Xi's China: In the Year of the Tiger, We Need No Longer Call a Deer a Horse.

In 2004, a former BPO boss exclaimed to me - "China is where the future lies." Eighteen years later, I remain fascinated by the continuing economic and political adventures of China's CCP and what it means for the World.

Around 2006, the world’s #1 CXBPO, Teleperformance , established TP China, and today the company has 6 sites across Tier 1 and 2 cities in the republic. CEO Daniel Julian stated in recent years that he expected the revenues from the East to eventually grow to a significant proportion of the company's total global turnover.

Certainly outwardly, the capitalist character of the Chinese economy is both familiar ?and alluring to Western investors, brands and customers:

• Almost 300k companies signed up for the latest Singles Day shopping event in November 2021 on Alibaba 's ecommerce site -Taobao , the most in the event's history.
• In 2020 the ?extravaganza generated $58 Billion in the first 30 minutes - equal to the GDP of Singapore for 2019.
• Last year, twice as many products were sold in 24 hours on Singles Day than over the entire five day shopping holiday in the US which includes Thanksgiving, Black Friday, Small Business Saturday and Cyber Monday.

For those whose businesses are focused on unlocking opportunities in retail and ecommerce that thrive on high volume customer engagement, forays into the Chinese marketplace have to be considered. ?

Asides from the obvious Belt & Road Initiative , the CCP's determination for China to continue to evolve as a self-sufficient, integrated, global economic power is perhaps best represented by the Greater Bay Area development . When complete this will link 11 cities including Hong Kong, Macau and Guangzhou into a technology and innovation business centre of almost 90 million people. Looking in from the outside, the development stands as a milestone of sorts in the relentless 'terra forming' exercise of city building that the Party has been embarked upon over the past 30 years – to date, China has used more concrete in the last 3 years than the US did in the whole of the 20th Century.

It is this doggedness of the long game that appears (more than occasionally) to out-manoeuvre the 'certitude' of the Western democratic model focused on 4 year presidential terms, the associated turnaround of administrations dissected by midterms, and the media pantomime that often characterises US and Western politics today.

Our Western powers' dependence on its post WWII institutions - the UN and NATO - seems to paper over a fragmented alliance of nations and governments with misaligned economies and partisan democracies, while the much more united front of China and Russia (outwardly at least) appears to be based on pragmatic economic engagement and geo-political realities. As one British MP summarised this week: ‘one brings oiI and gas, the other brings technology and infrastructure’. If we consider that since 2013, Putin and Xi have met 38 times, compared with less than 15 times between Xi and the last two US Presidents over the same period, it becomes easier to appreciate the growing confidence of both countries and their increasingly combative rhetoric and posturing on the international stage.

Recent examples of China’s self-confidence were seen in the Party’s retort and criticism of the US who had criticised both Putin and Xi for not attending COP26 last December in the UK. Its power play over Taiwan also took a more ominous tone when, to the fury of the Party, Lithuania proactively encouraged and supported the island Republic of China setting up the Taiwanese Representative Office in Vilnius in 2021, a flagrant affront to the established norm of the CCP’s One China principle. This demands that official Taiwan outreach abroad is only identified by its capital Taipei. However, it is also reported that the CCP’s real ire stems from Lithuania’s withdrawal from its Eastern European 17+1 diplomatic endeavour to divide and conquer by splitting the EU and associated EU/US dominance in the region.

In the UK, Neil Oliver, in his short BBC series which aired at the end of last year - ?Scots in China - ?visited the Greater Bay Area in one episode to talk with Scottish developers onsite. Any discussion that veered towards criticism of the Party was met with awkwardness and tension. Any mention that there are more billionaires in China than the US (819 vs. c.500), or that Shanghai is home to the world’s most expensive property, and it’s clear these aren’t the usual topics for public discourse.

To understand even in a broad sense CCP China’s end game requires analyses. Studying the literature and commentaries of concerned academics and researchers alongside Chinese official pronouncements and press, results in a conundrum of mixed messaging to the casual albeit interested observer.

Hidden Hand by Clive Hamilton and Marieike Ohlberg, focuses on the CCP’s complex machinations to infiltrate and influence the fabric of political and economic life across the globe – ‘controlling the terms of the debate’ while offering ‘the ‘China Case’ and the Belt and Road Initiative as solutions to the erosion of trust and cooperation in the international community.’

