Friday, May 08, 2020

China Has Long Prepared for War With The West


independent |  For China, this is not just any economic crash. It is one the country's leaders have steeled against for more than a decade. 

China's top policy planners have long assessed the geopolitical ramifications of the next big economic crisis - the one that would bring their decades of miraculous growth to a halt.

Official policy papers reflect Beijing's awareness that this event would not only serve as a critical test of the Chinese Communist Party's domestic rule, but could reshuffle the balance of powers among China and Western nations.

“After a big crisis, what is redistributed is not merely wealth within a country, but the relative power of all nations,” wrote China's chief economic architect Liu He, who has since risen to vice premier, in a 2013 study of recessions.

China reported a 6.8 per cent drop in economic output for the first quarter of 2020, its first contraction on record since the death of party founder Mao Zedong in 1976. In recent weeks, president Xi Jinping has launched a construction campaign akin to that seen in America in response to the Great Depression, while touting poverty relief and investment in advanced technology to help boost both the output of coronavirus-hit factories and consumer spending.

Since Mr Xi came to power in 2012, he has fast-tracked political preparations for the end of economic growth. He has flooded the airwaves with wartime-esque propaganda that lauds individual sacrifice for the national interest, while quashing budding pockets oCf dissent before they could grow.

“Xi Jinping's political control policies all along have been guided by a recognition that someday the economic miracle will begin to sputter,” said Richard von Glahn, a China economic historian at UCLA. “The coronavirus has accelerated the timetable.”

In 2010, China's top leaders commissioned a team led by Mr Liu to study the Great Depression and 2008 financial crisis. The project included officials from China's central bank and banking regulator, and resulted in hundreds of pages of analysis and policy recommendations published three years later.

This early preparation may give China a head start in its crisis response. As most of the world 
remains engulfed in day-to-day pandemic relief, China has begun broader strategic pushes, inching outward its sphere of influence in the Pacific and declaring greater control over Hong Kong. Beijing's overseas push has been made easier by the Trump administration's domestic focus, with the United States withdrawing from some of its traditional international roles.