Beijing’s Maoist revival, roiling Chinese society and politics, is now beginning to poison China’s business environment as well.
On Wednesday, Reuters reported that in late July the powerful National Development and Reform Commission brought together representatives from about 30 foreign companies—including GE, Microsoft MSFT +7.32%, IBM IBM +0.12%, Intel INTC +0.67%, and Qualcomm QCOM +0.01%—and tried to force them to write confessions of violations of China’s anti-monopoly law.
Chinese officials then, incredibly, showed the multinationals the “self-criticisms” of other companies as a means of pressuring them to follow suit.
NDRC officials, during the two-day meeting, also browbeat and threatened the foreign firms and warned them not to defend themselves.
“The message was: if you put up a fight, I could double or triple your fines,” said one participant at the session, reporting the remarks of the NDRC’s Xu Xinyu, a division chief in the antitrust bureau. Why should we care about the NDRC’s rough tactics?
The demand for confessions comes on the heels of that agency’s recent moves against, among others, milk, automotive, and pharmaceutical multinationals.
The discriminatory targeting of foreign business is reminiscent of the xenophobia of Mao’s era, and that may be no coincidence.
Xi Jinping has been conducting a series of Maoist-inspired “rectification” and “mass line” campaigns since he became China’s leader last November, and Marx is enjoying a Beijing-sponsored revival at the moment.
China, unfortunately, is beginning to resemble the neighboring state run by the Kim family, and as a consequence Chinese netizens have started to call their own country “West Korea.”
West Korea, from all appearances, is becoming more “Red” by the day. Many have dismissed Beijing’s moves to the “left” as mere rhetoric and not signifying a lasting shift in Chinese politics.
For instance, some China watchers say Xi is spouting ideology just to placate the extremist supporters of the charismatic Bo Xilai, once the country’s most openly ambitious politician and who is now on now trial for assorted crimes.
Others have actually interpreted Xi’s Maoist-Marxist campaigns as hopeful signs, believing these movements in fact lay the groundwork for significant economic reforms to be introduced at the Communist Party’s Third Plenum, expected for October.
In fact, the questioning of gaige kaifang—reforming and opening up—is included as one of the “seven perils” in the otherwise reactionary Document No. 9, issued by the Party’s Central Committee in April.
Deng Xiaoping, the great Chinese reformer, also had to protect his flanks from time to time by sponsoring campaigns against “bourgeois liberalization.” So do these sunny arguments add up?
Of course, we have to wonder about a political system that requires a new leader to first launch ideological binges just so that he can govern sensibly later on, but the Communist Party often works according to its own perverse logic.
Therefore, most anything is possible in the world of Chinese politics, but in this case China may actually be lurching left. For one thing, upbeat China watchers made the same arguments about Hu Jintao when he came to power in 2002.
The Chinese now call his ten years at the top, marked by an anti-reform drift, “the Lost Decade.” Xi, much more than the enigmatic Hu, looks like he actually believes the Party needs to base its legitimacy in its roots.
His words, in short, are probably a good indication of what he really thinks, and in this vein Robert Elegant, the author of a pioneering biography of China’s communist leaders in the early 1950s, makes an overlooked point.
“It is most unlikely that the head of state would level a public attack on a policy he intends to adopt,” he notes about Xi. In any event, Xi’s Maoist-Marxist campaigns are altering the balance of power inside the Party.
“Now the leftists feel very excited and elated, while the liberals feel very discouraged and discontented,” said Shanghai Normal University’s Xiao Gongqin, to the New York Times this month, commenting on Xi’s regressive campaigns.
“The ramifications are very serious, because this seriously hurts the broad middle class and moderate reformers—entrepreneurs and intellectuals.”
As a consequence of these reactionary developments, hopes for reform in China, generated by the elevation of the new leadership team of Xi and Li Keqiang, have begun to fade in recent months.
There is a growing appreciation of the notion that fundamental change cannot proceed in an atmosphere where liberal values are under attack, as they are in Document No. 9, which lists as perils such notions as constitutionalism, freedom of the press, universal values, and democracy.
Moreover, as more and more observers believe, structural economic reform will never proceed without political reform to remove the opposition of entrenched interests, sometimes called the “Iron Quadrangle” of state enterprises, the security apparatus, the military, and Party reactionaries.
Yet it is what Xi and Li have in fact been doing that is confirming fears. That is why the harsh tactics of the NDRC, which reports to Li in his role as premier, are so important.
The use of Cultural Revolution-style methods against multinationals suggests that Xi’s Maoist rhetoric is beginning to affect Chinese governance. Reuters reports that the NDRC held a separate anti-trust meeting for domestic enterprises.
Because the gathering of foreign firms was conducted in Chinese, language was not the reason for the separate sessions. And that raises concerns Beijing is blatantly violating its World Trade Organization obligations to provide “national treatment”—nondiscriminatory administration of the laws—to foreign companies.
Over time, China’s trade behavior has deteriorated, and this deterioration is accelerating. Xi Jinping has created an increasingly anti-foreign atmosphere in Beijing, something reflected in his Document No. 9.
As xenophobia becomes even more evident, arrogant Beijing officials are making less and less pretense of honoring their international trade obligations.