In We Have Been Harmonised by Kai Strittmatter, there is a greater slant towards the methodologies and tactics used, identifying the use of language as a key tool in ‘harmonising’ the relationships with the West to help achieve the overall goals of the Party.

A sense of inevitability regarding the eventual dominance of CCP’s China global positioning permeates both tomes.

However, in David Thomas ’s How Business Gets Done – My China Insights, published in 2016 and more recently his book Year of the Rat published in 2020, there is a more balanced and nuanced discussion around the China opportunity for the West. In one particular observation regarding the bounce back of the Chinese airline industry post-covid, David quotes from an article which summarises that:

“the future geography of the international airline network will soon be very different. The basic global route map has remained the same since the beginning of the Jet Age 60 years ago, with a strong bias favouring western airlines who pioneered it.”

Notwithstanding the challenges for Western business around the CCP’s inculcation in many walks of life, it is difficult to ignore a country where the eight busiest airports handled in one year more passengers than the population of the US.

It’s easy to see why these differing views co-exist. In the Chinese press, like China Daily , the CCP's sanctioned public use of language is oddly opaque and outdated. Regarding such things as the 'cooperation and friendship' between China and nation states as diverse as Malta and Belarus, the verbiage is more 19th century officious pronouncement than modern political parlance. The utterances are only made more bizarre with the ubiquitous inclusion of statements from Xi which lack both plausibility and credibility by dint of their sheer volume and scope in promulgations on every aspect of China's wide ranging global initiatives.

On the other hand, the reaching out of CCP’s China to support embattled nations like Kazakstan by providing aid, regional stability and finance appears no different to the efforts of Washington or Brussels to exert influence through benevolence and a commitment to the common good in regions where Western countries have a vested interest.

A primary difference of course in a great deal of Chinese economics and life is that its dominated by the CCP vs. the Western model which is dominated by the concept of the individual. As one banking director recounted to me, when he asked his Chinese counterpart at a dinner in Beijing how he had got into banking, he was dumbfounded when they responded that it was what they had been told to do!

All this plays out of course against a background of ongoing misinformation, claim and counter claim from the US as the ultimate power in the West and Beijing as the ultimate power in the East.

A scan of three newspapers on Jan 11th 2022 picked up at Gatwick airport tells a tale of its own. Alongside domestic news, the China Daily made mention throughout regarding what the editorial team perceive as the shortcomings of Western/US policies and actions across several topics, including Ukraine, while the Financial Times carried just one China story on a?regional lockdown in Xi’an and the New York Times carried none at all. Given the tension in these relationships just now, it’s clear, a genuine understanding of what’s playing out between World Powers regarding CCP China, the opportunities and the threats, will be an exercise in self-education for us all.

What is inescapable however is the growth in China of the middle class – which history demonstrates is the engine room of the global economy. My former BPO boss (mentioned above) explained to me in 2004 that by the 2020 half the Chinese population would be middle class. By 2018 more than half the population, more than 700 million people, had entered the middle-income bracket. This is more than the middle class of the US and the EU combined, and is growing in the East and shrinking in the West. When we consider the ‘youth bulge’ in Africa and India, and the rise of the MINT countries (Mexico, Indonesia, Nigeria and Turkey) a broad direction of travel for CCP’s theatre of influence, and its ongoing financial support, can be observed:

Ultimately, when considering the near future and CCP China's dominance in it, we must appreciate that this isn't an 18th century land grab to consolidate regional power, this is the 'art of economic war.' We are already players in the game, the question facing the West and all of us, complicit through our consumption, is whether we have something meaningful and relevant to respond with against a complex and sometimes impenetrable global power who has already achieved checkmate on so many levels, like a Vulcan game of 3D chess.

As the Year of the Tiger begins, governments, businesses, institutions and individuals need to have a perspective on if and how they will engage with CCP China – or not. Whether it’s to benefit from expansion and growth in Chinese markets or to understand the limitations on established freedoms and values, ignoring the obvious trajectory and intent of CCP China’s Plan (now in its 14th iteration) will do nobody any favours. Two Chinese proverbs sum this up well: ‘Guessing is cheap, but guessing wrong can be expensive’ and ‘no matter how tall the?mountain?is, it cannot block the sun’.