Transcript 0:00 [upbeat music] Hi, everybody, and welcome to Trendlines, a podcast on global affairs brought to you by World Politics Review. I'm Judah Grunstein, WPR's editor-in-chief. 0:14 Since he became China's president and head of the Communist Party in 2012, Xi Jinping has engaged in a high-profile anti-corruption campaign to clean the party up and reestablish its legitimacy while putting off needed economic reforms that would downsize the party's role in the economy. 0:32 That has many observers worried that Xi is simply bent on consolidating his personal hold on power. 0:38 Damien Ma will join Peter Dury a little later to paint a cautiously more optimistic picture of what to expect from Xi as his second term approaches in 2017. 0:48 But first, I'll be talking with WPR senior editor Freddy Deknatel about this week's top stories in international affairs. Hi, Freddy. How you doing? Hey, Judah. I'm doing well. How about you? I'm feeling great. 1:01 So obviously, the big story this week, uh, is still Donald Trump's presidency and the transition, but I think we're all sort of, uh, in hangover stage on that, and there's still just as much uncertainty about, uh, what that means. 1:17 So I thought we could talk about another story, uh, that, uh, made the headlines this week, obviously very closely related, uh, namely President Barack Obama's final trip to Europe as president. 1:31 Uh, he was in Greece earlier this week. He's in Germany now, where he met yesterday with, uh, Chancellor Angela Merkel and is meeting with, uh, um, other European leaders today. 1:44 Um, and I guess for me, uh, I was really struck, uh, by the ironies of this trip. Uh, in the 15 years that I've lived here in France, I've seen a lot of different stages of the, uh, US-European relationship. 2:01 There was obviously the divisions and tensions and hostility over the Iraq War under George W. Bush, and when Obama was elected, there was really a, almost a euphoria here in Europe. 2:15 Finally, uh, the kind of American president, uh, that they, that they'd been waiting for, one who would sort of leave room for Europe and, and make more room for Europe as an actor, as a global actor and in the partnership, um, in, in a way that, uh, they felt George W. 2:33 Bush didn't. 2:35 Um, and very quickly, there was this sort of sense of, uh, the, the, uh, a sense of abandonment because Obama entered office with, uh, somewhat of an aloof approach to Europe, uh, and kind of took it seriously, uh, the idea that Europe is old enough to take care of itself. 2:54 Um, and then in the, in the intervening years, there was, uh, the differences over how to respond to the financial crisis, uh, in terms of, uh, stimulus versus austerity. 3:05 There was the Snowden leaks and the sur- the surveillance of, uh, even Angela Merkel's cell phone, which led to a lot of tensions. 3:14 And now, uh, toward the end of his term, uh, with regard to the tensions in the relationship with Russia, there's been a newfound Eur- American commitment to European security. 3:25 And as Obama makes this final tour, there's th- there's this real sense of nostalgia and loss at the president that, uh, that they'll no longer have to deal with. 3:35 Yeah, I mean, I think the, the nostalgia, uh, as an American, you know, there's the sort of bookend of Obama going to Berlin in 2008 when he was a presidential candidate and speaking in the center of Berlin to a huge crowd, and now, uh, he's in Berlin sort of on his farewell tour, uh, as US president, uh, where perhaps the reception is a little more positive than obviously [chuckles] the, the meetings he's had in the last week with President-elect Trump. 4:02 And I think there's uncertainty, as we mentioned last week, is the name of the game right now, and, uh, you could tell from Obama's statements at a press conference with Merkel yesterday when he was talking about NATO and his hopes for Trump, uh, obviously respecting and upholding the transatlantic partnership and recognizing, uh, NATO's importance in European security. 4:24 He was k- you know, choosing his words very carefully, partly to, I think, make clear that, you know, he hopes that Trump will not actually follow through on, uh, the really extreme things he said during the campaign about maybe not coming to the defense of certain NATO countries if they weren't paying their fair share, um, and suggesting that, um, you know, Russia had never in fact in- in- invaded Ukraine. 4:48 I think that he chose his words very carefully in large part because he doesn't know what Trump will do, and I think Merkel doesn't know either what, what Trump will do. 4:56 I think there, you know, Obama's, uh, trying to assure European leaders, um, that, you know, Trump gave him his word, but I was just reading earlier that, you know, there probably have plenty of reasons to be skeptical of Obama because he also told them that Trump wouldn't win. 5:11 Well, uh, and, and all of this anxiety and uncertainty comes at a, a moment where the European Union and Europe in general is, is, uh, dramatically weakened. 5:22 Uh, the, the landscape has been altered so much since Obama took office. 