The Monthly Rundown: China's Two Sessions and the Russia-Ukraine Conflict
March 29, 2022
About the author:
Einar Tangen, Senior Fellow of Taihe Institute, and Founder and Chairman of China Cities Bluebook Consulting
An Interview with Einar Tangen
China and the world stand at a crossroad. As China conducted its annual Two Sessions in affirming its economic direction for the year, the crisis in Ukraine has waged on, all of which create new uncertainties and difficulties on the road ahead. How does China plan to navigate its economy? Will it abandon its current COVID management policy? And what might the global consequences of the Russia-Ukraine crisis be?
TIO: The 2022 Two Sessions are happening at a critical point in China’s political and economic development. The Communist Party of China (CPC) celebrated its 100th anniversary about eight months ago. Later this year, the Party will have its 20th National Congress. What do you think will be the most important items on the Two Sessions agenda, and why?
Tangen: We are living in uncertain times. The conflict between Russia and Ukraine has exacerbated an already difficult economic and political outlook, as the world was beginning to emerge from the pandemic.
Coming into the Two Sessions, China’s main concerns were its domestic economic outlook, U.S.-China relations, the pandemic, and its commitments to its people and the environment, but after the situation in Ukraine, the concerns have deepened and broadened to include the availability, costs, and logistics of necessities like food and energy, and the effect they will have on China and other developed and developing nations.
Facing these uncertain political, economic, social, and environmental headwinds, China’s primary focus is on the things it can control, meaning what needs to be done domestically in the short run, while maintaining its long term, economic, environmental, and social programs and milestones, like rural revitalization, to prevent people falling back into extreme poverty, regional economic inequality between provinces, the 2030 and 2060 environmental goals, education, youth development, and better availability and access to social services like health services and care for the elderly.
Last year, the unemployment rate was 5.1%. This year it is projected to be 5.5%.
Last year, the Consumer Price Index was 0.9%. This year they are projecting around 3%.
Together with the downward adjustment of the overall GDP growth target from 6% in 2021, to 5.5% in 2022, Beijing is signaling that political and economic uncertainties will be factors. It is worth noting that China didn’t go with a growth range as they did in 2020, opting instead for a hard number, which indicates a bit more confidence.
Usually, given Beijing’s proclivity to under-promise and over-deliver, people tend to look at the possible upsides, but with necessities like energy and food in play, there doesn’t seem too much room for external optimism. But, internally, China’s ability, over the last 40 years, to manage its economy better than other countries, as demonstrated by its management of the US Financial Meltdown of 2008-2009, is what people will be counting on. This is in part due to Beijing’s much larger economic toolbox, but also a better partnership with its people, as China’s COVID-19 response has demonstrated.
Beijing has signaled its economic efforts will involve a combination of fiscal and monetary moves to support key sectors, like families, technology, SMEs, green development, and the beleaguered real estate sector. Tax, fees, and rate cuts will help keep money in the pockets of consumers and SMEs. Lower home down-payments, support for technology, innovation, and targeted support for infrastructure, especially green projects, in line with China’s 2030 and 2060 environmental goals, will provide jobs while improving efficiency and cost savings as China continues the digitalization of its economy.
But, rather than just focusing on the headwinds, Beijing has gone to great lengths to assure its people that long-term social development goals will not be paused.
President Xi’s visit to the Inner Mongolia Autonomous Region, where he discussed regional and social development, like upgrades to the electrical grid, more support for technology, innovation, the environment, and rural revitalization, was a strong signal that China’s socialist policy efforts, like tackling economic inequality, women’s issues, and demographic needs, will continue.
So why is this important?
As other nations across the world struggle to cope with the barrage of negative economic news and political strife, social and environmental issues are being pushed to the back burners. Creating a “one step forward, two steps back” approach is threatening the global efforts to avoid an ecological, social, economic, and political cataclysm.
China’s ability to follow its long-term domestic goals and international commitments, like climate change targets, by simply modifying its short-term game and adjusting its middle and long-term approaches, is fast becoming the gold standard of national management.
The truth is, the workings of government are about methodical implementations and progress reporting. 90% of the daily government work is about harmonizing and implementing plans that are supposed to govern and improve the people and the nation. It’s about the nitty-gritty of balancing priorities, like defense, poverty, healthcare, education, development, etc. It is the reason the centerpiece of the Two Sessions, the Government Work Report, always contains an exhaustive list of the government’s previous and future goals. If Premier Li were to leave out any items, it would spark speculation that the government has abandoned those areas as priorities, causing widespread concern and confusion.