Xi Jinping is busy painting the country Red, and none of the consequences for multinationals in China are good.
forbes.com
On Wednesday, Reuters reported that in late July the powerful National Development and Reform Commission brought together representatives from about 30 foreign companies—including GE, Microsoft MSFT +7.32%, IBM IBM +0.12%, Intel INTC +0.67%, and Qualcomm QCOM +0.01%—and tried to force them to write confessions of violations of China’s anti-monopoly law.
Chinese officials then, incredibly, showed the multinationals the “self-criticisms” of other companies as a means of pressuring them to follow suit.
NDRC officials, during the two-day meeting, also browbeat and threatened the foreign firms and warned them not to defend themselves.
“The message was: if you put up a fight, I could double or triple your fines,” said one participant at the session, reporting the remarks of the NDRC’s Xu Xinyu, a division chief in the antitrust bureau. Why should we care about the NDRC’s rough tactics?
The demand for confessions comes on the heels of that agency’s recent moves against, among others, milk, automotive, and pharmaceutical multinationals.
The discriminatory targeting of foreign business is reminiscent of the xenophobia of Mao’s era, and that may be no coincidence.
Xi Jinping has been conducting a series of Maoist-inspired “rectification” and “mass line” campaigns since he became China’s leader last November, and Marx is enjoying a Beijing-sponsored revival at the moment.
China, unfortunately, is beginning to resemble the neighboring state run by the Kim family, and as a consequence Chinese netizens have started to call their own country “West Korea.”
West Korea, from all appearances, is becoming more “Red” by the day. Many have dismissed Beijing’s moves to the “left” as mere rhetoric and not signifying a lasting shift in Chinese politics.
For instance, some China watchers say Xi is spouting ideology just to placate the extremist supporters of the charismatic Bo Xilai, once the country’s most openly ambitious politician and who is now on now trial for assorted crimes.
Others have actually interpreted Xi’s Maoist-Marxist campaigns as hopeful signs, believing these movements in fact lay the groundwork for significant economic reforms to be introduced at the Communist Party’s Third Plenum, expected for October.
In fact, the questioning of gaige kaifang—reforming and opening up—is included as one of the “seven perils” in the otherwise reactionary Document No. 9, issued by the Party’s Central Committee in April.
Deng Xiaoping, the great Chinese reformer, also had to protect his flanks from time to time by sponsoring campaigns against “bourgeois liberalization.” So do these sunny arguments add up?
Of course, we have to wonder about a political system that requires a new leader to first launch ideological binges just so that he can govern sensibly later on, but the Communist Party often works according to its own perverse logic.
Therefore, most anything is possible in the world of Chinese politics, but in this case China may actually be lurching left. For one thing, upbeat China watchers made the same arguments about Hu Jintao when he came to power in 2002.
The Chinese now call his ten years at the top, marked by an anti-reform drift, “the Lost Decade.” Xi, much more than the enigmatic Hu, looks like he actually believes the Party needs to base its legitimacy in its roots.
His words, in short, are probably a good indication of what he really thinks, and in this vein Robert Elegant, the author of a pioneering biography of China’s communist leaders in the early 1950s, makes an overlooked point.
“It is most unlikely that the head of state would level a public attack on a policy he intends to adopt,” he notes about Xi. In any event, Xi’s Maoist-Marxist campaigns are altering the balance of power inside the Party.
“Now the leftists feel very excited and elated, while the liberals feel very discouraged and discontented,” said Shanghai Normal University’s Xiao Gongqin, to the New York Times this month, commenting on Xi’s regressive campaigns.
“The ramifications are very serious, because this seriously hurts the broad middle class and moderate reformers—entrepreneurs and intellectuals.”
As a consequence of these reactionary developments, hopes for reform in China, generated by the elevation of the new leadership team of Xi and Li Keqiang, have begun to fade in recent months.
There is a growing appreciation of the notion that fundamental change cannot proceed in an atmosphere where liberal values are under attack, as they are in Document No. 9, which lists as perils such notions as constitutionalism, freedom of the press, universal values, and democracy.
Moreover, as more and more observers believe, structural economic reform will never proceed without political reform to remove the opposition of entrenched interests, sometimes called the “Iron Quadrangle” of state enterprises, the security apparatus, the military, and Party reactionaries.
Yet it is what Xi and Li have in fact been doing that is confirming fears. That is why the harsh tactics of the NDRC, which reports to Li in his role as premier, are so important.
The use of Cultural Revolution-style methods against multinationals suggests that Xi’s Maoist rhetoric is beginning to affect Chinese governance. Reuters reports that the NDRC held a separate anti-trust meeting for domestic enterprises.
Because the gathering of foreign firms was conducted in Chinese, language was not the reason for the separate sessions. And that raises concerns Beijing is blatantly violating its World Trade Organization obligations to provide “national treatment”—nondiscriminatory administration of the laws—to foreign companies.
Over time, China’s trade behavior has deteriorated, and this deterioration is accelerating. Xi Jinping has created an increasingly anti-foreign atmosphere in Beijing, something reflected in his Document No. 9.
As xenophobia becomes even more evident, arrogant Beijing officials are making less and less pretense of honoring their international trade obligations.
Xi Jinping is busy painting the country Red, and none of the consequences for multinationals in China are good.
forbes.com
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