China’s President Xi Jinping opened the 19th Congress of the Chinese Communist Party — a once-every-five-year affair — with a 3 hour 23 minute speech. The Xi agenda, in the making for months prior to the Congress opening today, is trade theft, digital dictatorship, a planned economy, a Taiwan invasion, and cultivating satellite dictatorships.
“China is building the world’s most powerful facial recognition system with the power to identify any one of its 1.3 billion citizens within three seconds,” the South China Morning Post reports. This, in conjunction with surveillance cameras throughout China, will enable the Party to surveil all public activity of its subjects and assign a numerical score for each individual’s political reliability.
Xi Jinping and the Party are also forcing China’s private sector — the key motor of its economic dynamism up to now — to accept partial state ownership and control, to bail out the dinosaur state-sector companies by investing in them, and to submit all transactions to the state’s central database for close Party supervision. This is a corporatist model beyond the wildest dreams of Italy’s Benito Mussolini. China’s largest corporations are mostly state-owned.
Now both sectors, along with the citizenry, will be supervised by one massive data bank dwarfing all others in the world. As two headlines in today’s Wall Street Journal put it, “China Uses ‘Digital Leninism’ to Manage Economy and Monitor Citizens. Xi Jinping is leading China into a big-data dictatorship (paywall).”
China has been engaging in massive theft of U.S. intellectual property, theft so massive as to likely account for the trade and current account deficit the U.S. runs with China. Thus far, the Trump administration’s response, like that of the Obama administration prior, has been inadequate: the Trump administration has set in motion an intellectual property theft investigation that will take too long and is mistakenly sacrificing U.S. economic interests by linking trade complaints with bargaining for Chinese help in curbing North Korea.
China’s planned economy, which to date has featured extensive government subsidies to state-controlled industrial companies, results in overproduction that harms U.S. firms and workers.
Why hasn’t the U.S. been bringing complaints against China to the World Trade Organization (WTO) and simultaneously working to strengthen that organization’s rules to deal with China’s violations?
Instead of focusing on China, Trump and his trade negotiators have been working overtime in antagonizing key allies (Canada, Mexico, Germany, South Korea, and Japan), as though these were the major players in the U.S. trade and current account deficits. The administration has set back U.S. trade interests by walking away from the Trans-Pacific Partnership (TPP) negotiations and shuffling its feet on TTIP negotiations with the European Union.
President Xi has also been preparing China for war. At the top of his agenda are plans — never shelved, now being revived — to invade Taiwan. The decline of the U.S. Navy in the Pacific has inspired open threats to the U.S. to back off support for Taiwan.
Meanwhile, China is sponsoring a bevy of satellite dictatorships and bad actors in its immediate neighborhood — a kind of regional “axis of evil.” Besides North Korea and Myanmar (Burma), there is also Cambodia. That country is rapidly becoming a single-party dictatorship. The Asia Times reports that “Prime Minister Hun Sen has leveraged Beijing’s rich support to rout the political opposition and repudiate the US and EU, previously his government’s biggest financial supporters.”
Should the U.S. try to imitate China’s planned economy? It didn’t turn out well for the Soviet Union, although many in both the West and the U.S.S.R. thought the Soviet model would triumph. It could have, had not the West held together with a policy of military containment, deterrence, and prosperity through expanded free markets. Planned markets are intrinsically inferior to free markets, as explained by the great Austrian economists Ludwig von Mises and Friedrich Hayek. The world’s biggest data bank won’t alter the validity of their demonstration.