So, if you are one of the people who wonder why the report is so long and exhaustive, now you know.
TIO: One major issue, which is on everyone’s mind, is China’s COVID-19 policy going forward. Compared with other countries, China has been more effective, but stricter. Looking forward, will China continue its “Zero-COVID Policy” in 2022, and if so, why, and how?
Tangen: The premise outside China is that China is always on the verge of political, economic, and social collapse. This, ironically, has been projected onto China’s unprecedented success in handling the COVID-19 pandemic.
Regardless of the plain facts, hostile governments, media groups, and individuals continue to voice daily suspicions about the numbers, effects, and costs of China’s success.
But, the facts paint a different picture: the number of infections, deaths, the rapid development of vaccines, all while providing the best in class management of its economy, has set China’s pandemic response miles apart from any other nation.
While the pandemic raged and cut economic growth numbers for the vast majority of nations, China’s economy grew and was responsible for one half of world growth during the first two years of the pandemic.
China was the main provider of essential PPE (Personal Protective Equipment) and goods to nations who had failed the leadership moment, by choosing political compromises, and/or denial, over science. Without the “factory of the world,” countries, including the U.S., would have faced even more severe infections and deaths.
So, the premise that somehow China’s teetering on the brink of calamity due to its handling of the pandemic is a false narrative seemingly developed to cover up the failures of other nations and their leaders.
In the Two Sessions report, it was made very clear, China will continue to stick to science, not politics, as it makes decisions about transitioning from a pandemic to an endemic approach.
Beijing has seen, quite clearly, that political approaches to scientific issues are disastrous. There is no better example of that than the United States, where the numbers of infected, hospitalized, and deaths spiraled beyond anybody's expectations, literally among the worst in the world. Yet, the U.S. is the wealthiest, most technologically advanced country, with the best medical capabilities in the world.
So, what should people be looking for in 2022?
Since the pandemic’s first major manifestation in Wuhan over two years ago, Beijing has used a combination of masks, digital tracking, border controls, mass testing, treatment, vaccines, and targeted lockdowns to minimize infections and deaths.
Despite being able to mobilize effectively when required, for example, building field hospitals in a matter of days, China has only 3.6 critical care beds per 100,000 people compared to the U.S., for example, which has 30. Concerns about overwhelming treatment capacity were a major factor in China’s strict protocols.
As a byproduct of that success, the general populace has developed very high expectations about infections and mortality. These expectations are currently being tested by Omicron’s spread in Hong Kong, Liaoning, and other places around China.
China’s current approach: vaccinate 85% of the population (currently the number is above 90%), develop protocols to handle outbreaks without having to go into full-scale lockdown. This approach was developed and tested successfully during the Winter Olympic Games, using “bubbles,” managing public expectations and reactions to cases, developing and approving additional treatment approaches, like foreign and domestically developed mRNA vaccines, and finally, waiting for the mortality rate to come down to 0.1% or lower. The mortality rate is the unknown variable that will depend on a combination of vaccine efficacy and less deadly COVID-19 strains.
TIO: That leads us to the third question. In China, the Two Sessions are often deemed as an embodiment of Chinese democracy. From your perspective, how is China’s democratic paradigm different from that of the West? Can you give some examples?
Tangen: The role of government is first and always to protect the safety of its citizens, then to provide and maintain the physical and economic structure necessary for society and the nation to function.
Democracy is a means to ensure that a government fulfills its duty to protect and provide, by allowing the majority of the people to remove those they deem unresponsive.
In reality, democracies only work if the majority of those voting can balance their needs with the needs of society. No society can function without a sense of collective responsibility and action, as COVID-19 clearly showed.
But, for many developed countries and especially the U.S., democracy is less of a “means,” and more of an “end.” American Exceptionalism is based on the assumption that if all nations embraced the liberal, democratic, free-market system, the world would arrive at the end of history and life would be peaceful and perfect. The reality is every government is ultimately judged on its ability to protect and provide for its people, society, and nation.
In this regard, the U.S. has utterly failed, people are told to buy guns to protect themselves, the political system is divided and dysfunctional, the physical infrastructure is failing, while internationally, America’s soft power is dying the death of a thousand hypocrisies.
As Chinese citizens freely walk their streets without fear, murder rates in the U.S. continue to rise. As China builds the infrastructure it needs for the future, the U.S. is struggling to repair its failing roads and bridges. As China joins trade initiatives and funds development, America isolates and sells weapons. As China talks about a shared future, US leaders talk about the evils of other nations.
Against this backdrop, China has developed its “whole process democracy,” which basically means democracy with Chinese characteristics, or as I like to term it, Representative Democracy, based on Socialist Pragmatism.
