Neican: 23 May 2020

China Neican is a weekly column of the China Story blog that brings you concise, timely, and policy-focused analysis. Neican 内参 or “internal reference” are limited circulation reports only for the eyes of high-ranking officials in China, dealing with topics deemed too sensitive for public consumption. But rest assured, everyone is welcome to read what we write.

1. Economic priorities

One big item that has emerged from this week’s annual “two sessions” is that China has scrapped the GDP growth target for this year. If COVID-19 did not happen, the growth target would have been set at “around 6 per cent”. The absence of a growth target is a somewhat extraordinary break from usual practice. The growth target has been an important political signal since the 1990s. Beijing escrowed a hard target probably because this year’s growth will be quite low, and even then it doesn’t want to be tied to a hard target.

Instead, the focus has shifted to “Six Stabilities” and “Six Priorities” (六稳六保). One big part of that is employment. At least nine million jobs are to be created in urban areas (城镇新增就业); urban survey unemployment (城镇调查失业率) is to be around 6 per cent; and urban registered unemployment (城镇登记失业率) is to be around 5.5 per cent. The aim is to stabilise employment, guarantee livelihood and promote consumption (稳就业保民生促消费).

On the other hand, the aims to “build a moderately prosperous society in all aspects” (全面建成小康社会) as well as to “eradicate absolute poverty” (脱贫) by this year have not been scrapped.

These goals are set with an eye to ensuring social stability, which is crucial for the party-state’s legitimacy, especially at a time of uncertainty and crisis. High unemployment can be a significant source of resentment towards the government. One estimate puts the figure of China’s unemployed at around 50 million people, or 12 per cent, in March.

China’s focus on employment rather than growth may mean some short-term pain for countries economically exposed to China, such as Australia, as China will look to prioritise domestic production even more.

2. National security law for Hong Kong

China unveiled plans at the “two sessions” this week to legislate for a “national security” law for Hong Kong that would effectively criminalise dissent, and further tighten its control over the city.

Recent anti-government protests are seen by China’s leaders as “subversive” and a challenge to Beijing’s authority and China’s national security, necessitating the urgency in passing this law. Instead of acknowledging genuine local grievances, and the party-state’s own role in the mutually-reinforcing cycle of oppression and resistance, Beijing blames malicious “foreign forces” and local “criminals” for the city’s recent unrest.

The new law is framed as a necessary measure to close legal gaps, but in reality it would strengthen Beijing’s hand in Hong Kong by further closing the space for dissent. The Chinese party-state has a strong track record of subordinating law to politics, and the new law will be used against what Beijing considers to be its local political enemies.

Beijing’s new efforts indicate that it doesn’t think such a national security law could pass Hong Kong’s legislature. Hong Kong’s Basic Law (mini-constitution) requires the city to put in place legislation to “prohibit any act of treason, secession, sedition, subversion against the Central People’s Government”. But a proposed bill was dropped after mass demonstrations in 2003, and has since been in limbo despite calls by pro-Beijing politicians to reintroduce it.

The process for introducing the new law is striking because it’s another clear demonstration of what Beijing sees as its ultimate authority over the city. Under the Basic Law, which gives legal form to the ‘one country, two systems’ framework, Hong Kong is guaranteed a “high degree of autonomy” in the exercise of executive, legislative and independent judicial power. The city’s “way of life shall remain unchanged for 50 year [from 1997]”, so it was promised. As we noted earlier:

“[‘one country, two systems’] is a model of central-local relations born out of tactical necessity rather than any deep commitment [by the party-state] to political pluralism or respect for the autonomy of Hong Kong and Macao.”

Indeed, Xi Jinping sees ‘one country’ part of the formulation as the roots of a tree, as the foundation, while the “two systems” part can be compared to the leaves and branches, both transient and expandable.

Last week, we said that “[a]s human rights, media freedom, rule of law, and Hong Kong’s autonomy continue to come under pressure from Beijing and its local proxies, we should expect to see continued, and perhaps intensified, resistance.” The ‘perhaps’ has now turned to a ‘definitely’ as there is little doubt that Hong Kong is heading towards new eruptions.

3. US strategic approach to China

The Trump White House released its United States Strategic Approach to The People’s Republic of China report this week. For those interested in US-China relations, we highly recommend you read the 16-page document in full. While there is nothing strictly “new” in the report, it is a full articulation of the administration’s position on China, including on the China challenge, its approach to relations with China, and the China-relevant measures implemented under the 2017 National Security Strategy.

The new approach “reflects a fundamental reevaluation of how the United States understands and responds to [China]”. The report argues that engagement with China has not worked in spurring China’s “economic and political opening”, and in fact, “reforms have slowed, stalled, or reversed”. Indeed, the direction that China is travelling currently is not deemed to be converging with US interests.

This “fundamental reevaluation” has a number of glaring flaws.