5:28 Uh, at the time, there was really this idea that the, that the EU could become a global actor, that Europe could, could, uh, project security, uh, pro- could project force and, uh, provide security, for instance, in Africa, uh, as the United States, uh, pulled back some of its commitments. 5:48 Um, and there was, you know, 10 years ago, there was, uh, real discussions of, uh, European defense, uh, integration. 5:57 You have that kind of discussion increasing today in the context of, uh, this uncertainty of what a Trump presidency means. 6:05 But at the same time, the, the, the prospects for Europe being a, a strong and stable actor, even in the region, let alone the world, uh, are dramatically reduced. 6:16 Um, and at the same time, there's this question of norms and values, the idea that, um, Europe always represented this soft power of attractivity In part because of the norms that it represents and the, the values, uh, that it, that it pr- that it defends. 6:34 And now you have this, uh, continent-wide rise of, uh, nationalism and populism, uh, xenophobia, largely characterized by Islamophobia, and it really sort of calls into question that claim that Europe made to being, uh, sort of the model that the world should follow. 6:54 Yeah, there were stories earlier this week about Merkel being, uh, the leader of the free world now, um, with Trump about to go into the White House. 7:04 Uh, meaning, you know, she's, she's the last leader in Europe who really represents, uh, and wants to defend this liberal international order. 7:13 Um, and obviously she faces her own problems at home in an election next year. Um, and obviously, you know, e-elections upcoming in, in France and also in the Netherlands. 7:23 Um, this populist wave, i-it hasn't reached its high water mark with Trump, um, I don't think. 7:29 I mean, at least we, we, we can't say with certainty given, um, that there are several other closely contested and, um, very uncertain elections coming, and I think people... 7:41 Uh, we were talking about it the other day that, you know, once Brexit happened, you know, your, your expectations shift and then could Trump actually happen? 7:49 And then once Trump happens, you know, the expectations shift even further and you wonder who could be elected in, in France now or who could be elected in, in the Netherlands. 7:58 The impossible becomes possible, and the inconceivable becomes, uh, probable. And, and as you said, France's election, uh, next April is highly uncertain. There's a very crowded field. 8:11 There's no real, uh, strong candidate except for the National Front's, uh, Marine Le Pen, who's almost certain to make it into the second round. And yeah, Brexit changes the whole landscape of Europe completely. 8:25 The European Union is no longer the same as it was when, when Obama took office. 8:30 And so if you had a, a populist victory in France and the Netherlands, these are two founding members of the European Union, two anchors of what it represents, and both of the populist leaders, Marine Le Pen and Geert Wilders, uh, in those countries have said that they would seek, uh, a similar kind of exit for a referendum for their countries, uh, should they win. 8:53 So again, it's a, it's a, a moment of, uh, of real insecurity and anxiety internally for Europe, definitely something that you could call an existential crisis. 9:04 Uh, so this added uncertainty and anxiety, uh, of Trump's election, uh, just really, uh, exacerbates and magnifies that. I think that kind of wraps up the time we have to talk about the big stories. 9:16 Were there any quiet stories that we covered this week that, uh, that you wanted to mention? Yeah. 9:20 There was another election story in Central America, uh, a briefing by Christine Wade about Daniel Ortega's recent re-election in Nicaragua. 9:30 Uh, and she draws a line there to really a fever of, of re-election across Latin America, um, and the troubling signs for democracy. And, uh, I mentioned Geert Wilders in the Netherlands. 9:44 Uh, we actually just published yesterday this month's country report on the Netherlands, and it talks about his rise and the implications for Dutch identity, uh, and politics there. 9:55 So an in-depth article, a long read, but a fascinating one and, uh, one that I highly recommend. I guess that just about wraps it up. Sounds good. Good to talk to you, Dan. Likewise. 10:06 Let's pass it over to Peter for the report. [upbeat music] One of the world's most powerful men has arrived in London tonight. China's top leader, Xi Jinping, has consolidated control faster than most observers expected. 10:20 Tensions mount between the United States and China over a number of issues. Tensions within China are also rising. He's a gambler. He's a high roller, and he's bold, he's brave, and taking a risk. 10:32 Key business deal of the week is controversial. It'll bring Chinese companies into Britain's nuclear power stations. 10:40 He is the leader of the world's second largest economy, as well as the commander-in-chief of the largest army. 10:48 The son of a former close ally to Chairman Mao, Xi Jinping not only survived when his father fell out of favor, but proceeded to rise to China's highest offices with a far more ambitious vision than perhaps any of his predecessors in a generation. 