TAI Contributing Editor Gary J. Schmitt recently sat down with Minxin Pei, a renowned China scholar and author of China’s Crony Capitalism, for an interview about the Chinese response to COVID-19. They discussed why Xi Jinping was slow to respond, how the U.S. government should conceive of policy toward Beijing, why Alexis de Tocqueville continues to haunt the Chinese elite, and why both Xi and the party-state may be more vulnerable than we think. (This transcript has been edited for length and clarity.)
Gary J. Schmitt for TAI: Minxin, you recently published a piece in Foreign Affairs entitled “China’s Coming Upheaval: Competition, Coronavirus, and the Weakness of Xi Jinping.” The usual view is that President Xi is really quite strong. Why do you think that’s not the case?
Minxin Pei: There are many aspects of power, and President Xi Jinping is strong and powerful in one aspect only. Relative to his colleagues, he has dominant power, meaning nobody can conceivably push him aside; in the decision-making process, he has more power than any Chinese leader except Mao. But there are other aspects of power—the capacity to get things done, to execute policy, to make the right policy. And here I differ with a lot of my colleagues.
In terms of making the right policy, having too much power can be a liability. The decision-making process can be so skewed toward complying with the wishes of this most powerful decision-maker that many of the risks and potential pitfalls are not vetted. We can see this in a lot of policies that have been rolled out. The Belt & Road Initiative is my favorite example. From whatever angle you look at this policy, it is a dud. But you have to ask why that policy was made and implemented with such fanfare in China.
TAI: How would you assess China and Xi’s handling of the pandemic when it comes to “the capacity to get things done”?
MP: There’s a lot that we don’t know about the decision-making process regarding the pandemic in China, but we know enough to make some educated guesses. Within the Communist Party, there is a premium on political loyalty and conformity. This is to maintain a façade of political stability. This greatly limits the local officials’ capacity to be transparent and honest. Out of their interest in political survival, they tend to be quite conservative and play down the seriousness of problems that may make them look incompetent or disloyal. From the very beginning of the crisis, this system made it difficult for full, accurate information to be delivered to the top.
The second issue with the current decision-making process is that it’s really one-man rule. It all depends on how much that person knows, and what kind of decision that person makes. In the meantime, we have to consider that a leader like President Xi Jinping must deal with all sorts of issues, so that probably this report from Wuhan came in saying, “We have some patients with unidentified pneumonia,” but did not get enough attention.
We know, for example, that the Politburo Standing Committee met on January 7th and Xi issued a set of instructions about the coronavirus. We don’t know what these instructions were. But there was a big gap between January 7th and January 20th, when he issued instructions that outlined an aggressive response. And on January 22nd, he ordered the lockdown of Wuhan. So, there is about a two-week gap that raises a lot of questions. And when you look at Xi’s itinerary, he visited Myanmar on January 17th and 18th, and then stopped in Yunnan for a two-day inspection tour. So, a reasonable guess is that by that time, he did not have enough information or he did not regard the issue seriously enough to cancel both visits.
Even after the system was mobilized, he did not appear in public for about another two weeks; he let Premier Li Keqiang take over. That raises questions about how decisive he was, how much responsibility he wanted to assume in fighting the virus. He assumed full control around the time of the Politburo Standing Committee meeting on February 7th—a whole month later. That’s when he started firing officials.
Since then, the situation in China has improved quite dramatically. But now let’s look at another decision the leadership has made, the attempt to change the narrative. I’m not sure how productive that was. My guess is that it has backfired big time. Instead of winning hearts and minds outside China, it has elicited a very strong negative response—in the United States in particular, but also in Europe and around the world.
TAI: In your article, you describe the regime itself as “brittle.” So, looking beyond Xi, where do things stand in terms of the Party’s control, the stability of the regime? Is it running out of gas, and what could it do to sustain itself?
MP: We always assume that the Communist Party maintains tight control over the media, public opinion, and expression of dissent. But there was one moment in early February, immediately after the death of Dr. Li Wenliang, when it appeared the Party very briefly lost control. You saw media, social media, and even official news clearly deviating from the Party’s guidelines. They gave frontpage coverage to the death of Dr. Li Wenliang, and well-known business tycoons said very critical things about how the Party handled the crisis. And then all of a sudden, you saw an explosion of civic activities, because the local bureaucracy turned out to be so incompetent that they could not deliver critical medical supplies. Local civic organizations and ordinary citizens had to step in.
