URSABLOG: Convening History

Sooner than expected, but not a moment too soon. The Communist Party of China (CPC) has said that their National Congress will be convened on October 16th in Beijing. Well that’s not strictly true; they have said that at a meeting of the Political Bureau of the CPC Central Committee, presided over by Xi Jinping, General Secretary, it was decided that the seventh plenary session of the 19th CPC Central Committee is to be convened on the 9th October, when the Political Bureau of the CPC Central Committee will propose that the 20th CPC National Congress will be convened on October 16th. Clear now? Good.

For those of you who do not attach much importance to this, or worse, find it boring, I can sympathise. But the significance of this National Congress is of great importance to the world as a whole, and in shipping in particular. Until this is out of the way – and the expected confirmation of Xi Jinping in his unprecedented third term as CPC General Secretary and all that flows from that – nothing much will happen in China. I suspect that all of the things that we have been waiting for, or have been afraid of, will start happening once this milestone has been passed.

The good news, I suppose, is that it will take place on October and not in November or December as was originally thought. What can we expect from the National Congress? Well according to Xinhua – and I will try and spare you the terribly turgid language of the report – it will:

-?????????Thoroughly implement Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era.

-?????????Formulate action plans and major policies mobilise all Party members and people in China to firm up confidence in history, strengthen historical initiative, and bravely charge ahead.

-?????????Push forward common prosperity for all, advancing the great new project of Party building, and promoting the building of a community with a shared future for humanity.

-?????????Make sure everyone – Party members and people from all ethnic groups – will be mobilised to work together for building China into a modern socialist country in all respects and advancing the great rejuvenation of the Chinese nation on all fronts.

-?????????Elect a new CPC Central Committee and a new CPC Central Commission for Discipline Inspection.

If that all doesn’t concern you, then you should begin paying more attention. Let me try and explain what I think it means.

Thoroughly implementing Xi Jinping thought is the cementing of the General Secretary’s importance in everything that is decided in China from now on. This is not a simple matter of apparatchiks second guessing what the boss wants in order to get promoted, but it is the centralisation of all political thought – forget about discussion or debate – which will then flow back from the centre to inform policy making from top to bottom. Those that question the wisdom of zero-COVID lockdowns for example – within China especially – will find themselves being accused as anti-Party elements and disciplined accordingly. Those that made money from providing education services and gaming platforms to paying customers have been corrected and in many cases put out of buiness. Hong Kong is part of China and is being brought steadily back into the fold, being cleansed of Western, democratic and other unsavoury elements. Taiwan, well Taiwan is being reminded on a daily basis that it is historically part of China, and they had better get used to it because sooner or later, one way or another they will be absorbed into Greater China.

The references to firming up confidence in history and strengthening historical initiative is basically using Marxist-Leninist theory and language to justify both the motivation behind their increasingly assertive actions in the western Pacific, and the justification to bravely charge ahead when action, any action, is taken.

Common prosperity is shifting focus away from the individualist capitalistic economic model which has thrived since the early 1980s to a more morally controlled – using social technology – that ensures that Xi Jinping thought remains more important than any other thought that will spring into peoples’ minds. This is not just about China however, this is challenging the whole ‘western’ canon of thought and political and economic systems. First China’s great rejuvenation – on all fronts – then this will be used as a model to be shared in future with the rest of humanity. One assumes – as in the case of Hong Kong for example – whether they like it or not.

The announcement of the election of a new CPC Central Commission or Discipline Inspection is not either a procedural formality or a throw away comment, but is a reminder of how China will be run: centrally and with discipline.

This National Congress is of paramount importance to shipping, because China is turning inwards and outwards at the same time. The large-scale investments we have come used to in the past will not just be controlled by monetary stimuli, but by Party controlled and approved investments and policies. The fiddling around with various interest rates and borrowing limits that have been announced in recent months have had little effect except keep things stable and the system fluid. Evidence of this can be seen, as reported by the Financial Times, when the State Council, China’s cabinet, added Rmb300bn ($44bn) in credit support by its policy banks. “This will expand effective investment, boost consumption and help keep economic activities on a steady course,” said premier Li Keqiang, who apparently has overall responsibility for the economy. The FT further reported:

“…the measures, which analysts viewed as incremental rather than transformational, also reaffirmed Xi’s directive to prioritise combating the health risks posed by the coronavirus pandemic over the economy.”

Zero-Covid policies are causing huge problems for the Chinese economy, but are of paramount importance, and they will stay in place until Xi Jinping decides otherwise. To underline this, the State Council rather alarmingly – for those waiting for the stimulus anyway – commented that while “the foundation of economic recovery is not solid”, China will avoid “resorting to massive stimulus or compromising longer-term interests”.

I have spent so much time discussing the goals of the National Congress – which are almost certainly a foregone conclusion – because they are the longer-term interests that cannot be compromised. What they mean in practical terms remains to be seen, but if the priority of the National Congress is to thoroughly implement Xi Jinping thought, and one those thoughts is a tough, uncompromising zero-Covid policy, then we cannot look to the Chinese internal economy to help drive international trade and assist shipping further until things change.

China’s inward turn means that the importance of GDP growth has lessened drastically over the last couple of years, aided by the hit dealt by the pandemic. The story has changed: economic growth at all costs is no longer as important as strengthening historical initiative. Read the announcement in Xinhua for yourselves – if you can bear it – and you will find no mention of ?economic growth.

Likewise, the outward turn that China is now taking is not just about Taiwan or the South China Sea. It is not even about Socialism with Chinese Characteristics (sorry about the capitals, but it is obviously catching) it is about presenting and promoting a different world view, one driven by its history. This means not just recovering from the century of humiliation and the misuse of its resources and people by various colonial powers, but that their sense of their history – and politics, philosophy and sociology – runs directly in opposition to the western created ‘Liberal World Order’.

If China succeeds in exerting itself on the world stage and aligns itself with other countries with a similarly sympathetic, anti-western views, then confrontation is almost inevitable. Whether this will be militarily, or economically depends on so many things that it is, at this stage, impossible to forecast how things could turn out. But the world is changing and changing fast. The invasion of Ukraine has shown that peace is not a default option, and there are many countries in the world that welcome the disruption to the ‘end of history’ status quo that we have all benefitted from since 1990.

The death of Mikhail Gorbachev this week reminded me how extraordinarily peaceful and prosperous the last 30 years or so have been. It also reminded me how certain people can change history through their actions, but those very actions can have unintended consequences. There is a direct line to be drawn from the implosion and breakup of the Soviet Union and the invasion of Ukraine. What is happening in China now is as important as glasnost and perestroika were in the 1980s. To any of us in business, professionally and personally, I believe that it is worth paying close attention to what will unfold in China in the coming weeks. It will dictate the shape future of the world we will live in for years to come, and the business that we do.?

Simon Ward

www.ursashipbrokers.gr