As the celebrations of the 70th anniversary of the Chinese Communist Party’s (CCP) takeover of mainland China recede into recent history, a look at the Communists’ heritage suggests that for all its foreign-exchange reserves and tech manufacturing know-how, and despite its military hardware and far-flung infrastructure investment portfolio, China may not have come that far.
On the eve of the military parade in Beijing that marked the anniversary parade, President Xi extolled the virtues of China’s communist heritage—at a village where nearly half the residents starved to death during the famine wrought by Mao’s Great Leap Forward. The choice of venue highlighted how Xi faces a similar crisis—the decimation of China’s hog stock by African swine fever. The price of pork, a staple on Chinese dinner tables, is soaring, and medicine to protect remaining hogs is in short supply. By some estimates, half the country’s breeding sows have died. Communist China at 70, which controls the economy from ministries in Beijing that pledge to make China the world leader in advanced technology by 2025, seems no more able to assure adequate food supplies for its citizens than Mao in the early years of Communist rule.
Unsurprisingly, reports about the proceedings of the CCP plenary meeting in early November affirmed that the Party continues to expand its power over all aspects of Chinese society. One of the few novel ideas in the official reports was that China would completely open its agricultural sector to foreign companies and investment. Perhaps that too is not surprising for a country suffering through the collapse of one of its major food sources.
Looking abroad, the Communist infrastructure investment campaign continues, and despite recent overt opposition from the United States, the expansion faces few obstacles in practical terms. The mostly clear sailing that China is enjoying stems from the lack of alternative sources of capital on the scale and low-cost basis available from China. While China continues to concentrate on buying infrastructure operation contracts or investing in new assets in less-developed or emerging markets and financially-weak developed markets, this year also saw China’s global infrastructure push reach the U.S. East Coast.
In the background, Hong Kong continues to simmer. The situation provides valuable historical context for today’s trade war, as well as the Chinese military expansion that was on display at the anniversary parade. Despite Hong Kong’s leadership having officially withdrawn the extradition law that sparked the unrest now in its eighth month, the protests show no sign of ending. At the same time, Beijing seems to be focused on taking Hong Kong down a peg.
The plenum framed separatism and foreign interference in Hong Kong as national security matters—essentially declaring that matters in Hong Kong are now matters of mainland Chinese sovereignty, for Beijing to decide. The “one country, two systems” concept stands as a stark reminder of the century-long Treaty Port era, when China was forced to allow Western powers to live under their own laws within commercial facilities established on Chinese territory. The primary trade objective was to ensure Western companies could import their goods into China—to help redress the trade surplus that China amassed as Western traders paid in silver for the Chinese tea, porcelain, and silk in high demand in their domestic markets. Opium was the most profitable good the West could offer. The opium trade gave rise to a credit market that pulled China into the Western financial system, largely without the consent of the Ch’ing government, as the lucrative economics of opium—along with Western military and naval superiority—enabled Westerners to expand opium trade despite the efforts of Chinese officials to prohibit drug traffic.
Adding historical context for today’s trade war, it was the 1844 Sino-American Treaty of Wanghia that introduced the concept of “extraterritoriality,” a humiliating mechanism that granted foreigners immunity from prosecution under Chinese law. Negotiated for America by Caleb Cushing, a Massachusetts lawyer with connections to the China trade, the treaty vaulted the relatively small U.S. onto the same plane as Great Britain; though the U.S. lacked Britain’s economic and military power, the Cantonese officials who agreed to Cushing’s terms were motivated in part by their desire to prevent the Yankee’s trade mission from going to Peking. That would have brought unwanted central government attention to the luxurious lifestyle and profit-seeking mindset of China’s southern coastal trading centers, which represented an affront to Chinese values.
The unequal treaties that sanctioned self-governing foreign settlements on Chinese land came to be known as concessions. Hong Kong remains a symbol of the coerced surrender of Chinese sovereignty; the term “one country, two systems,” a lingering reminder that as recently as 1984 China was not strong enough to negotiate a treaty that enabled it to govern its own territory without making concessions to a Western power.
Communist China at 70 has turned the tables on the West. Instead of granting concessions to militarily superior Western powers, cash-laden Chinese state-owned companies are buying concessions to operate ports across the West, many in countries so financially weak that China gains political and economic leverage by operating the facilities that handle the host country’s imports and exports—a 21st-century version of the “one country, two systems” concept that China was forced to accept in the 19th century. This ground presence could help China project its growing military power without engaging in combat: will a country that depends on China not only as a customer, but also as the financier and operator of its international trade infrastructure, side with the U.S. or a Western coalition against China in a military confrontation?
Cheap financing for big public works appears to be the Party’s version of 19th-century opium—and governance may well be the Party’s next major export. But until he can fix the kind of basic agricultural problems that decimated China under Mao, President Xi is not likely to win any lasting adherents to his Party’s cause.