Fortress China: What Could Happen if Beijing Goes Bust

June 11, 2020 Topic: Security Region: Asia

Fortress China: What Could Happen if Beijing Goes Bust

The China wave is receding fast, and what will remain is a smaller, more compact, less permeable country that neither welcomes the world in nor is eager to go abroad. Individual Chinese people, of course, will continue to be among the most mobile in the world, just as they were during the high Ming-era of the long sixteenth century. But the country will turn inward, seek to exclude foreign influences, and focus on stability overgrowth. Not for nothing is Xi Jinping called the Good Emperor: he is returning the country to its neo-Confucian, Han Chinese, Ming Dynasty roots. Welcome to Fortress China.

Pity Xi Jinping. Less than four years ago, he was the anti-Trump, the toast of Davos, the hero of the World Economic Forum, promising to "pursue a well-coordinated and inter-connected approach to develop a model of open and win-win cooperation" and "develop a model of fair and equitable governance in keeping with the trend of the times." WEF Chairman Klaus Schwab lauded China's "responsive and responsible leadership in providing all of us with confidence and stability."

That was then; this is now.

Xi is still the anti-Trump, but that hasn't given him the super-powers he needs to make China great again.  Or even, as he more modestly states his goals, to make China a "moderately prosperous society" that promotes "the building of a community with a shared future for mankind." The coronavirus put paid to the first, and China's post-virus full court press foreign policy offensive has made a joke of the second.

China faces an ongoing constitutional crisis in Hong Kong, airspace incidents with Taiwan, chronic tensions over its militarization of the South China Sea, a tariff war with Australia, a tense border standoff with India, an abrupt end to its post-Brexit honeymoon with the United Kingdom, a battle with Canada over the extradition of a Huawei executive to the United States, and an American election campaign in which the two sides are vying for the title of toughest on China.

All it would take is a rupture with Russia to make Xi's annus horribilis complete, and there are signs that Trump is trying to foster just that. Trump's suggestion that he might invite Vladimir Putin's Russia back into the G7 was a strikingly unsubtle move to build a global anti-China coalition. It probably won't work -- not least because America's G7 allies won't hear of it -- but it must still ring alarm bells in Beijing. The last thing China needs is another problem.

 

Since the proclamation of the People's Republic in 1949, China has never been beleaguered by so many simultaneous domestic and foreign policy challenges. So far, Xi seems inclined to double-down: his answer to each challenge has been to open another policy front. But as each one goes horribly wrong, a day of reckoning must come. Either China will have to back down, as it did in December's Phase One trade agreement calling for a truce in the US-China trade war, or risk going bust. Increasingly, it looks like Xi has chosen the latter.

What would it look like if China "goes bust"? Forget about a Gordon Chang style breakup of China, or a Paul Allison style great power war. If China goes bust, think of a Ming Dynasty style New Great Wall: China will recede into itself.

 

China has already walled off its internet, and it is increasingly seeking to decouple its computer hardware from global production networks. Chinese internet giants like the famed Baidu, Alibaba, and Tencent (BAT) have singularly failed to break out of their home market; China's best-known internet breakout is TikTok. China has built its own credit card network (UnionPay), but it is singularly a network for Chinese cardholders. Exports make up a chronically declining proportion of China's GDP, and unlike Japanese and South Korean companies in earlier decades, Chinese firms have failed to establish a significant presence manufacturing overseas.

Xi Jinping's signature foreign policy doctrine, the Belt & Road Initiative (BRI), has been exposed for what it always was: a subsidy program that only bought influence as long as the subsidies kept flowing. Now that money is tight and China is reneging on its extravagant promises of generous aid, countries as different as Indonesia and Nigeria are seeking new partners for their ambitious development plans. And in the current coronavirus-influenced climate, it's unlikely that any additional first-world countries will be signing up to the BRI.

The China wave is receding fast, and what will remain is a smaller, more compact, less permeable country that neither welcomes the world in nor is eager to go abroad. Individual Chinese people, of course, will continue to be among the most mobile in the world, just as they were during the high Ming-era of the long sixteenth century. But the country will turn inward, seek to exclude foreign influences, and focus on stability overgrowth. Not for nothing is Xi Jinping called the Good Emperor: he is returning the country to its neo-Confucian, Han Chinese, Ming Dynasty roots.

Welcome to Fortress China.

Salvatore Babones is an adjunct scholar at the Centre for Independent Studies and an associate professor at the University of Sydney.