Kevin Rudd: Xi Jinping Wants to 'End a Posture of Passivity'
Kommersant Interview with ASPI President Kevin Rudd
(This is an unofficial translation. Read the interview in the original Russian on Kommersant.)
Former Australian Prime Minister Kevin Rudd, who currently heads the Asia Society Policy Institute (ASPI), visited Moscow in order to include Russia in the global network of experts on Asian policy issues and to find out the Russian perspective on regional problems. In an interview with Kommersant correspondent, Mikhail Korostikov, the well-known Sinologist talked about the most serious threats to the Chinese economy, and why China has intensified its foreign policy.
What is the purpose of your visit in Russia?
As president of the think tank, ASPI, I mainly focus on hard policy issues facing the Asian region, such as East Asian security architecture. And from that perspective, the answer to your question is very simple: Russia is a part of Asia, however it defines itself, and its interests lie in Asia. Russia is also important to the commission (ed. — the policy commission was established by ASPI on the initiative of Kevin Rudd to find ways to settle regional disputes). The commission already includes representatives of Japan, Korea, China, Southeast Asian countries, and the U.S. Participants are scholars close to the centers of decisiom-making or retired senior policy makers. And I think Russia should also be represented.
Did you succeed in conveying your ideas to your interlocutors in Moscow?
I concentrated on research institutions, mainly on those which deal with security policy in East Asia, regional trade, and also on issues of global order. Russia has long been involved in political processes in Asia, and that’s good. There may be debates about the extent to which this policy is covered in the popular media, but within the academies there are a range of people who know their field intensely. And that is useful.
So do you think that, at least among academia, the interest in Asia is sufficient? And what about at the official level?
Well my engagement with Russian and Soviet officials goes back 30 years. I began life as a career diplomat. I can at least assess the level of Chinese proficiency of Russian scholars, politicians, and diplomats [with whom I worked in China]: their Chinese is first-class. Out of all foreign countries which train Chinese speakers, you produce the best. The majority of my conversations in Beijing with Russians over the years has always been in Chinese. It’s our lingua franca.
In Russia many expected that by establishing political relations with China, this would significantly improve economic cooperation. But this didn’t happen. Why do you think that is?
China pursues its economic interest very vigorously, and none of its partners should expect a free lunch. At the end of last year, Australia finally concluded a free trade agreement with China after ten years. The Chinese are very tough negotiatiors.
How do you see the future prospects of China’s economic rise?
Debates are happening around the world on the question of whether the transformation of China’s economic model will succeed or not. The present economic model secured high rates of growth for roughly 30 years, but now everyone understands that it needs to change. The essence of this transformation is to transition from a labor-intensive, low-wage, export-oriented model, with high levels of state investment in infrastructure, to one driven principally by domestic consumption, with a greater role for the services sector and a dominant role for the emerging private firms. The Chinese continue to register serious progress in this direction.
But growth rates are falling…
From an historical perspective, no one sustains double-digit growth rates eternally, particularly at the stage of transition to middle-income status. Secondly, levels of private consumption are growing, not as rapidly as the Chinese want, but they’re growing. Thirdly, private firms are now the dominant sector in the Chinese economy. The state-owned sector represents 24% of productivity – and declining. From a macro-economic perspectives, that’s not too bad. If the growth rate drops critically, the Chinese will resort to fiscal, monetary and credit policy to fill the gaps in growth. They can do that for a number of years. They have the financial capacity to do that.
Recently, the Chinese stock exchange registered one setback after another. Does this not constitute evidence of problems in the economy?
Concerning the stock exchange, its influence on the economy is significantly over-rated. As seen by the dismissal of the head of the Chinese regulatory commission, the Chinese were not happy with the way they had performed either. But in any case, we should not confuse the condition of the Chinese financial market with the condition of the Chinese economy; they are disconnected. The stock market is not a popular mechanism to attract funds to China. All alarmist commentary in the West is usually by market analysts who have just emerged from 24 hours staring at a screen. They don’t have time to take a break and look at the bigger picture.
If you had to name the biggest threat to the Chinese economy, what would it be?
The key problem is whether the private sector is able to grow rapidly enough to generate enough jobs to compensate the reduction of state-owned enterprises (SOEs), which no longer benefit from as much governmental investment and support. So far, Chinese unemployment indicators are quite reasonable.
And do you trust Chinese statistics?
There are debates on Chinese statistics. They say there are lies, damned lies, and statistics. Any government embellishes its economic indicators, but there are some things which you simply cannot embellish. The consumption of electricity, for example. Businesses cannot overstate that, otherwise they pay more. In addition, China is very globalized, with hundreds of firms collecting their own data, which allows for cross-referencing. Moreover, the Chinese remember their own sad history of statistical distortion. Mao did it in the 1950s, which led to famine. So, in general, while there may be errors in Chinese statistics, there are also some in developed economies, which I know, for example, from the case of Australia. Our statistical bureau would always change its statistics 12 months after publication, due to new information. According to various data sources, Chinese growth is expected to be a little under 6%.
The previous Chinese leader, Hu Jintao, made “Peaceful Rise” his slogan. The current leader, Xi Jinping, declared an era of the “China Dream,” of a strong, renewed Chinese nation. Does this mean that the Chinese Dream and Peaceful Rise are two different things?
I think that the “Chinese Dream” concept captures two things. Firstly, it is a dream about Chinese wealth and power, which were the main leitmotivs of Chinese reformists since at least the 1890s after 50 years of foreign incursions. And the rationale for that is: never again will China be the subject of such humiliation. But there is a second aspect. Around the streets of Beijing, the billboards read “the Chinese dream is my dream”. So the Chinese Dream is a dream about the good life, education for people, and their businesses. This entire concept brings together governmental and private aspirations. In some way, the concept of “Peaceful Rise” prior to it was very much in the technocratic tradition.
