What did David Shambaugh just say? (Part I)

First shots were fired just before lunch time on March 6 2015, as “The Coming Chinese Crackup” by David Shambaugh, the renowned China scholar, author of China Goes Global, went up on WSJ. His thesis, summarised in the title: Xi’s anticorruption campaign 反腐 and other repressive policies had become excessive will unwittingly result in the party state’s collapse—exactly how, nobody can tell (!?). But just maybe Xi might be “deposed in a power struggle or coup d’etat.”His argument has seemed to opened up a firework of responses from all sorts of wonderful, and sometimes unheard of China specialists, demonstrating how the debate has kept its juice pretty much since the People’s Republic of China was founded when PRC-doomsday theorists reared their head.

Since, this is a personal blog, I will reveal my bias and say many of the counterarguments wonderfully rounded up and presented in words the many frustrations I had reading through Shambaugh’s piece. I apologise in advance for the following chaotic mesh up of quotes without quotation marks and no-quotes parading as quotes and quotes in quotation marks here.
Here are Shambaugh’s major reasons for the coming crackup and some of my favourite responses and their key points.

Shambaugh’s first point: Rich Chinese, many of whom are also party members, are emigrating abroad, hoarding foreign property, and having their children born into foreign citizenship. This is a sign of “lack of confidence from the regime and the country’s future”. Therefore CCP will crackup.

Arthur Kroeber, managing director of GaveKal Dragonomics: Rich people may want to go out, but capital outflows are still modest and many rich Chinese still investing in China. Following relaxation of rules, business registrations rose 45% in 2014.

Shambaugh’s second point: Such aggressive repression demonstrates the party leadership’s deep anxiety and insecurity. Therefore, CCP will crackup.

Kroeber: “crack down on free expression and civil society is deep distressing” but not necessarily sign of weakness. Can even be viewed as China’s Authoritarian-Capitalist model, a rejection of the idea that China needs liberal democracy to keep going. Anti-corruption is a way of stabilizing the system, if this is to work, Xi needs control over all aspects of the political system, including ideology. And Xi has delivered this.

Shambaugh’s third point: Regime loyalists are merely pretending. They merely “recite stock slogans verbatim”, as I [Shambaugh here, not me] have seen at Central Party School party’s highest institution of doctrinal instruction, and look bloody bored. Therefore, CCP will crackup.

Ryan Mitchell (currently a Ph.D. candidate in Law at Yale, previously an attorney on Chinese human rights): “Yet for many within the Party, tifa are anything but boring: they are a constant reminder of lines not to be crossed, positions to be advocated, opportunities for advancement (or, especially since the Deng era, enrichment), and expressions of the current balance of power. They are visible expressions of political capital and materialized authority.” Political aesthetics matter in China, where “authority contains both rational and irrational factors” that are intertwined, and if Xi carves out a good image of himself, say his election image of “devotion and sincerity”, which his father Xi Zhongxun has said was the most lovable qualities of “us Communist Party folks”.

Shambaugh fourth point: War on Corruption is a “selective purge” and will never truly knock off corruption off its perch. It is so damned rooted in Chinese culture. Therefore, CCP will crackup.

Ho Fung Hung, Associate Professor of Sociology at Johns Hopkins University.Xi, compared to Jiang Zemin and Hu Jintao who were hand-picked by Deng Xiaoping, last of the founding fathers, with approval by party elders, is the first leader to be chosen out of delicate compromise, and so has relatively little legitimacy. No wonder that his corruption campaign is raging, after stories of an attempt at an internal coup amongst princelings (which do not sound too far off reality, it has happened before in Chinese elite politics, most memorably with the Gang of Four.) But it is true that party rift is happening at the worst economic times. An internal coup may materialise but other political elites won’t rock the boat since their own security and interests are pegged to the party-state.

Shambaugh’s fifth point: Reforms are sputtering on the launchpad, Xi’s ambitious goals are stillborn, reform challenges powerful deeply entrenched interests.

Kroeber: China is still the faster growing economy in the world. 2014 saw the start of restructuring local government debt to revamp the fiscal system. China is also taking first steps to liberalise one-child policy and the hukou system. There are important changes in energy pricing. Shanghai’s stock market was linked to Hong Kong. Reorganization of state-owned enterprises are planned (and might I add here that anti-corruption is also aimed to dishevell the network of entrenched interests in amongst these enterprises).

Shambaugh’s conclusion: all these cracks can only be fixed by political reform. But Xi will never relax his current repressive policies because for him relaxing means collapse of the party.

Kroeber: No apparent evidence that China’s rising middle class want political change. The urban bourgeoisie (about 25% of the population) fear they may lose out to the rural masses (88%) in a representative system.

(might I add here, Luigi Tomba, expert on municipal government in China, talked about how the in many ways the middle class in China can be characterised as the propertied generation who first emerged during late 1980s and early ‘90s when the work units 单位 danwei—which used to organise much of Chinese society—allowed workers to own their own property, thus giving rise to the property boom and the rise of the urban bourgeoisie. He remarks how the values and beliefs of these propertied-generation are not comparable to their Western counterparts since many don’t believe in pursuing systemic change per se, but rather seeking new ways of pursuing their economic and social interests very much within the given boundary.)

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