Which Past?

President Xi's Common Prosperity as a Shanzhai (Copycat) Agenda?

“Past may be prologue, but which past?” Henry Hu.

“The past isn’t dead. It isn’t even past,” William Faulkner.

On the year anniversary since January 6th, I thought I would repeat an exercise which I did after Trump’s election in 2016 and shared on this blog for my 12 tweets of Christmas post. In my blogging on the early morning of November 9th, 2016, I ran through all the potential historical comparisons for what had just happened and settled on Caesar. I published that claim and shared it on social media, not because I thought it was “right” but because I thought people in my circle would consider it “interesting”. And to paraphrase the sports commentator, Colin Cowherd, it pays to be in the interesting business.

I’ve noticed that it is often the case that the “right” comparison that contributes to real insight is often in a critical sweet spot, not so distant as to be alien but not directly adjacent as to be trivial. But the pop history that college students excel at often involves taking some completely alien point in history and showing the ways it rhymes with the present. You will find a lot more content that fits this formula because the gaps in knowledge can be filled with mystery which naturally piques an audience’s interest. If we are being honest with ourselves, these articles amount to a lot of sound and fury signifying nothing. The same obviously goes for the Trump/Hitler parallel. I wisely avoided it in my election night post, even though I agree with the more academically grounded explanations that invoke the comparison only to emphasize the common role of conservative fealty to right-wing demagoguery.

I tried to find a podcast I listened to several years ago when Ezra Klein made a very similar point between right and interesting in historical analysis, but came up short. I recall Ezra argued that 1968 might be a captivating parallel for those who have not done their assigned readings characterizing the tumult of the 1960’s, but not to those of us who have. His old Vox colleague, Jane Coaston, reminded a listener who flatly posed the question that readers of major American newspapers in cities across the country during the late 60’s were so desensitized to the deluge of daily bombings they hardly registered. For these reasons, Ezra added that if you really want to understand the country, perhaps it is better to go back to 2005 when he first arrived in Washington and began his career covering policy in the now defunct blogosphere. His more recent work emphasizes that the continuity between the Trump and Bush administrations lies in their contempt for government and expertise. Highlighting the porousness of the boundary between farce and tragedy, the very people who screwed up so royally somehow live on like political zombies. Perhaps the reason why they are so often revived and even celebrated is that for all their mendacity they could at least be said to be true believers, not cynics who neglected to wrap their cruelty in grand narratives.

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Ezra’s idea of reaching for periods in the more recent past has me going to a very different corner of the world. But, by sheer coincidence, it also emphasizes the tumultuous 60’s as the frame of reference—the rebirth of Mao and the return of radicalism in Xi Jinping’s China. With the concentration of power under Xi to the point that he is increasingly lonely at the top, the orthodox view increasingly interprets Xi as Mao in a matter of fact way. Nor is it the case that these views are limited to the ignorant commentariat. The most astute China watchers I know like my old boss at The Carter Center also find themselves reaching for the Yan’an period prior to the founding of the PRC to periscope the future of the country’s leadership politics. Everything old is new again.

Christian Goebel @Chri5tianGoebel

Updated version of a graph I posted in February. It visualises frontpage headline mentions of China's political leaders in the People's Daily between 1946 and 2021.

Talk of cult of personality notwithstanding, I find that I am transported to an alien world when I pick up a book on the Cultural Revolution in much the same way that the Civil Rights era strikes me as alien. The China I saw when I lived there in 2018-19 certainly bore no resemblance. While the Party may give a nod to Mao’s notion of perpetual revolution so as to avoid the Soviet Union’s bureaucratic sclerosis, to be sure, a common concern, the overwhelming emphasis is still on the errors of leftism. The project to rejuvenate the Party to steer clear from the Soviet pathology—you pretend to govern, we pretend to obey¹ —must occur firmly within the confines of Reform. Those boundaries were stated plainly by Deng as crossing the river by feeling the stones or, if you prefer, Chen Yun’s “a bird within a cage”.