First, contrary to the narrative that the US engagement with China was for the purpose of liberalising China, the predominant reason for engagement was self-interest. During the Cold War, the US-China strategic realignment aimed to contain the Soviet threat. Post Cold War, the two countries benefited greatly from their economic ties.

Second, engagement has produced mixed results, but it is far too simplistic to say that it has straight up “failed”. This, of course, depends on what criteria we measure it up against. For one, China participates in the international system today like any great power instead of a state bent on exporting revolutionary violence and overthrowing the existing order. Moreover, despite efforts by the party-state to prevent “foreign [ideational] pollution” and at social and economic control, today’s China is more open to foreign ideas, good, and people than almost anytime in modern Chinese history. Further, the human rights situation in China has improved since Maoist times when tens of millions died because of the crushing brutality of the party’s political campaigns. This is, of course, no comfort to those locked up in Xinjiang’s concentration camps, but in some ways, China has changed.

Despite the authoritarian turn under Xi, China in the last decade is closer to US ideals than at any time in history. Certainly, more so than when Nixon and Mao met in February 1972.

There are many reasons to compete more intensively with China, but the narrative that engagement was to liberalise China and that it failed dismally, is not one of them.

On how the US will relate to China today, the report states that the US new competitive approach to China will be “guided by a return to principled realism” that acknowledges the existence of “long-term strategic competition between [US and China]”. This approach has two objectives:

first, to improve the resiliency of [US] institutions, alliances, and partnerships to prevail against the challenges the PRC presents; and second, to compel Beijing to cease or reduce actions harmful to the United States’ vital, national interests and those of our allies and partners.

In practice, the US is now willing to tolerate greater bilateral friction with China, with only engagement pursued in a “results-oriented” (instrumental) basis.

But even if we buy into the Trump Administration’s characterisation of the China challenge, and agree that the principles underpinning its new competitive approach are sound, there still remains the question of execution. So far the execution has been patchy if not poor… but we’ll leave that for another day…

4. COVID inquiry

The World Health Assembly agreed to a resolution that requests the World Health Organization to:

initiate, at the earliest appropriate moment, and in consultation with Member States, a stepwise process of impartial, independent and comprehensive  evaluation, including using existing mechanisms, as appropriate, to review experience gained and lessons learned from the WHO-coordinated international health response to COVID-19

The resolution was led by the EU and gained the support of a wide range of countries, including China (but not the United States).

This resolution has allowed both China and Australia to claim “victory”. Australian media has claimed vindication, naming it “Australia’s inquiry” as it has led the call for an independent inquiry. On the other hand, the resolution is not what Australia has been pushing for, which is to investigate the “origin” of the outbreak, rather than the “response” (which, as we noted, China is likely very happy to do). The inquiry may open a Pandora’s Box of examining different countries’ responses. The Trump Administration will certainly not welcome this. The timing is also vague, and China has ruled out an investigation before the pandemic is over.

Despite both Australia and China claiming diplomatic victory, this resolution is unlikely to be the end of bilateral tensions.

This week on China Story

  • Jeffrey Wilson, The Australia-China trade war: Vale the ‘grand bargain’?
    For several decades, a ‘grand bargain’ has underpinned Australia-China ties. Recognising economic opportunities exist alongside diplomatic friction points, both sides sought to maintain a separation between the political and economic domains of the relationship. But with the recent outbreak of a COVID-19 dispute, which has led to a bilateral trade war over barley and beef, the separation looks increasingly untenable. Has the Australia-China grand bargain begun to unravel?
  • John Lee, China steps up the long march to 5G
    Despite much of the country still being under coronavirus restrictions, China has doubled down on its’ national roll-out of fifth-generation (5G) wireless connectivity, with central government direction to ‘forcefully advance 5G network construction’.  With economies around the world hobbled by the pandemic, China’s state-led drive to deploy 5G is stoking fears that next-generation telecommunications and the applications built upon it will be dominated by Chinese firms.
  • Beyongo Mukete Dynamic, China is losing its critical African “friends” when it needs them the most
    With rising tension between Beijing and the West, China needs friends now more than ever. But repeated racially-motivated discrimination against Africans in the southern Chinese city of Guangzhou are undermining decades of China’s efforts to build a reservoir of diplomatic goodwill across Africa.
  • Ruiping Ye, The legal basis of China’s COVID-19 response
    China’s laws on emergency response and epidemic control are relatively complete. The laws deliberately leave room for the flexible exercise of powers by local governments to respond to the epidemic. However, it also leaves room for the misuse of powers. Further, while government and departmental orders are quick and effective in times of emergency, the legality of some orders is questionable.
  • Diarmuid Cooney-O’Donoghue, Rising to the challenge of teaching Chinese students
    Some Australian academics and commentators have accused Chinese international students of threatening freedom of speech in Australian classrooms by attempting to shut down discussions on controversial topics, such as on the status of Taiwan, and human rights in China. Yet others claim that these students bring much-needed diversity and different points of view into the classroom. Australian universities should seek to protect academic freedom, while better managing diverse classrooms and supporting international student experiences.