continued strong effort to extend and justify its claims on the off-shore islands and their man-made duplicates is to keep alive China's expansionist claims to control passage through the South China Sea. All of this action provides a convenient tradeoff for their real aim of getting control of Taiwan. As the British say, "Damned clever these Chinese, wot?" Of course, there is also a chance to lay claim to offshore oil sources.

Everything in Xi Jinping's playbook involves multiple mechanisms of economic, political and military advantage. Nothing is straightforward, or needs to be. China doesn't have to learn this strategy nor the tactics therein from any other nation, Russia included. However, now with a unified and powerful nation, China has the ability to exploit their "natural and historic" instincts. Manifesting the exploitable aspects of capitalism, while maintaining the discipline of their own form of socialism, fits perfectly.
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Admittedly, the Chinese government has sent thousands of students to the United States and Western Europe to study everything from technical developments to political action structures. This is deemed an indication of the extent of their intelligence gathering - and it is. However, such information and procedural acquisition also has a concomitant effect on their students who are so involved. Exposure to the culture of the West, and especially the freedoms of the United States, obviously has the potential of "infecting" young student minds. Maybe such a phenomenon does not occur to the degree one might think, but at some level it must happen.

Certainly, Chinese authorities are aware of this vulnerability in their overseas education program. They would be very conscious as to whom they send and their demeanor during and after their period of study. Obviously, the students are monitored by peers who accompany them. Nonetheless, this program, as effective in technical intelligence gathering as it might be, from a political standpoint is very dangerous in Chinese terms. That is an important vulnerability in "The China Way".

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Updated Oct 17, 2018 6:52 AM EDT | More details

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