The moment that system opened up just a little bit, it showed that there’s this enormous energy hidden inside that could come out. We should think about glasnost here, because glasnost in the Soviet Union really showed how brittle the system was. If you open it up for an extended period of time, you can unleash revolutionary forces.
As to where the system is, I like the baseball analogy of nine innings. Probably we’re at the third or fourth inning. The decay has set in, but this is a very powerful system. It will take a long time for the decay to permeate the system, to undermine it at a fundamental level and to cause the evaporation of the confidence of Chinese elites in this regime. It has already been undermined by the anti-corruption campaign, by the U.S.-China trade war, and by the persistent economic slowdown. And now, on top of that, we have the coronavirus.
TAI: You remind me here of what the late Kremlinologist Myron Rush once said: the collapse of the Soviet Union was not inevitable exactly when it happened. The regime, as decayed as it was, could have gone on for another 20 or 25 years. But when you open a system there’s a rush of civic life into that opening. So it’s no surprise, as you say, that you saw this bubble up in China, and then of course they tried to shut it down as quickly as possible.
MP: Yes. I want to add that at the end of the process, when it happens, it could happen very fast. It’s true of all dictatorships that you see a long period of decline. The first eight innings seem to be going on forever, they can last a decade or two. But the last inning happens within a year or two.
And in the case of China, there’s another risk factor that used not to exist: succession. The weakest moment for this kind of system is succession, and by abolishing term limits, Xi Jinping has dramatically increased the risks that the system could not handle another succession crisis. The Communist Party has handled only three successions peacefully, but it has not handled the succession from strongman to collective leadership without some kind of cataclysmic event.
TAI: Is there much internal party opposition left?
MP: It’s hard to say because in that kind of system, the moment that you are identified as opposition, you’re gone. Based on what I read in the official Chinese press—you have to read it with a magnifying glass—and contacts with people in China, there’s a lot of dissatisfaction and worry about the current state of affairs, and a lot of question about leadership. Forming any kind of opposition is hard, but we should not dismiss them. I tend to believe that when the moment is right, the opposition comes out of woodworks. The people who are loyal to you today could turn against you tomorrow. Just look at Egypt. The moment the military rises up, and says, “down with this system,” then the system is done.
TAI: In much of the current discussion about China, there’s a view that if President Xi were to pass from the scene, many of the problems we face with China would go away. And then there’s another view that Xi came to power when the system had run out of gas, and all he’s done is exacerbate the problems that were already baked in. What’s your view?
MP: These two views are not necessarily mutually exclusive. That is, the policies in the last seven years have accelerated the regime’s decline, because these are very questionable, if not outright counterproductive, policies. At the same time, it is not inconceivable that reversal of these policies may not require a fundamental change in the nature of the regime. Just imagine for some reason that Premier Li Keqiang, who is a comparatively moderate figure, takes over—you could see a lot of concrete policy changes. Under Li Keqiang I simply cannot believe that something like BRI will continue, or that military activities in the South China Sea will maintain their current tempo, or that high-profile foreign policy initiatives will be sustained.
The pre-Xi system was fundamentally a conservative one. Today, it is a much more risk-seeking system. So, for the survival of the Chinese Communist Party, a conservative system probably would do a much better job.
TAI: Your book China’s Crony Capitalism argues that the party system has been able to sustain itself essentially by corruption, through party spoils. But that system is dependent upon an economy that is growing. The economy’s no longer growing at the same rate. Can the Communist Party maintain itself when the spoils are declining?
MP: It will be more difficult than before. My analogy is that this is a leaky bucket. You have new water coming in, such as economic growth; now there’s less water coming in, but it still leaks a lot. So you really need to plug some holes, and then you prioritize what holes you need to plug. That’s why a fundamentally conservative policy would be conservative on the foreign policy front. The Party’s survival does not depend on an aggressive, high-profile foreign policy. It depends on maintaining this patronage system while keeping economic reform at a reasonable level.