I do not feel the same way when I read about the period coinciding with Hu Jintao’s tenure. That tenure is now derided as “ten lost years” because Hu-Wen had an engineer’s sensibility to normalize deviance, contributing to organizational dysfunctions that eventually spiraled out of control to mass contention in the final three years of his rule, creating an opening for Xi’s archconservative camp. Departing from the Jiang-Hu incremental consensus, they alleged the failure was one of organizational atrophy of the Party-state’s Leninist muscle memory. Conversely, Western business elites are more sympathetic to Hu’s track record, pointing to the limits of constrained modernization, a crisis of success. In China’s Leaders, David Shambaugh aptly characterizes the crisis of success that followed from annualized growth rates of 10 percent:

At the heart of China’s economic reform aspirations lies the stated desire to “rebalance” from the old (post-1978) growth model to the new (post-2013) one….The “old two” drivers of development were fixed asset investment plus low-wage, low-end manufacturing primarily for exports. This model was wildly successful beyond anyone’s expectations over the last 30 years. But a new growth model is needed which requires a re-calibration of macro-economic drivers. (Emphasis mine)

Analyzing product space data in a range of countries around the world, I determined in my thesis at Peking University that there were structural patterns to support the notion that development follows three stages and two transitions between the stages. It follows that successful growth strategies from a factor to scale economy, described in Yuen Yuen Ang’s book How China Escaped the Poverty Trap, do not translate for the next transition from a scale to knowledge economy.

Shambaugh’s demarcation is at 2013, by coincidence the same year President Xi shored up his position in the Party hierarchy, does not seem to reflect the actual onset of the growth model’s symptoms. The deviance may have been normalized until 2013, but it appeared much earlier, as concluded in this clairvoyant 2006 analysis of Hu’s 11th 5-year plan:

Yet China in the first decade of the 21st century is different from China under Deng. A prominent role of the central government, massive inputs, and drastic policies have constituted the recipe for economic success over the last two decades or so, but may no longer be relevant to and effective for the “common prosperity” goal. The likelihood that this goal will be achieved may very well depend on whether the state can identify a new set of economic, institutional, and political means for redistributing wealth.

Did you hear the key phrase in that excerpt, common prosperity? There is nothing new about Xi Jinping’s New Development philosophy, as articulated in the cadre publication Qiushi. It is substantially cut and pasted, or perhaps shanzhai, from Hu Jintao’s 2005 Qiushi essay (link in Chinese). Then-Zhejiang Party Secretary, Xi Jinping, was likely taking notes. If you are willing to slog through the Chinese in Hu’s essay, pay special attention to the elasticity of the New Development Concept, as articulated in points 1 through 10, an umbrella idea for everything from accelerating the development of education to overcoming energy bottlenecks. In a commentary for The China Leadership Monitor digesting in real-time the significance of the 11th 5-Year Plan as a signal that Beijing was serious that it would have to transition to the difficult problems, Barry Naughton notes that the concept’s political strength, encompassing a range of interests, is also its principal liability. While the attempt to do away with the hard counting target of planning (jihua) and move toward a modern guidance-based policy framework (guihua) may be admirable, it leaves outside observers wondering what exactly are the instruments that 1) rank and/or harmonize the priorities 2) such that ambitions do not become dead letters.

Barry Naughton, Politics vs. Policy 2005 and 2021 edition.

It is remarkable how Naughton recycled his earlier argument for a virtual lecture with Stanford`s Scott Rozelle last year, applying it to the proliferating policy objectives of Xi’s Common Prosperity agenda. In both instances, the words are good, but decreeing an ambition is not in itself a good strategy because of latent conflicts across policy areas. One conflict especially pertinent to China’s demography in 2006 was allowing urbanization to continue to be an engine of productivity growth, while also not letting the edges of cities grow unchecked into slums as in many other developing countries. With China approaching developed levels of urbanization, these concerns remain but the primary loci has shifted to all the property that has been built to accommodate this extraordinary urbanization process. Namely how do regulators ease stress on urban families—as Dan Wang implied in this year’s annual letter make babies first, make steel later—while maintaining property revenues for local governments? The electricity crisis was another Xi-era manifestation, as there is the problem of environmental targets switching from coal to liquid natural gas working too well. Outside observers may notice China has gone full circle. Though the intention may have been to eliminate the compulsion of a hard target, the effective result of an impossibly expansive policy agenda is to similarly deprive instruments of their market-conforming character, Naughton argues.

