I have long been skeptical about the conventional political risk narrative that China is effortlessly rising to superpower status. The country faces myriad intractable economic, demographic, political, and geopolitical problems that will slow, and likely even halt, its march to dominance.
This was even before the Chinese authorities announced to a stunned world the outbreak of the coronavirus, which is proving a stress test for the Chinese system like no other.
After the chaos of Mao Zedong’s Cultural Revolution, China’s then-Paramount Leader Deng Xiaoping — surely the most important figure of the late 20th century that most of the world knows absolutely nothing about — ideologically transferred his party’s claim to the “Mandate of Heaven,” the traditional Chinese justification for each successive dynasty’s right to rule, from radical communism to capitalism and nationalism. The Communist Party would no longer base its political legitimacy on ideological fervor, but on the organic Chinese cultural traits of mercantile prowess and national pride.
With Deng’s opening up of the Chinese economy in December 1978, and the economic miracle that followed, the transfer of the Mandate of Heaven was complete. Following the 1989 crackdown, three decades of remarkable capitalist-fueled economic growth and a hugely enhanced, self-confident role on the global stage seemingly put the Communist Party’s legitimacy beyond question.
That is, until now. Underlying China’s recent setbacks, as it slows economically and over Hong Kong, is the growing, nagging fear that perhaps, just perhaps, the party is not as competent as its supporters proclaim or as its enemies fear.
Given its blood-soaked history, it is safe to say that few people actively love the Chinese Communist Party; rather it is tolerated only as long as it produces the goods, both in terms of continued economic growth and growing geopolitical might. If this narrative of competence is challenged, if the pillars of the Mandate of Heaven begin to seriously wobble, the party will have nowhere to hide.
The economic consequences will also be severe at a time when the Chinese economy is already slowing and a trade war with the US endures.
Dr. John C. Hulsman
Enter the coronavirus. While much is shrouded in mystery, there is also a good deal we know about it. The virus originated from mammals, with the Huanan seafood market in Wuhan being the possible source. The coronavirus causes viral pneumonia, making the elderly and the infirm particularly susceptible. Antibiotics are no use in treating it and no vaccine has yet been developed to keep it at bay, with recovery primarily depending on the strength of the sufferer’s immune system.
The virus can be transmitted by human-to-human contact, with the mortality rate being less than 2 percent. As of mid-February, 75,000 people have been infected (the vast majority in China) and just over 2,000 have died. The crucial issue now is how easily transferable it is between people. What is clear is that this has the potential to be a pandemic.
What is also known is that, at least initially, the Chinese Communist Party bungled its response to the outbreak to a degree that can only be characterized as criminally incompetent.
In early December, when the now-martyred Dr. Li Wenliang and his colleagues first raised the alarm in Wuhan — the center of the outbreak — about a strange new illness, the party, in typically secretive mode, censored the emerging facts and repressed the whistle-blowers, forcing them to “confess” to anti-social behavior. In doing so, it lost a precious seven weeks when it could have alerted the world to the impending danger.
Public health emergencies typically require timely, transparent, and accurate information from the relevant government to maximize the response. But these are qualities more associated with supposedly inferior open societies, rather than the closed Chinese system. Worse still, the Chinese system has had its stress test and has been found wanting; it is not a particularly competent one.
Having just finished watching the brilliant, shattering television series “Chernobyl,” it is easy to see how, in retrospect, that disaster — indeed any disaster — quickly becomes a supreme political test for whatever ruling party must face it. The late-era Soviet Union undoubtedly flunked that test. After Chernobyl, even the veneer of Soviet competence had been eviscerated, and with it the Politburo’s own Mandate of Heaven.
Though parallels with the USSR can only take you so far — the Soviet economy was already on its knees well before the nuclear accident at Chernobyl — there are telling signs that the coronavirus might ultimately bestow a similar fate on Xi Jinping’s China.
Already, there has been vocal anguish and outrage following Li’s death, while stories of local party officials selfishly hoarding desperately scarce face masks and protective clothing at the expense of brave front-line health care officials have provoked condemnation. The economic consequences will also be severe at a time when the Chinese economy is already slowing and a trade war with the US endures.
Beyond the immediate fallout, there may well be one more casualty of the coronavirus: The Communist Party’s claim to competence.
Dr. John C. Hulsman is the president and managing partner of John C. Hulsman Enterprises, a prominent global political risk consulting firm. He is also senior columnist for City AM, the newspaper of the City of London. He can be contacted via www.chartwellspeakers.com.