Coronavirus | The COVID-19 pandemic is China’s biggest crisis since Tiananmen, says Richard McGregor

'Once China started to take it seriously, we did see a quite remarkable demonstration of the power of the party-state, when you think what they managed to do in a short period of time.'

April 26, 2020 08:10 pm | Updated April 27, 2020 05:15 pm IST

Women wearing protective face masks push a child on a stroller along a street in Beijing on April 26, 2020. China confirmed more cases of coronavirus and no new deaths for the 11th day in a row.

Women wearing protective face masks push a child on a stroller along a street in Beijing on April 26, 2020. China confirmed more cases of coronavirus and no new deaths for the 11th day in a row.

China’s response to COVID-19 has shown both the weaknesses and strengths of its system, says Richard McGregor, Senior Fellow at the Lowy Institute and author of The Party: The Secret World of China’s Communist Rulers . The Party is fighting battles on many fronts, facing political and economic challenges at home as well as an unfavourable geopolitical environment, he said.

Where does Covid-19 rank in terms of the challenges the Party has faced? Is it the biggest since Tiananmen and 1989?

Every challenge looks like the biggest crisis, but I would say the answer to that is yes. Certainly the global financial crisis in 2008-2009 was a big challenge for China. They got through that through a massive stimulus programme. I think this time is a little bit different.  We've not only got what is going to be an extended economic downturn – this can't be turned around by a sort of wave of  infrastructure spending, so we've got probably the longest downturn post-Tiananmen or maybe since the late seventies – plus we have also got a sort of global political crisis or global political fight over the origins of the virus, and responsibility and accountability for it. Now China is a much bigger economy, and a much more powerful country. That doesn't mean that it can sail through something like this, and they are fighting on a number of fronts.

Also read: Coronavirus | India following U.S. trajectory in COVID-19 cases, says Chinese expert

The early response to the pandemic has been framed by the Party as a local-level mistake, while China’s recovery has been portrayed at home as a vindication of China’s political system. Has this narrative been successful?

It’s just absolutely amazing, can you imagine six weeks ago, even a month ago, that China would be heralding its handling of this crisis as a vindication for their system? But that's where we are these days. You know, we should say, of course, that in some respects, that sort of propaganda is as much directed internally as it is externally. We shouldn't forget that. But I think China's handling of this crisis really shows the deep weaknesses and also some of the strengths of their system. So let me explain that.

First of all, there's absolutely no doubt that China mishandled the early stages of this crisis. Now, we don't quite know exactly what happened. There was certainly a cover up at some levels. There was a bureaucratic mess, fighting between the localities and the centre. There were all sorts of things happening and that, I think, was a show of China's weaknesses. In other words, a lack of openness, lack of transparency, endemic bureaucratic problems, and a fear of offending and reporting to the centre.

Now once China started to take it seriously – and we should emphasize we're kind of in early days still – we did see a quite remarkable demonstration of the power of the Party-State. When you think what they managed to do, in a short period of time – no discussion like we have in messy democracies – they locked down in residences up to a 700 million people, they mobilised the army, they mobilised the paramilitary, they commandeered businesses to make for the state personal protective equipment, they shut factories, they shut businesses. So we did see a real display of what the state in China can do. And on its own terms, it was effective. You know, I don't believe every Chinese figure to the tee, but there's no doubt that we've got rapidly declining infections in China and large parts of the country relatively speaking getting back to normal. So we saw the good side and the bad side of the Chinese system.

Also read: China approves third COVID-19 vaccine for clinical trials

The Party has said President Xi has been involved in the response right from January 7. Considering the initial response, is there a risk in placing Xi front-and-centre?

The narrative of Xi in charge of this crisis has got some holes in it, maybe deliberately. Certainly in the rewriting that's going on now on the successes of this, that they are all down to Xi, and to his focus on the strong central power of the Party. But if you go back a little bit, the fact that he in theory ordered that this be handled on January 7 only came out much, much later. And that would be a strange thing to take credit for because we had no reporting of cases from early January to January 16. Clearly the issue was not being handled then. I think that sort of came out in almost a moment of panic in China to show that Xi had been on top of this from the start. Certainly once he did focus on it on January 20, when he was basically behind the Wuhan lockdown, the system was mobilised. That's true.

But at the same time, it might be good internal propaganda if China is successful and they can portray China as successful compared to other countries. They've got enough control of the media to do that. But externally, I don't see many too many countries taking Xi as a kind of great leader and a magician for the role he played here because clearly the system didn't work at the start. There's one other point. One reason --  and there is speculation about this in China -- that the centre didn't focus on this until January 20 was in the three days beforehand Xi was on a state visit to Myanmar. And people around him might have thought they couldn't upset that with talk about the problems of a new coronavirus. So in some respects the system didn't jump into action until Xi was back from overseas. And that might mean that there's another two or three important day lost in fighting the virus.

Also read: Coronavirus | China reports rise in cases, most from abroad

We have seen some curious internal political developments. We had an unusual essay by the former property tycoon Ren Zhiqiang openly criticising President Xi and the centralization of power. He has since been detained. Do you see it as reflecting a broader sentiment among some of the elite?