There are a few real differences between Xi and Hu, but they likely are not in a positive direction. While both legitimate their policies under the moniker of scientific development, they have radically different ideas of what “scientific” meant. Shambaugh draws the line wonderfully:

Under Hu and Wen, it was “the system that mattered” —policies were largely the result of collective institutional (bureaucratic) deliberation rather than being arbitrarily decided by Hu or Wen. This is what was meant by the term “scientific”.

Consultation has been replaced by President Xi’s techno-utopianism refracting a modern guise onto Mao’s old line that the masses can move mountains if only they possessed the collective will. Triumph of the will. All those dilemmas noted by frumpy economic policy analysts like Naughton? They can be escaped if we simply lean into the endless promise of the next wave of general purpose technologies. The top liberal minds, like Wu Jinglian, who might say otherwise have been expelled from the process as their insights on innovation might also be paired with fatal liberalization. Critical foreign observers were previously treated seriously even as they paved their path independently. Joseph Stiglitz’s sympathatic account of the 2005 consultations with the World Bank, then the high priest of the good governance agenda, emphasizes this point. It is difficult to imagine either in the increasingly xenophobic climate of contemporary China. Wu would be dismissed on the grounds of promoting Western ideology and the triumphalist new China would declare that foreigners are no longer necessary for moving up global value chains that are within their sights.

The difficulty is that innovation is not a dinner party. President Xi seems to believe igniting that process is simply a matter of directing investment, and perhaps redirecting some talented engineers stuck up in decadent consumer tech. Though surely different in content, it is similar in kind to the project they have already completed to remake the infrastructure of modern China to keep the gears running on its gargantuan scale economy. What is not appreciated is the Hirschmanian view that creativity comes as a surprise to the inventor, and that it is therefore not possible for any central agent to direct, no matter how omnipotent.

If that holds, investment is fundamentally different depending on the stage of the growth process. It is a lesson that the Chinese would be wise to learn, as the failure to commit to capital deepening was one of the factors that contributed to the fall of the Soviet Union, Krugman noted in a seminal essay for Foreign Affairs. After all, the Soviet Union possessed no shortage of high-end talent. Guns and butter aside, the cautionary fable was not purely one of misallocation, but of how to foster genuine creative advancements. The lesson goes doubly for the countries that formerly comprised the Free World and are losing their creative edge by adopting the U-form corporate structures that spelled doom for the USSR.

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Through this detour of Xi-Hu Common Prosperity/Scientific Development rhyming, I think I have an answer to the question I posed in the introduction on why people find it more interesting to make comparisons to the very distant past. Most (though not all) have an intuitive grasp that the people in the distant past— Chairman Mao and Joseph McCarthy—are clear Manichean villains. They excite us. The history of more direct relevance to us is considerably more muddied and banal. George Orwell has weighed in on this matter, whose remark applies just as sharply to the Republican Party in the U.S. as the CCP:

What is to be expected of them is not treachery or physical cowardice, but stupidity, unconscious sabotage, an infallible instinct for doing the wrong thing. They are not wicked, or not altogether wicked; they are merely unteachable.

They are farcical creatures, incapable of learning not only from dusty books but from their immediate experience. That applies equally to President Xi’s efforts to elevate to a mode of policymaking suited for modernization and the Republican Party’s contempt for expertise. The worthy reminder is that you need neither blacklisted careers nor outright purges to find tragedy. Unteachability is its own kind of tragedy.

1. The chief proponent of Party-building reforms in the Hu administration, Zeng Qinghong, once said, “It is… hard to exercise power well, especially when it is held for a long time, and the Party’s status as a party in power does not necessarily last as long as the Party does, nor is it something once achieved never lost.”