Many analysts believe that Chinese foreign policy under Xi Jinping has become much more assertive. What is this assertiveness for?
The slogan of the architect of Chinese reform, Deng Xiaoping, was “hide your strength, never take the lead.” That lasted until the end of 2014, almost 35 years. That time is over. Xi Jinping plainly announced this at a Central Party work conference on foreign policy at the end of 2014. That’s the transition point. The Chinese gave the order to end a posture of passivity. And this is a serious transition, as they historically faced inwards. Historically, China did not tend to establish colonies or take military action beyond its borders. At the same time, they don’t wish to participate in global opposition of any kind. Look at their nuclear forces. They are pretty small in comparison to American or Russian nuclear forces. And China is not trying to catch up. The leadership thinks that it is better to become an indispensable part of the global economic system, rather than to build, at their own expense, a global security structure.
History shows that the majority of one-party regimes sooner or later degrade, become corrupted and fall apart, or evolve towards democracy. What, in your view, are the chances of such changes happening in China?
The view that corruption is the unique trait of Eastern authoritarian regimes is groundless. It also exists in the West. Concerning China, Xi Jinping quite clearly declared that the Chinese Communist Party is not going anywhere soon. Hence his campaign to assert the legitimacy and secure the economic effectiveness of the Communist Party. There are two connected challenges: to reduce the levels of corruption to reestablish the authority of the party, and to continue to secure rising living standards for the Chinese people, in a manner that is environmentally sustainable so that people do not suffocate [on pollution] on the way to the Chinese Dream. The Chinese system demonstrates remarkable flexibility. Remember the key ideological innovation of the Chinese Communist Party: the theory of the “three represents” of Jiang Zemin (ed. Head of the PRC from 1993 to 2003). He announced that entrepreneurs could join the Communist Party, which was impossible at the time of its founding in 1921. But in doing so, they had to abide by the defined rules. That’s how it was done.
But if the party controls the army, the police, politics, the mass media, then could there be a great temptation to misuse this monopoly at some point.
In Chinese history, there is a very important concept of the "Mandate of Heaven”, which says that a successful emperor keeps the empire united so there is no chaos, so it is capable of resisting a foreign attack, and so it can maintain the living standards of the people. Famine, for example, is always a barometer of the loss of the Mandate of Heaven. The Communist Party works on the same goals. Keeping Tibet, Xinjiang, and Taiwan [as parts of China]. Defending its territory against its 14 neighboring states. They don’t want to turn into North Korea, where people have nothing to eat. It’s not like the behavior of wealthy democracies, but it has its own logic, because the obligations of the leader and of the subjects are reciprocal.
But do you really believe that these concepts from thousands of years ago play a major role in contemporary China?
Russia’s history significantly influences its policies, as does the history of the United States on U.S. policies. I don’t know of a single example when history did not have an effect on a particular country. Xi Jinping, in contrast to his predecessors, has a phenomenal knowledge of national and international history. He does not look solely at history post-1949 (ed. the rise of the Communist Party in China). He is interested in why Imperial China fell (ed. in 1911), why the reforms of the 1890s failed. Did they start too late? Did they try to do too much, too rapidly? China learned from the mistakes of the Soviet Union, carefully watched the “Arab Spring” and the “Color revolutions”. They don’t want to repeat this fate. Now, for example, one of the most important points is environmental quality in cities, in which 700 million Chinese now live. The problem in this area is massive. I know about it not just in passing, because my daughter is married to a Chinese guy. When they had children they left Beijing to go to Australia. But the Chinese have nowhere to go, and this worries them a lot.
At the present moment, Xi Jinping is leading an anti-corruption campaign under the slogan of reestablishing discipline in the Communist Party. Recently he visited major governmental mass media, called for them to follow the instructions of the Party. How do you think, or why does he think, that China needs discipline? Wasn’t it precisely the weakening of said discipline in the 1980s which led to the launch of economic reforms?
On the level of discipline, it’s best to turn to history. I first opened a Chinese textbook in 1976, in the last year of the cultural revolution. I remember the death of Mao Zedong, the crackdown on the “Gang of Four” (ed. A colloquial term for the group of senior officials who called for the continuation of the Cultural Revolution after Mao’s death), reforms under Deng Xiaoping, the events of 1989, and all the rest. The political evolution of China is non-linear, with seesaws and sometimes reversals, but in general the level of personal freedom has grown unimaginably. In 1984, a Chinese person wasn’t allowed to have foreign friends, could not even choose their own place of work, education, a life partner, or even the color of their clothes. Everyone wore either green or blue. Modern Chinese society has changed significantly. Social networks have emerged in which 700 million people actively discuss everything which is happening. And to achieve political unity for Beijing under such conditions is a very difficult challenge.
You are considered one of the most persistent proponents of the fight against climate change. With which arguments would you convince Russians of the necessity to engage in the fight against climate change? Because Russia is generally considered a net winner, with melting permafrost and ice caps in the Arctic Sea.
I’m not a scholar, I react to what they write. And it seems to me that this problem has to be looked at holistically. Global warming is not simply the warming and cooling of several points. It is, in the first instance, devastating natural disasters and the proliferation of the habitats of tropical and subtropical diseases. Fiji recently suffered from the biggest typhoon in its recorded meteorological history. Some rivers are drying up, others have started flooding abruptly into people’s homes. And let’s not forget that climate change is provoking massive population flows. For example, in China warming has made several parts of the country uninhabitable. Where will all these people go?
To the Russian Far East?
You said it, not me.