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A Delicate Balancing Act

China, Company Strategy, Economics, Sustainability, Technology
By John Richardson on 14-Jun-2013

Xi_Jinping_Sept__19,_2012.jpgXI Jinping (see picture), the country’s new president, is being described either as a nationalist, who has set China on an overly aggressive course or as someone who will skilfully and harmoniously guide the nation through major domestic and international reforms.

According to Robert Lawrence Kuhn , an international investment banker and author, Xi’s nationalism, or perhaps more accurately his patriotism, is not at odds with his obvious passion for reform.

Kuhn, in this New York Times article, writes that there are reasons why there is no contradiction between the two aspects of his leadership. The reasons include:

• The need to consolidate power. Xi was not selected by Deng Xiaoping, the architect of reform, as were his predecessors (Jiang Zemin and Hu Jintao), and he was not elected by the people. Conventional wisdom had it that Xi would be a weak leader. In order to realise his Chinese Dream, Xi needs to assert strength and assure control. So far, he has exceeded expectations.

• The need to enable reform. Xi and Premier Li Keqiang are determined to enact far-reaching economic reforms, the most extensive in 15 years, but there is stiff resistance from those whose dominance would be diminished and benefits cut (such as state-owned enterprises with ties to party power). This resistance can no longer be couched credibly in terms of ideology, so it appeals to nationalistic aspirations by accusing reformers of “worshipping Western ways,” “glorifying Western models” or “caving in to Western pressures.” Xi’s proactive nationalism is a strategy of “offence is the best defence” — an inoculation, as it were, against the political virus of being labelled “soft” or “pro-Western.”

• Maintain stability through unity. China faces numerous internal tensions, especially a class-divided populace (rich-poor, urban-rural, coastal-inland) that have erupted within one generation. Moreover, an increasingly complex society can fracture along multiple fault lines. Pollution, corruption, healthcare, housing, migrant workers, workers’ wages, social cynicism, changing values, among other raging issues, threaten to fragment society — and all are exacerbated by an energetic social media. Only nationalism, which resonates intrinsically and passionately across Chinese society, can provide sufficiently strong social glue.

Kuhn, therefore, concludes that American policymakers need to understand that an apparent contradiction isn’t a contradiction at all.

According to some people in the chemicals industry, it is absolutely inevitable that Xi, and others in the Chinese government, will succeed in this delicate balancing act. Hence, there is a great deal of enthusiasm at the moment to build new capacity to serve Chinese growth.

We really, really hope that success is achieved – and actually think that it will be achieved. We think Xi shows all the signs of being a great leader. 

But a debate about the numerous alternative scenarios must still take place.