I think it certainly does reflect the broader sentiment among some of the Chinese elite, which is very critical of Xi. We've known that for some time. It's not surprising given what a tough, remorseless leader that Xi has been both in terms of the anti corruption campaign and crushing any opposition generally.

Mr. Ren is an interesting character. I've met him and interviewed him many years ago. He's always been outspoken. He was, of course, most outspoken many years ago on issues of real estate. He was a fierce opponent of the government investing in public housing, rather saying that such issues of property should be left to the private sector. And he's generally been in favour of more untrammelled markets in China, which, of course, is another reason why he wouldn't like Xi who's lent towards the state side.

Having said that, it's interesting. Ren certainly got into trouble, but he doesn't seem to have gotten to as much trouble as you might have thought. I think he was suspended from the Communist Party just for a year. He wasn't expelled altogether. He might be in some form of home detention now. But it was really telling. It was a brave essay. It was eloquent. I think it reflected many of the concerns of a lot of people in China, the technocrats and the like, what they dislike about Xi. Of course, the Party has put a lid on it without sort of ejecting him from public life for ever and a day.

 

We have also had Vice Minister of Public Security Sun Lijun placed under investigation. It was only in February when he was given a role with the security situation in Wuhan. Given that the Party takes some time in preparing such cases, is this very unusual?

That is an odd case. As you say, the investigations by the Communist Party's anti-corruption watchdog often do take a long time. They often sort of proceed from previous investigations. In other words when other people have been investigated, they are interrogated. And they usually give up people they've worked with or they're expected to confess, not just only on themselves, but on others as well. We don't quite know whether this was at the end of a lengthy period of investigation, or whether it happened suddenly. Certainly before people are detained, they often drift out of the centre of public life for a few months beforehand before things catch up with them. But in this case, as you say, Mr. Sun had been actively involved in Wuhan and then suddenly he was disappeared. So this is a another case of where the lack of transparency in China leaves us scratching our head.  

China’s global image has taken a hit, but it has also been the first to bounce back from this crisis. Will China emerge from this stronger or in a worse-off position globally?

 

It’s really hard to say. In many Western countries, China is going to be in a worse off position. The US-China relationship continues to break down at a rapid pace. China's relations with a lot of European countries, France, Germany, Britain, has been strained by this. Partly because of the issue we discussed earlier, the lack of transparency and partly because of a distaste at what many people see as China's efforts to exploit the turnaround in their country and gain sort of a propaganda or PR win from it.

It's too early to tell. I think one of the big issues is yes, the China's economy is starting to steady but it's by no means in recovery mode. And we've got to see how much they can come back.  There's a lot of problems hidden under the surface in China and once growth slows dramatically, they will come to the surface. The authorities have got lots of firepower, but nonetheless they just can't click their fingers like they did in 2008 to get out of this. It's also going to depend on what happens in the US with Trump in the US election, and whether the US economy and the US political system can right itself. That's another unknown.

It's also going to depend on countries surrounding China immediately, like Japan, South Korea, and of course, India. But without some sort of open accounting of what happened in Wuhan, which China is resisting, it's hard to see how they come out of this with their reputation enhanced. They might be just as powerful, but it's going to be an even more abrasive power than it is at the moment.

China-US relations were already in decline. The prominent Chinese scholar Wang Jisi recently said the decoupling is irreversible. Would you agree with him?

I'm not so sure. Political decoupling might be, economic decoupling or trade decoupling is another matter because the two countries and global systems generally are so enmeshed, it's very difficult to unwind them. You're certainly going to see it happen in some areas in the manufacture of drugs, antibiotics, India has an interest in that. You're going to see some of it in terms of manufacturing personal protective equipment, medical supplies, but that's really not a big deal at the end of the day. But do you see the sort of globalization unwinding as some people assert will happen? I think it's too early to call that yet.

There's going to be a lot of countries hedging their bets with China. But China's logistical strengths, its industrial clusters, its ports, its railways, in other words, the ability to trade and do business are immensely powerful. You can't simply replicate that in other countries. Businesses at the end of the day, particularly coming out of the trough following this crisis, governments aren't going to be able to subsidize too many businesses for too long. So I'm a bit cautious to overstate that at the moment.

India has recently amended its FDI policy to tighten scrutiny of investments from China. Do you see other countries taking similar steps? Do you think this broader backlash against Chinese investment is temporary, or is it more long-lasting?

I think it's more long-lasting actually. A week or so before India did that, Australia did something similar but without mentioning China by name. Australia said that any foreign investment proposals – usually there's a threshold at which the government doesn't look at them -- but they basically said anything has to be looked at. And that was basically aimed at China as well, even if they didn't say so. There's little doubt that the climate for China investing in the US is not going to get better soon. Europe in recent years has gradually been trying to put up more regulatory barriers to particular purchases of Chinese tech equipment. The UK is a similar case, right now.

We are going to see ongoing Chinese investment in countries in Africa, perhaps in resources. Perhaps in Brazil, Argentina, and the like, which aren’t so sensitive about it. But generally the boom in outward Chinese FDI, which we saw in 2016-16, I think that's over for the moment. There's going to be many, many more barriers. It might not matter as much to China as a few years ago because China itself is advanced far along up the industrial chain. But yes, I think this is now permanent feature of the landscape.

 

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