There is one area where the Party probably can squeeze more juice out of the current system, and that is state-owned enterprise reform. My view is that the Party has overestimated the political risks of reforming state-owned enterprises. It thinks direct control is better than indirect control. But direct control has a lot of costs. So, my friend, our colleague Nicholas Lardy, estimated that if you reform state-owned enterprises, you can squeeze out two percentage GDP growth points per year. That’s huge. The Chinese growth rate could be 8 percent rather than 6 percent. If you do this, then you get more water into the bucket. In the meantime, you plug holes, no more schemes like BRI, so you can still maintain a patronage system. But if you do not create more economic growth and implement economic reforms, and in the meantime you continue your expansionist, costly policies around the world, then it speeds up the leaking process.
TAI: As you suggested earlier, China’s effort to win hearts and minds in Europe and the United States has seemingly backfired. At the same time, the PLA has been acting quite aggressively around Taiwan and in the South China Sea. One would think the latter doesn’t help the former. What do you think is the logic behind President Xi’s actions here?
MP: I think one of the top priorities for President Xi is to maintain his image as a tough leader. He is similar to Donald Trump in that sense, thinking: “I may not be doing well otherwise, but I sure want to appear to be fearless.” That’s the political consideration. That’s why when you look at the Chinese official media’s coverage of President Xi’s activities, it’s always, “today, Xi talks to a foreign leader, tomorrow he talks to another foreign leader.” If you believe Chinese official media, then President Xi is leading the world’s effort in fighting the coronavirus. So, that’s for domestic consumption.
Another issue is the critical role of the military in maintaining President Xi’s power. He may not be successful in making the Chinese economy more productive or in changing China’s external environment, but he surely needs the military to support him, because that is his insurance policy, his power base. The Chinese military really doesn’t care that much about potential bad reactions. They want tactical advantages. They want operational experience. And also, they can make a persuasive argument that this is really a game of mutual deterrence: The U.S. is trying to do this, and if you do not respond, then you show weakness. That’s the hidden dynamic.
TAI: So, this is a regime that is both brittle and aggressive. If you were sitting in the White House, do you look at that brittleness and think, “This is an opportunity to push” or, seeing the aggressiveness, do you think, “We would be taking too great a risk?”
MP: First you have to have a clear strategic objective. I recently wrote something for Bloomberg along these lines: What are we trying to achieve? What would be the matrix for measuring our success? Are we trying to contain Chinese power, to prevent China from acquiring capabilities for threatening the United States? Are we trying to replace the regime? Or are we responding to specific Chinese policies?
These are three levels of objectives. To a certain extent, they are all connected. Policy is backed by certain ideological views, and then made possible by capabilities. But if you follow the logic that we have to go after Chinese power, then it’s a really long and open-ended process. The trouble is, how do you measure progress?
We have to have a short-term and long-term policy. In the long term we have to be very confident that this is a competition between two systems—not just between China and the United States, but between China and the liberal-democratic world. So, if you raise it to that level, then U.S. policies will have to change dramatically. We need to recruit more allies, and we need to have more patience in the long term. Then in the medium term you carefully analyze what China is doing that is of the greatest concern, and then how do we respond.
The short term has to be about specific, targeted policy responses aimed at achieving specific goals. In the long term, it is strategic competition designed to maintain the unity of the Western democratic alliance and to maintain America’s dynamic growth and structural strategic advantage. Currently the policy is based on undercutting China and overlooks that you win this long race not just by trying to make the other guy weaker, but by making yourself stronger.
TAI: In Europe, it seems there’s been a crack in the consensus about the prospects of positive engagement with China. First, how would one use that change to create a sensible European policy toward China? Second, can that change occur without Washington working with allies to make it happen?
MP: The answer to the second question is that the United States will have to take the lead. In the last few years, we’ve seen that the United States wants to take on China all by itself. Of course, the United States is an 800-pound gorilla. It can do a lot of damage. But the United States also pays a lot of costs, with a lower probability of success in the short term. If it works with allies, it will be a lot more cost-effective.
In terms of Europe’s position on China, Beijing is doing a lot to accelerate this epiphany. There’s a lot of self-inflicted damage done by Beijing in Europe. The U.S. should take advantage of this and make a much more compelling case that they are in this together. And to do that, the U.S. will have to change its policy toward Europe. You do not just badmouth Europe. You do not encourage the breakup of the EU. You do not hurt your friends with tariffs. Washington’s conduct toward allies during this coronavirus crisis has been really disappointing. You have to be much more solicitous.