China’s system involves its 90 million CPC members who come from all walks of life and represent the feelings and needs of the people around them, in life, society, and work. Compare the makeup of the NPC (National People’s Congress) to the US Congress. In the NPC, members receive travel, lodging, and a small stipend, but maintain their everyday jobs, which range from housewives, garbage collectors, engineers, taxi drivers as well as government officials. In the U.S., 48% are millionaires, 98% are college elites. They are paid an average of $178,000 a year and believe they are responsible for not only the U.S. but world affairs. Ironically, many do not have passports, and most have made only a few trips abroad. Their attention is focused on party politics and being re-elected. In contrast, the economic and demographic diversity of NPC members provides a means of collecting and organizing feedback about the government’s performance.
So you have two very different approaches to democracy, but the goal, in theory, is the same. The performance of the systems over the last 40 years could not be more different, as China’s economic and social growth attests.
But the ultimate measure of success is the accomplishments of the government and the attitudes of the people. In the U.S., support for the government hovers around 25%. In China, different independent studies and polls, by Pew, Harvard, and Edelman, estimate people’s support to be between 82 and 95 percent.
So, counter to this narrative put out by many governments and the media, China is the most successful representative democracy that the world has seen for the last half-century.
In the West, the idea, after World War II, was that the U.S. was going to take control of the world and implement Western-style democratic capitalism in order to avoid another World War.
The premise was that if everybody embraced the same system, everything would be fine. So, democracy and open and free markets were the ends. But the fact is they're just systems, the ends are what is produced and how citizens feel about it. This is a contrast to China’s view, that democracy is just a means to the end of good governance.
If you ask people in the U.S. if democracy and free markets were everywhere, what would happen, they would say everything would be fine and life would be good. But it's not born out by the facts and realities. There are free markets and democracy in many countries, and the U.S. has tried to literally overthrow their governments. For the U.S., it’s actually not about democracy, free markets, or liberalism, just whether the U.S. approves, or is willing to tolerate another country’s governance.
Democracy has not united countries; liberal values have not stopped wars. Economically, free markets have not prevented economic distortions, like monopolies, collusion, and massive inequality.
America’s actions, starting wars, interfering in the affairs of other countries, pressing its own economic interests at the expense of others with “America First” slogans have created a post-hypocritical world, where governments and individuals routinely do what they criticize others for doing.
For instance, with the Ukraine situation, the U.S. started a number of wars based on its own “security interests.” Afghanistan, Iraq, Syria, the list goes on. It is therefore hypocritical for the U.S. to say that Russia can’t do the same thing. This is not an exoneration of what Russia is doing. It is simply pointing out that Realpolitik leads to more Realpolitik, resulting in a hypocritical world where diplomacy, the rule of law, and the international order are just used by the powerful to control the powerless.
TIO: Now that you mentioned the situation between Russia and Ukraine, it's definitely not something that Chinese officials would have hoped for or anticipated, but there's no way for us to escape from this topic. How do you see China cope with the uncertainties in its dealings with international affairs, given that the conflict has already had some negative impacts on global energy prices and also people's everyday lives?
Tangen: So, let's put it into context. China is sympathetic to Russia’s security concerns about NATO’s expansion because it faces the same types of pressure from AUKUS and the Quad.
To understand the situation, you need to go back to the fall of the Berlin Wall, the collapse of the USSR, when Russia was assured by US Secretary of State Baker that the EU and NATO were not going to encroach into former Warsaw Pact states.
Let's put aside whether or not an American Secretary of State has the power to make decisions for other sovereign nations.
In the following years, NATO expanded five times, each time over the vociferous objections of Russia.
Now, to the question, what is NATO? NATO was formed as a defensive alliance against the Warsaw Pact. The Warsaw Pact goes away. NATO does not. NATO continues looking for a reason to exist. Blame it on bureaucratic inertia, but since it wasn’t disbanded, it went in search of a new mission, that new mission has become Russia.
In 2001, Putin made a speech in Berlin, in German. He said Russians were looking forward to finding a home in Europe. He addressed the NATO issue by applying to join but was rebuffed three times.
Contrast his Berlin speech with his speech to the Munich Security Conference, six years later in 2007, where he said, “We (Russia) have been lied to and humiliated; we no longer support the global world order led by the United States and we will work against it.”
So, 15 years ago, the fuse was lit. Over the next 15 years, NATO and the EU continued to expand despite acknowledgment by Biden, Burns, the current head of the CIA, Henry Kissinger, and many others, that expansion of NATO, particularly into Ukraine, would result in a WAR.
