Robert Daly is in charge of one of the main Western antennas in China and believes that this great power deserves an important role in building the new order.
What can we expect from China in this year of the Dragon?
China is in a transition. It is going through the worst crisis since Deng Xiaoping opened the economy in 1978. Growth is lower and is combined with a demographic crisis that has arrived ten years earlier than expected. Production has fallen, investments have also fallen and so has the stock market. The real estate bubble has burst.
What does this transition consist of and how long will it last?
People inside and outside the Chinese government I have spoken to estimate that they need four or five years to carry out a hard adjustment. Afterwards, they are convinced that China will have slower, but sustainable growth.
Can Xi Jinping maintain his international ambitions if the economy does not perform well?
The president is well established in power. He has the unwavering support of the Communist Party, the army and internal security, which is very important. He spends more on this internal security apparatus than on foreign military expansion. He also has the support of the working class and the population in small towns. However, he long ago lost the favor of intellectuals and elites in the capitals.
Don't you think you've made a lot of mistakes lately?
Yes. The benevolent father he was during his first ten years in office has disappeared. He managed the pandemic very poorly at the beginning and at the end. Hiding the coronavirus outbreak in Wuhan was a mistake. And then when the omicron variant arrived, it was a disaster. The confinement in Shanghai, for example, or the zero covid strategy. When it was abandoned, a million people died. The authorities covered it up again. There were protests, and young people discovered that they live under an impulsive and unpredictable regime. Xi hoped that a rapid economic recovery would erase his mistakes, but this did not happen.
Is Xi losing the support of young people?
In a way, yes. Young Chinese are proud of their country, of the progress it has made to become a great power. But they also realize that China, in Europe, in the US and much of Asia, is not very well liked. The rivalry with the United States has also worsened, and they see that Xi has made a mistake with Putin and Russia.
Too many mistakes.
Xi has lost the image of infallibility.
Is there a risk of an internal revolt? We saw the spontaneous protests of November 2022 against the zero covid strategy.
They lasted a weekend. The Government was very scared. There were hundreds of detainees. I don't think there will be a revolution against Xi. China has shown that it can overcome crises worse than the current one. Furthermore, it is too early to know if it will have social and political consequences, as some analysts predict.
Could Xi provoke an international crisis, in Taiwan for example, to distract attention from his domestic difficulties?
Xi will not invade Taiwan. He is not as bold as Putin. The Chinese army is built on the Russian model and now sees in Ukraine that this model is not working as expected. No Chinese senior commander has combat experience. The economy is also decisive. An invasion of Taiwan that does not go well could sink it, and this collapse would be the end of the communist regime. Even if China managed to occupy Taiwan, the cost would be very high. The economy would suffer greatly under a harsh sanctions regime. Xi knows this, and that is why I think he prefers to solve economic problems instead of taking risks with Taiwan. His priority is maintaining power, and failure in Taiwan would undoubtedly bring down the regime.
Does it make sense to decouple the US economy from China's?
The United States maintains a trade deficit with China because it makes products that help the middle class make ends meet. The United States depends on rare Chinese minerals, but also on solar panels, semiconductors and various medications, such as ibuprofen. Looking for alternatives will be slow and expensive. China is also looking for other markets for many of its industries, such as telecommunications, as well as new suppliers outside Europe and the United States. It wants to reduce its dependence on the West in sectors such as agriculture, semiconductors, software and natural resources.
Does the current trade dispute between China and the United States make sense?
No, but now it's part of the relationship. The tariff dispute costs each American family about a thousand dollars a year, and it does not seem like it will be resolved. Furthermore, if Trump returns to the White House, he could remove China's “most favored nation” trade status. In this case, rates will rise an average of 61%.
Does Xi prefer that Biden repeat his term or that Trump regain the presidency?
He prefers Trump to return and for several reasons. Because he weakens the transatlantic relationship, because he is not interested in creating a new world order and because he does not care about Taiwan. It knows that the trade war can worsen with the US, but, in return, it can improve with a more autonomous Europe from a strategic point of view. The trade agreement with the European Union could be taken out of the freezer. This is, at least, what Xi aspires to.
The EU considers China a strategic rival.
China sees that Europe has no interests in the Pacific nor the US will for global primacy. Furthermore, unlike the United States, it has shown a desire to improve trade relations. In any case, I believe that Washington and Brussels are better aligned today with respect to China than at any time in the last twenty years.
China supports Putin in Ukraine, which is an enemy of Europe and the United States. You yourself consider that we are in a new cold war.
The relationship between China and Russia is very complex from a historical point of view. There is a deep distrust between the two, but they do not want the United States to condition their aspirations. This unites them not only with each other, but also with other countries such as Iran. They do not want to live in a world that, from their point of view, the United States has designed to their detriment. That is why China gains new support in the Middle East and the Global South.
Russia will have China's support in Ukraine until the end.
At the moment it does not supply weapons, but it does supply everything else that is necessary for war. To confront the existential danger posed by the US, China needs a strong Russia. Therefore, in case she were to lose the war, she would send him weapons. She does not want to have an ally weakened by a defeat in Ukraine.
