Tuesday 23 October 2018

China's leader has a point - the West is in a mess

People dressed in Red Army uniforms performing to celebrate the opening of the 19th Party Congress in Yiyang in China's central Jiangxi province. The slogan reads
People dressed in Red Army uniforms performing to celebrate the opening of the 19th Party Congress in Yiyang in China's central Jiangxi province. The slogan reads "Celebrate the 19th Party Congress. Always follow the Party." Picture: AFP/Getty

Jeremy Warner

There was only one, over-riding message intended in President Xi Jinping's epic, three-and-a-half-hour speech to the Chinese Communist Party Congress this week: China is now centre stage in world affairs and will exercise its new-found power accordingly.

The speech didn't overtly address the flip side of this display of geopolitical triumphalism, perhaps for reasons of diplomacy. But there was no such holding back from China's state-controlled news agency, 'Xinhua'. In an editorial timed to coincide with the speech, it took direct aim at liberal democracy, contrasting China's sense of purpose with the political and economic "chaos swamping" many Western nations and their "failing party political systems".

There is good reason to doubt if China can sustain the economic progress it has made in the past 40 years - a boom built on debt if ever there was one - but it is increasingly difficult to disagree with the Chinese leadership's view of the West. Politically paralysed, wracked by division and economically compromised, not since World War II have the advanced economies of the West seemed quite so enfeebled, lacking in self-confidence and filled with foreboding about the future.

In America, a deeply divisive president is willing to renege on the international agreements of his predecessors. In his quest to "make America great again", he is apparently hell bent on repudiating the very values and institutions that have these past 70 years been the bedrock of American power, influence and economic progress.

Chinese President Xi Jinping
Chinese President Xi Jinping

Donald Trump disdains the globalisation that the US used to champion, allowing a coercing Chinese autocrat with one of the most protected and polluted economies in the world ridiculously to step into the vacuum and claim the torch of environmentalism and free trade. Mr Trump has left an empty chair, so why shouldn't Mr Xi fill it?

A similar form of inward-looking paralysis grips Europe, with its disastrous experiment in monetary union. Determination to make it work has become all-consuming, sapping the energy of an entire continent and destroying the political consensus that has hitherto served Europe so well. The condition is chronic, and the politics poisonous.

With Brexit, Britain too has become mired in myopic constitutional and political crisis. While they argue over the minutiae, all gainful activity seems to be grinding to a halt.

Urgent social and economic deficits that threaten to leave Britain trailing - in housing, education, saving, policing, tax policy and much else besides - go unaddressed amid the obsessive political rowing and legal complexities of leaving the EU.

A disastrous election result, which cost the Tories their majority, has rendered the British government rudderless and impotent, a snakepit of destructive ad hominem, mobster infighting that leaves even delivery of a successful Brexit in growing doubt. To a deeply disillusioned electorate, struggling with stagnant wages and falling living standards, even a committed Marxist, disingenuously offering yesterday's failed solutions to the complexities of today's world, is beginning to look preferable to the present delinquency. Maybe UK Labour Party leader Jeremy Corbyn is on to something in looking to China as the model.

Mr Xi is right to think that China is winning. It is admittedly hard to see why a country that uses technology not as the liberating force it is in the West but as a means of coercion - less Big Data, more Big Brother - should be succeeding. It also defies basic economics that China's investment-led, debt-fuelled growth bubble can continue indefinitely.

Mr Xi tried to move on to a different model, one that put quality of growth before quantity, but it didn't work, and now he's doubling down on the old kind. Both private credit and the budget deficit are spiralling out of control.

Whether China can ever escape "the middle-income trap" - defined as development that gets stuck some distance below advanced economy status - is open to question. If it can't, one-party government by a tiny, politically oppressive elite will find itself increasingly challenged.

Yet set against the failings of the West, China is indeed driving forward. One quite powerful illustration of this is the likely decision by Saudi Arabia to abandon the planned stock market flotation.

An IPO in London or New York of the country's giant oil reserves in favour of strategic outside investment by Chinese state-controlled enterprises. In return, China will get guaranteed supplies of Saudi oil at a set price for a five to 10-year period.

The big losers in this arrangement are America and Britain, traditionally Saudi Arabia's two most supportive Western allies. Britain's high standards of transparency and accountability may always have rendered a Western IPO unrealistic. Even so, there is a certain symbolism in Saudi's decision to turn east in search of modernisation. China is able to accommodate things that our Western ways cannot.

Friends urge me to be positive, optimistic and enthusiastic for the future, and I do try. But sometimes it's hard, very hard. (© Daily telegraph London )

Telegraph.co.uk

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