Today, we face the consequences of US “inaction” and Russian action.
China’s understanding of Russia’s situation is based on its own treatment by the U.S.
For years, Taiwan was not really an issue. Things were going along fine—WTO and the One-China Policy. But, as China began to rise, Hong Kong, Tibet, Xinjiang, Taiwan, and the South China Seas suddenly become major political issues. To Beijing, it was part of a multi-pronged attack on China, to contain its rise and force political and economic structural changes, in essence, because China’s success, with a different system, was an existential threat to America’s model of government and an indictment of the use of American Exceptionalism to justify its actions.
Going back to your question about the consequences for China. It is why the 2022 Government Work Report focuses on what Beijing can do domestically in the face of international headwinds. China’s international positions center around supporting the UN-centered international political order and defending the economic gains of the developing world due to globalization. Domestically, China is preparing for food and energy shortages, and price volatility, as it continues to pursue its long-term social, political, and economic goals, following its own path to prosperity.
The outlook for the years following the pandemic was already challenging due to loose money, high debt, rising prices, food shortages, logistic bottlenecks, sanctions, and political uncertainty, the situation in Ukraine is pouring gasoline in a fire that we weren’t prepared to handle in the first place.
TIO: Based on what you said, are you suggesting that the economic sanction on Russia is irrational in the sense they are threatening people's livelihoods?
Tangen: It's irrational in the sense that the U.S. has been using sanctions for years. If you go back, if sanctions worked, Cuba, Venezuela, Iran, China, Russia would have changed. You would have seen regime changes, economic and ideological changes. It didn't happen.
There have been over 100 packages of sanctions since 2011 against Russia. Has Russia changed? It actually exacerbated the situation. As they say, the definition of being crazy is doing the same thing over and over again but expecting a different result.
Sanctions instead of creating change seem to have the opposite effect. In Russia’s case, it hardened Putin’s determination to fight NATO’s expansion. In the case of Iran, it derailed more moderate governments from coming to power.
Yes, the Russian people are going to pay a terrible price. But here's the difference. Russia grows more food and has more energy than it needs. It may not have a lot of consumer choices, but it will have food, heat, and the ability to run its economy. Contrast that with many nations, with no involvement in the US-Russian conflict. In Africa, the people and the nations will suffer. They are the ones who are going to go without food, energy, have debt burdens they can’t pay because their first priority will be to feed their people. They will be the ones to experience civil unrest as their hungry impoverished people look for new answers to problems that have been caused by others.
In the EU and the U.S., the suffering will be by those at the bottom of the economic pyramid, the ones who won’t be able to afford higher food and energy costs.
So, yes, the situation is completely irrational. The “inaction” of the EU and the U.S. that led to Putin’s actions will result in misery and tragedy for the world’s most vulnerable.
TIO It seems like the world is splitting up into two camps of pro-Ukraine and pro-Russia right now. And even if China states that it remains an impartial stance on the situation, people from the West, particularly in the U.S., are saying that it's wrong and that you have to support the Ukrainians. Given that China's ties with the West are already not so promising, how is the war going to affect its relationship with the West in the future?
Tangen: There is no immediate hope of a thaw in U.S.-China relations because the U.S. sees China’s system of government and success as an existential threat.
Russia’s actions in Ukraine have added fuel to a fire that has been smoldering for 15 years. The U.S. and EU, despite economic differences, are trying to make the situation about Ukraine a moral litmus test, demanding individuals and countries either support or face repercussions. The difficulty is that the majority of the world’s population and landmass did not support the UN resolution against Russia because while the suffering of the Ukrainian people is real, the moral superiority of the U.S. and the EU is not. The jingoistic certainty is, to many, a thin veneer to cover their culpability. If I pour gasoline on a woodpile, I can’t say “I'm shocked that it started a forest fire” nor am I entitled to blame others for not putting it out.
All that was necessary was to listen to Russia’s security and economic concerns. The solution would have been fairly apparent. The countries in the former Warsaw Pact could have been designated as sovereign and neutral and guaranteed by treaty by both Russia and NATO. Trade with the U.S., Europe, or Russia would have been open and subject to the same terms for each. Instead, we have a humanitarian tragedy, which threatens the existence of the human race.
This interview was conducted on March 7, 2022 by Kang Yingyue, International Communications Officer of Taihe Institute.
This article is from the March issue of TI Observer (TIO), which is a monthly publication devoted to bringing China and the rest of the world closer together by facilitating mutual understanding and promoting exchanges of views. If you are interested in knowing more about the March issue, please click here:
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