11:05 For this week's report, I'm joined by Damien Ma of the Kellogg School of Management and the Paulson Institute to take a closer look at Xi's background as well as his political vision and how it shapes China's domestic and foreign policies. 11:19 President Xi Jinping, uh, rose to power in late 2012. 11:23 He has, uh, become what many believe, and also it is my view, that he's one of the strongest leaders, uh, since Deng Xiaoping, which, uh, was the well-known patriarch of Chinese reforms throughout the '70s and '80s. 11:38 So Xi Jinping is a different kind of politician, uh, and part of his biography is important because of his political lineage. 11:47 His father, a man by the name of Xi Zhongxun, is considered a very high-level, uh, person who fought with Mao Zedong during the Communist Party revolution. 11:58 So he, uh, his father was basically present at the creation, as I say, of modern China. 12:05 Uh, and so he has that political lineage, which makes him a different kind of politician than, uh, his predecessor, who did not have that kind of, uh, political lineage. 12:15 So, uh, he has used that a little bit to his advantage, obviously, and I think he views China through a lot of, uh, his own biography and, and obviously, you know, the way in which he grew up with his father. 12:28 And despite the fact that his father himself was hurt during the Cultural Revolution under Mao Zedong, they, you know, Xi Jinping himself was, you know, basically a survivor of the Cultural Revolution. 12:39 And now he is the most powerful man in China, certainly first among equals. 12:45 Many people say a lot of different things about him, but I think the most certain thing we know about him is that he's a very ambitious guy and he has a grand vision for China. 12:57 I think it can be simply distilled as make China great again is basically his platform. 13:03 This is not some Trump slogan or some simple explanation or it's not, you know, trying to describe a very dystopian, nasty future for China. 13:15 It's really about recapturing what many people in the Communist Party believe was the former greatness of China that has been stifled for at least a century, if not more than a century. 13:29 They call it a century of humiliation, which started with the first Opium War. And that has become kind of the crucible on which Communist Party power and history kind of rests. 13:40 He is basically hoping to lead China through a new Chinese renaissance. Let's not forget China back in its various dynasties. There were, during its peaks, it was estimated to be maybe 50% of the global economy. 13:55 Well, right now it's only about 13% or 14% of the global economy and it's 20% of humanity. In contrast, the United States is about 4.5% of the global population and about a quarter of its economic output. 14:10 China looks at that and they think they've been there before and there's no reason why they can reascend to their peak. Xi Jinping has simplified it into the two ideas of wealth and power. 14:21 Those are kind of the guiding ideas behind his vision and the way he wants to do it. 14:25 And at least based on what he's been doing in the first term, the first five years is he's very eager and very urgently trying to remake and reshape the Communist Party, which he believes has been weak and corrupt. 14:42 And number two, he wants to refashion a new economy, move away from the export and investment intensive model that's been, that's defined the Chinese growth so far. 14:52 And lastly, he wants to reassert China's influence abroad and globally. So there's a political component with the party, an economic component and a foreign policy component, and he's pursuing them all at the same time. 15:05 As one of the first measures after assuming the post of General Secretary, Xi initiated a massive anti-corruption drive that implicated hundreds of Communist Party officials as well as administrators of state-owned corporations and military officers. 15:20 I think he truly believes that that is the precondition to solving a lot of the economic as well as the foreign policy and military issues. So he's really fixated on 15:33 reshaping the Communist Party into a better version of its current self. And he's doing it through a very ferocious, intense corruption campaign. 15:44 This kind of campaign we have not seen for decades, perhaps even a generation. And so he's showing how serious he is in weeding out some of the corruption within the party, which is something he inherited. 15:56 This has been going on for quite some time, so this is not new. He is just coming in very clearly doing something pretty substantial about it. And so this has really defined his first term. 16:11 And even a lot of the economic reforms, I think, have taken a little bit of a backseat because he's so focused on the politics. He truly believes that once the party is fixed, it's less corrupt, 16:24 then I think you can start to seriously execute and implement some of his economic and foreign policy visions. 16:30 China's economic development is fundamental to Xi's hold on power, both in a practical as well as in an ideological sense. 