Looking Back and Looking Forward: The Challenge of Predicting an Unpredictable World

Commentary by Prof. Michael Jeive

As the year draws to a close, one is tempted to reflect all key events from the preceding 12 months and to look forward to a year ahead. However, it seems in 2018 that events are moving so quickly that there is barely time to reflect, or that one’s preliminary conclusions are overtaken by rapidly changing circumstances.

This is especially true in China. A year ago, one might have expected that the imminent celebrations of the 40th anniversary of the “Reform & Opening” policy that started at the 3rd Plenum of the 11th Party Congress on Dec. 18–22, 1978 would dominate both national and international headlines in December 2018. Deng Xiaoping’s call to ‘Emancipate the mind, seek the truth from facts and unite as one in looking to the future’, concluded the 1978 Central Economic Work Conference and set the stage for the third plenum of the eleventh Central Committee of the Communist Party of China (CPC). (A report on the 1978 Plenum can be found here.)

The 40 years since 1978 have brought remarkable and unprecedented change, the few tables below Identifying just some of the areas of radical change and progress.

An extensive survey  of the reform period, and source of the tables above, has recently been published by the Australian National University Press (see link in reading list below).

While the national press in China will no doubt feast on the celebrations much of the rest of the world may be more focused ongoing trade war and its impacts.

Next week is also likely to see the launch of the annual Central Economic Work Conference which convenes to define the agenda for the following years key economic policies. The event is normally meticulously planned in advance with policies debated, discussed and consensus created before the formal meetings. Today it is not clear whether the recent Xi-Trump Dinner at the G20 in Argentina will lead to significant changes in China’s 2019 policies and priorities.

However, here too, there appears confusion or at least a definite lack of clarity:

Caixin Global – Charts of the Day: Beijing and Washington Frame Trade War Talks Differently

The Trump-Xi meeting on the sidelines of the G-20 Summit over the weekend has brought a temporary trade truce between the world’s two largest economies. While Beijing and Washington both called the meeting “highly successful,” the two governments have described the results quite differently in their respective statements.

To provide you with a more nuanced understanding of the Sunday meeting and the progress of trade talks, Caixin has put together a side-by-side comparison of the two statements, as well as the joint statement released in May following Vice Premier Liu He’s round of negotiations with U.S. Trade Representative ‎Robert Lighthizer‎ in Washington.

The full article

Axios.com – Behind the scenes of Trump’s trade wars

Last Saturday night, after his dinner with China’s President Xi Jinping in Buenos Aires, President Trump rode to the airport in his armored limousine. The first lady, Treasury Secretary Steven Mnuchin and Press Secretary Sarah Sanders joined the president in “The Beast.”

What happened: Inside the car, Trump dictated a statement to Sanders listing the concessions he said China made during the dinner, according to two sources familiar with their private conversation. The statement, which was circulated to principals, was all Trump. Since then, we’ve seen a mess of competing and confusing statements from the Chinese and American sides, throwing U.S. stock markets into a spiral.

The full post

In our last newsletter, we discussed the US China trade war arguing that “It is precisely here  that we see the nexus of the rising conflict between the US and China – not simply trade, but technological capability. The Made in China 2025 (中国制造2025) programme aims to comprehensively upgrade China’s technological capabilities reducing its dependency on western developed economies”. The full impacts of the conflict are still to be seen, but some initial winners and losers can perhaps be identified. In recent days we have seen more and more reports that Beijing is willing to modify the Made in China 2025 (中国制造2025) programme to open market access to more foreign companies.

While the recent Xi-Trump Dinner at the G20 in Argentina offered some hope for a softening of the dispute and appeared to signal a willingness on both sides to return to negotiation and compromise, the arrest of Huawei CFO Meng Wanzhou and the news on December 11 of the arrest in China of a former Canadian diplomat offer evidence of a hardening of approaches.

China’s public response to the arrest of Meng Wanzhou had already been robust, Michael Kovrig’s subsequent detention, if not related, is a very great coincidence:

In a recent page three editorial in the Party’s official People’s Daily newspaper, China’s leadership makes the sternness of its position known in regard to the arrest in Canada of Huawei CFO Meng Wanzhou (孟晚舟), the daughter of the company’s founder.

The commentary is attributed to this “Zhong Sheng” (钟声), a pen name used in the paper since November 2008 for important pieces on international affairs on which the leadership wishes to register its view. The name “Zhong Sheng”, literally ”bell tone”,is a shortened version of “bell tone to warn the world” or jingshi zhongsheng (警世钟声).

But it is clear from the piece that the Chinese leadership, at least publicly, does not view this as a legal case at all, but purely as a political move on the part of the United States and Canada.

http://chinamediaproject.org/2018/12/09/peoples-daily-emits-growl-over-meng-arrest/

Looking forward there seem to be more questions definite answers. Is Beijing ready to deliver on the reform promises of the 2013 Third Plenum? Will Xi Jinping use the Reform and Opening anniversary commemorations to announce major economic reforms and further opening?

South China Morning Post –

All eyes on China’s annual conference as President Xi Jinping prepares to unveil economic game plan for 2019 amid trade war tensions with the US

China’s top leadership is likely to hold the annual policymaking Central Economic Work Conference next week

The meeting of the mainland’s top leadership will decide what Beijing will do to keep growth on track amid the trade war truce with the United States

Full story here

What impact will US and European pressure and the needs of the Chinese economy and enterprises have on the (re)formulation of the Made in China 2025 policy? While there seems little or no evidence for political reform or a loosening of the ideological party direction, there appear to be a growing number of voices within the country pushing for greater economic openness.