President Xi Jinping delivers a speech during the opening ceremony of the 20th National Congress of China's ruling Communist Party in Beijing, China on Oct. 16, 2022. - AP
“CHINA will not close its door to the world. We will only become more and more open.”
Such was President Xi Jinping’s promise in his speech to the Communist Party’s five-yearly congress – in 2017. How things have changed.
In 2022, with Xi’s unrelenting zero-Covid policies in full swing, China is more closed off than it has been in generations.
In the two-and-a-half years since the June quarter of 2020, the total number of outbound tourists is equivalent to about one month’s worth at the end of 2019.
International flights are operating at levels comparable to where they were at the peak of the pandemic. Overseas visitors must still endure a minimum of seven days’ government quarantine.
Reform and opening up
China’s Covid response was the first major policy decision mentioned in Xi’s party congress speech this year. He shows no sign of wavering.
The spirit of outwardness that’s run through China’s official rhetoric since Deng Xiaoping initiated the era of “reform and opening up” four decades ago is in broad retreat.
Openness, mentioned 33 times in the 2017 speech, got just 17 in the one delivered from the podium on Sunday.
Obsessed with China’s place among nations and his own role in restoring its greatness, Xi appears to be misreading one of the most important lessons from millennia of Chinese history – it’s always been strongest when it has been most open to the world, and weakest when it has been most isolated.
“The leadership has this illusion: ‘We used to be so closed, we used to be self-reliant. We could just go back,’”
According to Kent Deng, a professor of China’s economic history at the London School of Economics.
That switch “will cost China, will injure China in a fundamental way,” he said. “China will become poor and insignificant in the world.”
On metric after metric, China’s global isolation has accelerated. Tougher regulations of internet usage was one of the first policies introduced within weeks of Xi’s elevation to the presidency in 2012. Facebook, Google and Twitter all remain banned.
Imported movies accounted for just 15.5% of box office revenues last year, down from 51.5% in 2012. The value of imported books and magazines in 2021 fell to its lowest level since 2017.
The number of students starting further education in Australia in the year through July was barely more than half that of 2019. Indian students may soon overtake them. The number in the United States in the 2020–21 academic year was its lowest since 2015.
Remittance payments from overseas citizens were slumping even before Covid-19. The US$18.29bil (RM86.33bil) received in 2019 was down by nearly half from its peak of US$33.1bil (RM156.3bil) in 2015, before the Trump administration took office and launched its trade war.
All this suggests that China is once again becoming a more inward-facing economy, as it has done on many occasions throughout its history.
The sheer size and productivity of the domestic economy has for millennia been both a blessing and a curse.
“China was capable of switching between opening up and closing back down quite comfortably,” said Deng.
That benefit was never available to smaller, marginal economies such as Portugal, the Netherlands, England and, later, Japan, but this apparent weakness forced those nations into an engagement with the wider world that ultimately put them in the lead.
Similar pattern
After centuries of bloodshed and exploitation of colonised nations, it was the smaller, trade-exposed economies that won the spoils of the Age of Empire.
Look at the four Tier-One megacities that to this day dominate China’s economy, you see a similar pattern of a nation at the height of its power wherever it is most in contact with the world.
Beijing owes its dominance to its establishment by Kublai Khan as the winter capital of the Mongol Empire, a city Marco Polo described in the 13th century as bringing “people of every description and from every region” to exchange goods.
Guangzhou was an even earlier trading city. Its Huaisheng Mosque is one of the oldest outside the Arab world, established by Muslim traders within a few decades of the death of Muhammad.
Diminishing contact
The city enjoyed further spurts of growth as a key port for Kublai’s empire and as a node for global commerce after the Portuguese established a trading post in Macau.
Later, Shanghai and Shenzhen rose as gateways to global trade networks in the 19th and 20th centuries.
Mao Zedong himself, who did so much to close down China’s links with the world, shied away from capturing then-British-ruled Hong Kong, apparently because he recognised that even the People’s Republic would need foreign trade and capital to aid its development.
Of course, the attractions of isolationism are often not so much economic as political.
For authoritarian regimes, diminishing contact with the outside world is a time-honoured way of tightening government control – a pattern seen in Eritrea and North Korea today, and in the Soviet Union, Albania, Paraguay and Romania in the past.
It has a storied and unsuccessful history in China, too. Mao left China the world’s sixth poorest nation in 1978, at the dawn of the Deng era. But this isolationism wasn’t new.
The early Qing dynasty saw the population of the southern coasts forcibly relocated inland in the 17th century to prevent contact with loyalists of the former Ming regime, causing trading networks to atrophy.That left the country wide open for colonial exploitation – the “century of humiliation” from the first Opium War to the Communist victory in 1949 that plays such a role in Xi’s account of history.
To be sure, Xi isn’t the only one responsible for China’s international isolation. Washington’s attempts to crack down on the theft of technology and trade secrets look more and more like a McCarthyite witch hunt targetting anyone of Chinese descent in business and academia.
The Biden administration’s latest sanctions may sever commercial and personal contact between the two countries’ chip industries, keeping China away from the cutting edge of semiconductor development.
Trade, furthermore, continues to boom. Even excluding soaring spending on petroleum and coal, the value of China’s imports over the past 12 months is about 50% higher than it was five years ago.
The monthly trade surplus topped US$100bil (RM471.4bil) in July for the first time – more than double its average level during 2016, when Donald Trump won the US presidency in part on his promise to end China’s trade dominance.
That strength conceals deep undercurrents of weakness, though. Foreign direct investment, on paper another bright spot for China’s engagement with the world, has never regained its 2008 levels, once you exclude domestic investments routed through Hong Kong for tax breaks.
Greatest trading nation
China’s terms of trade, moreover, have been negative since early 2021, meaning it’s overpaying for its imports relative to the price it receives for exports – a worrying sign for a country that still needs to bring in more foreign capital to pay for its development.
As Xi enters his third term in office, China remains the world’s greatest trading nation – but if zero-Covid policies and wolf warrior diplomacy aren’t reversed, the path ahead will drive it further and further toward the status of a hermit kingdom.
“Openness brings progress, while self-seclusion leaves one behind,” China’s president told the party congress five years ago. The Xi of 2022 should heed the advice of his 2017 self. — Bloomberg
David Fickling writes for Bloomberg. The views expressed here are the writer’s own.