16:39 While the times of breakneck double-digit growth have passed, his government has to ensure continued high growth rates to satisfy the population's demands for improved standards of living, as well as cope with the continued influx of the rural population into the cities and the growth of the labor force. 16:59 At the same time, Xi wants to use China's economic strength as a tool to fulfill his long-term political ambitions. 17:06 He and his government right now seems to believe that both the state and the market can play significant roles just in different spheres of the economy, and they will operate in tandem and in parallel with each other. 17:20 It appears to me that he wants, he is seriously wanting to reform the economy. It's often called rebalancing, but that might not be the best descriptor of it. 17:30 He essentially wants to bring the economy away from its current investment-driven, debt-driven, export-oriented model. He wants to turn a lot more toward high-end value-added, less capital-intensive services. 17:45 China will still have an export sector. China just wants to be more like Germany and Japan in terms of exporting more high-value goods rather than shoes and socks. And they are already making that shift. 17:58 But I think on the export side, they're definitely looking a lot more toward the Germans. And in fact, their industrial policy is basically copied from Germany's Industry 4.0 policy. 18:09 They also want to have the innovation and domestic consumption that really drives the U.S. economy. 18:15 So to me, I think what he wants to accomplish is some hybrid version of a Germany and the United States somewhere in between there. 18:22 But the problem is, and it needs to, first of all, clear a lot of the debt needs to deleverage, but they've also set this fairly high 6.5 pers- percent GDP growth through 2020. 18:36 Economic reality suggests that they probably can't achieve that particular growth target at the same time as they're trying to deleverage and reform. 18:42 There's a bit of a balancing act they need to do here, is if they gotta meet the target, then it, then they're gonna be slower on the reform and deleveraging part. 18:49 So I think in the second term, when a lot of the politics focus should hopefully taper off and die down a little bit, then there'll be a lot more capacity and focus on really implementing and, and, and executing on some of these economic reforms. 19:04 I think it's important to understand that, uh, when, uh, when they announced their big economic reform, uh, blueprint, their 60-point, uh, Third Plenum document, which was the document that everybody looked at as the big, uh, economic reform blueprint that came out in 2013, the key line in there was that the Chinese government decided to make the market decisive in allocating resources, and that was, uh, largely interpreted as China's gonna liberalize, um, you know, uh, marketize a lot of different areas of the economy, possibly even privatize the state-owned sectors. 19:40 I think that was a bit of a over-interpretation of what that meant, and, uh, people need to be clear that the Communist Party has always viewed the market in what I would call an instrumentalist fashion. 19:53 Uh, the market is not an end in itself. The market is simply a useful tool to achieve the power and status that China wants. 20:01 A cautiously optimistic scenario is that they will basically be able to put boundaries on the state sector, clearly delineated, and I think the party will wanna control those state assets, but the market will be much more decisive in the private sector. 20:17 And so the hope is that the private sector will grow as a portion of the overall economy so that, um, relatively speaking, the state sector will be smaller. 20:26 Confronted with immense reforms both within the Communist Party structure as well as the wider Chinese economy, Xi Jinping has also decided to assert China's influence on a global level. 20:40 He has risked the ire of his neighbors as well as of the United States by pushing China's territorial claims in the South China Sea and the Sea of Japan using the newfound strength of a modernized Chinese navy. 20:54 At the same time, China has become more assertive in regional and international diplomacy, deploying its economic, diplomatic, and military influence in ways that present a clear break from earlier administrations. 21:06 The Chinese, even before Xi Jinping came to power, has been wanting to build a blue-water navy. 21:12 They've really substantially wanted to, uh, increase their naval capacity, and they've certainly acquired a lot more toys, uh, uh, gunboats, even an aircraft carrier that they retrofitted from, uh, from the Ukrainians. 21:25 So they've had all this, uh, already, uh, in process even before Xi came to power. 21:31 Uh, and so I think part of it is that China needs to show that it's now a much more capable naval power, uh, that's able to defend its own backyard, so to speak. 21:42 The second factor I think is important to, to understand that this is directly connected to what's happening in, in, in domestic politics with the, with the anti-corruption campaign. 