TAI: You mentioned Alexis de Tocqueville in the Foreign Affairs piece, and, of course, we Americans think about Tocqueville as the author of Democracy in America. But when China’s leaders read Tocqueville, they read L’Ancien Régime. Why do you think Tocqueville has something to say about the current situation in China?
MP: When I was doing my PhD thesis, I coined the phrase “the Tocqueville Paradox,” because I was looking at why the Soviet Union fell apart very quickly, not as a result of long-term stagnation but by trying to repair the system. The Chinese leadership, especially Vice President Wang Qishan, piqued interest in Tocqueville because he read L’Ancien Régime, and he warned fellow cadres that reform could speed up the demise of the system itself. This is why Chinese leaders like Wang read Tocqueville: They are aware of the risks embedded in reforming a very rigid, brittle system.
Historically, the leadership of the Chinese Communist Party is also informed by the Gorbachev experience. They blamed the collapse of the Soviet Union on Gorbachev, not looking at the more fundamental causes that preceded him. So, they’re informed, in many ways, by this phenomenon identified by Tocqueville, that a bad system is at its most perilous moment when it tries to be better.
TAI: You first book, From Reform to Revolution: The Demise of Communism in China and the Soviet Union, was based on your dissertation. If I remember the argument, the Soviets moved too quickly on political reform without thinking through all the economic and social elements that also had to be in place, while the Chinese Communist Party (CCP) was able to sustain itself because it undertook economic reforms first and didn’t open up the system politically. Can you make an argument that the Chinese system has now reached the point where, without political reform, it faces a similar fate as the Soviets?
MP: That dissertation was done in 1991. The book came out in 1994. At that time, I was quite optimistic about the Chinese path. I tried to look at the Chinese economic reform and the Soviet political reform, and I argued that the moment that you open up that kind of system, you unleash revolutionary forces that change the balance of power. In the case of China, China’s initial economic reform was very moderate, but it was Chinese society, Chinese entrepreneurs, who made China’s capitalist revolution. Where I was a bit more optimistic than I should have been was suggesting that economic change alone could compel the political system to change.
My second book, China’s Trapped Transition (2006), was very different. There I came to the conclusion that you have to tackle the political core of the system, which is one-party rule. If you do not deal with the nature of the regime, which essentially is a predatory system, then no amount of economic development can change the system. And even worse, economic development is ultimately unsustainable.
TAI: One of the key arguments made by both Republicans and Democrats in the past for engaging and trading with China was that a growing middle class in China would push for property rights and then eventually civil and political rights. How would you describe the status of the middle class in China today, and the prospect it could ignite reforms?
MP: Their status is very ambiguous. Clearly the ranks of the middle class have grown a lot. By education level, income, whatever measurement you use, China probably has 300 million in the middle class, but that’s only 20 percent of its population. So, China has a large middle class in absolute terms, but as a share of the population it is still relatively small. Another issue is that a middle class becomes politically active not just because of material resources. It needs some form of intellectual or political awakening. It has to be exposed to ideas that are fundamentally at odds with the current political system, or it has to be exposed to material setbacks that raise questions about its future under the system.
Because of censorship and the regime’s repression, the Chinese middle class has not really experienced what you might call an intellectual enlightenment. Instead, they’ve been subject to a lot of nationalistic indoctrination. So you can exclude that as a resource of political change. Now, we can only rely on the second part. This is a middle class that has never experienced a sustained decline in their standard of living. Now, they are about to get one. Between the lack of reform, worsening external environment, the coronavirus shock, and China’s deteriorating economic fundamentals, the world ahead is actually quite challenging.
TAI: Well, that’s another Tocqueville thesis, right?
MP: Yes, the revolution of rising expectations.
TAI: One final thing before we wrap up. Are you working on a new book?
MP: I’m writing a book on China’s surveillance state. The materials are very, very hard to get, so it will take a lot of time. But it will be an important book because the party-state’s future rides on the efficacy of its coercive capabilities.
TAI: I certainly look forward to it. Thank you, Minxin, for sitting down with me and TAI.