21:53 Uh, Xi- Xi Jinping, when he, when he came into power, he immediately hit the People's Liberation Army, and he, uh, and he purged some, uh, fairly high-level former generals. 22:03 Clearly, he was intent on, uh, weeding out some of the, uh, bad corruption in the PLA. 22:09 Uh, that's because the PLA for the past few decades have, have also, uh, become mixed in, in business dealings and, and, and, you know, property deals and so on. 22:19 So there is a lot of issues with the PLA, and Xi Jinping has wanted to, uh, have a much more s- uh, s- slimmer, more nimble fighting force. He's been very clear about that. He wants a 21st-century fighting force. 22:32 So if he's doing all this political stuff within the PLA and purging people and trying to, you know, basically reduce its size, you know, the PLA is a very important political power base for the president, for, for, for any Chinese president, but, but, but especially for Xi Jinping. 22:49 And so he needs to, I think, at least, uh, um, uh, give them something else so that they stay kind of loyal to him. 22:57 So part of that is driven, I think, by domestic politics, and part of it is ch- uh, sheerly because, as I said, uh, earlier, is China's increasing in capabilities and so its, its willingness to demonstrate that. 23:10 And I'll just end with a final point, which is that, uh, a lot of these things, a lot of these territorial, uh, disputes in the maritime space have actually been, uh, discussed under Deng Xiaoping. 23:23 Deng Xiaoping just chose not to pursue them, uh, in any meaningful way. Uh, Xi Jinping seems to be, uh, less patient about that, and he's basically bringing it up, and he's, uh, 23:34 willing to kind of take these old shelved i- uh, issues and bring them to the forefront today. 23:41 Xi was inaugurated as the president in 2013 and is expected to win a second five-year term in 2018, but his reforms and visions are too ambitious to be realized within the 10 years of his mandate. 23:56 While the presidency is limited to two consecutive mandates, no such legal limits are tied to the post of General Secretary of the Communist Party, arguably the more powerful of the two offices. 24:09 Convention binds these two seats together, but Xi's ambitions bring up questions about his plans for his succession and legacy. First of all, let's be clear that term limits have not been in place for that long. 24:21 They have become a semi-norm, but in reality they really were only implemented under, uh, Deng Xiaoping. 24:29 But Deng Xiaoping himself, let's not forget, even though he formally retired in 19- uh, in the late 1980s, uh, he still remained influential, uh, uh, throughout the '90s, even under, uh, even when Jiang Zemin was formally party secretary of the Communist Party. 24:44 So technically he steps down around 2022. There is some speculation about whether he will try to basically be Deng Xiaoping and remain influential even though he formally steps down. That's hard to say. 24:56 It's purely speculation at this point. 24:58 But I think if you look at, if you looked at all their plans You know, their 13th five-year plan, which is their macroeconomic blueprint, many of their other plans, even Xi Jinping's own personal goals of the two 100 years, which 25:14 is the first 100 years is from 1921, the formation of the Communist Party, to basically 2020, which is about the end of his term. That's when China becomes basically a high middle-income country. 25:28 And then the second 100-year plan is from 1949, the creation of modern China, to 2050, which is when China becomes a true great power, achieving the wealth and power status that Xi Jinping wants. 25:44 Is he going to get the second 100-year plan? Obviously not. But I think he's hoping to leave a legacy where he does fully achieve his first 100-year plan. I think it's possible. 25:54 They have to, I think, really double down on the economic side in the second term. 25:58 And that's why I think to actually achieve some of their economic objectives in terms of doubling GDP, doubling per capita income, they really have to figure out how to reform the economy and really execute on it rather than just have a blueprint. 26:15 Because of the preoccupation with domestic politics and the party in the first term, the actual reform process has really proceeded in fits and starts. 26:23 They've got from basically 2017 after the political transition to 2022 to really carry out some of the more substantial economic reforms. Many thanks to Damien Ma for joining us this week. 26:39 If you'd like to read more about the prospects for reform in China under Xi Jinping, you can find his in-depth article on worldpoliticsreview.com. 26:48 If you like what you hear on Trendlines, go ahead and subscribe to it in the podcast app of your choice. That will save you the trouble of downloading each new episode. 26:57 Trendlines is produced and edited by Peter Dury, who also conducts the report interviews. 27:02 You can follow him and World Politics Review on Twitter, and you can find links to pieces covering the issues we talked about in the show notes on worldpoliticsreview.com. 27:12 Have a great weekend, and see you next week for a new episode of Trendlines.
