This week’s free issue of the newsletter is an excerpt from Richard McGregor’s new book Xi Jinping: The Backlash.

Richard is a senior fellow at the Lowy Institute in Sydney and before that he was a journalist with the Financial Times. His 2010 book The Party: The Secret World of China's Communist Rulers is still required reading for understanding the Communist Party and his 2017 book Asia's Reckoning: China, Japan, and the Fate of U.S. Power in the Pacific Century is also excellent.

Xi Jinping: The Backlash is a mini-book about the pushback to Xi at home and abroad. The book is published in Australia but is available on Apple, Google, Kobo and Amazon Kindle.

I hope you enjoy the excerpt, and the book in its entirety.

In 2001, about a decade after the end of the Cold War, and just as China was formally joining the global trading system, Henry Kissinger peered into his crystal ball. In his book Does America Need a Foreign Policy?, Kissinger pondered what might happen if Washington treated Beijing as a ‘permanent adversary’, an enemy that the United States had decided it was compelled to oppose because of its ‘moral flaws’. Would it be smart, he wrote, for the United States to bunker down in Asia on that basis for another lengthy Cold War, deploying policies similar to those directed towards the former Soviet Union?

On one level, Kissinger was prescient in imagining how such a policy might play out. He described a scenario in which the United States limited trade with China to non-strategic items, the phenomenon we call ‘decoupling’ today. He suggested the United States would build up Japan’s defence and increasingly treat Taiwan as an independent entity, both of which are true, after a fashion. Once he started to rattle towards a conclusion, however, Kissinger’s crystal ball started to get foggy.

Kissinger argued Cold War-style policies would fail on multiple levels. Washington’s ability to influence Tokyo would decline. The Korean Peninsula would turn into a ‘tinderbox’. Washington’s European allies such as Germany, sensing a vacuum, would rush to fill it with their own business deals. Regional nations with territorial ambitions might take the chance to expand their claims. “Unless their own survival is directly and clearly threatened, the Asian nations will not be prepared to join a crusade that groups them together as were the nations of Europe in opposition to a single threat,” he wrote. “A policy that is perceived as having designated China as the enemy primarily because its economy is growing and its ideology is distasteful would end up isolating the United States.”

Kissinger could turn out to be right in the end. Cold War analogies don’t hold water, because Asian nations and the United States are all so deeply enmeshed with China’s economy in a way they never were with the Soviet Union. Regional nations, and indeed much of the West, may judge that their economic and diplomatic interests are best served by cutting a deal with China, leaving the United States to retreat to its own continent. Beijing knows that its presence in Asia is a geopolitical fact. For the United States, it is a geopolitical choice, one that the American public appears indifferent to defending, even if the Pentagon is not.

So far, however, the struggle to find a new order in place of a waning Pax Americana is not unfolding in the way Kissinger imagined. Regional nations from Japan to Australia and west to India are making no secret that they prefer Washington and its military to stay, and for their alliances to be refreshed. The reason is not an overbearing Washington insisting on maintaining primacy in Asia. Donald Trump, for one, couldn’t have made it clearer that he would like the United States to abandon its traditional regional role. With the Pentagon and national security establishment sending the opposite message, that the United States is in Asia to stay, Washington has hardly been a beacon of dependability. But even amid the Trumpian chaos, US allies can’t yet afford to give up on America.

Certainly, the way Washington frames any contest with Beijing affects its allies’ behaviour and choices. Some are hedging their bets like never before against over reliance on the United States. Trump has already damaged Washington’s relations with Europe and NATO. But US policy is not the only determinant of the way countries, in Asia and elsewhere, are responding to the emerging new order. Rather, it is Beijing’s behaviour, a factor that Kissinger, supposedly so conversant with China, barely seemed to have weighed up in reaching his conclusions. In private, Kissinger has always been more hard-headed, telling one aide in the mid-1970s: “When [the Chinese] don’t need us, they are going to be very difficult to deal with.” Old friends of China like Kissinger do not dare speak so frankly in public. But such sentiments are closer to the mark in explaining why the world has been reacting as much to Xi’s China as it has to Trump’s America.

Japan, to take one example, has not needed US pressure to reconfigure and strengthen its military. Shinzo Abe has pushed for more military spending and greater US engagement himself, in response to rising threats from China and North Korea. Likewise, Australia’s defence build-up and diplomatic agitation is as much a response to Beijing’s assertiveness as Washington’s weakness. Europe would love to work more closely with the United States on China trade policy, if only the White House would agree to cooperate. Even Kim Jong-un wants an insurance policy, cultivating Trump in part to balance against being dominated by his giant neighbour.

The transformation is most evident in the United States, with a haphazard, unstable Trump masking the increasingly solid foundations of an across-the-aisle hardening over China in Washington that started gingerly under Barack Obama. But the U.S. is not alone. Countries large and small around the world, from Australia to Germany, Canada to Malaysia and India to Kenya, are all rethinking and renegotiating their ties with Beijing. Difficult as it may be to see at home in China, the backlash against Xi Jinping is reaching full bloom overseas.

Big countries such as the United States are confronted by a once-in-a-lifetime challenge from Beijing. Small countries feel patronised and bullied. Neighbours worry about being marginalised. Advanced industrial nations see China coming at them like an unstoppable oncoming train. All of these phenomena, bubbling under the surface for years, have burst into clear view during the ambitious Xi administration.

The rivalry between the United States and China might be, in the words of one writer, the ‘contest of the century’. Yet in China, it is not hard to find people who echo Kissinger’s view, that the Americans are entering the contest driven by an inflated sense of moral superiority. Many Chinese depict Washington’s anger as little more than the sour grapes of a country that cannot accept Beijing as a worthy peer. Nor, they argue, can Washington and its allies intellectually countenance a single-party state that is both successful and innovative. “Western democracy has its problems. China’s system has its problems, too,” said Hu Xijin, the sharp-tongued editor-in-chief of the Global Times, a nationalistic tabloid owned by the People’s Daily. “When we have problems, we will reform. But the West doesn’t. They think everything [they do] is right.”

There is something to this critique. Evan Medeiros, a key architect of Barack Obama’s Asia policy in the National Security Council, said the differences in the two political systems were an ‘enduring source of distrust’. Chinese plans to tighten social control at home, he said, “will only draw a sharper contrast with the United States”. The Chinese themselves have always seen the US system as inherently a threat, something that has been reflected in the Party’s propaganda guidelines. Equally, said Medeiros, ‘there is no American political leader who will ever confer the legitimacy on the leader of the communist party, as the Chinese desire’. In other words, both systems believe that the other is out to get them, and they are not entirely wrong.

The United States has always been able to overlook the moral failings of undemocratic systems when it has other interests in mind. Saudi Arabia, a theocratic state that was home to most of the September 11 bombers, is a case in point. Saudi Arabia has oil and is a rival of Iran, enough to persuade US presidents for decades to keep Riyadh tightly within its orbit. When Obama pushed back against this tradition, he was heavily criticised. But for the Chinese, it is laughably hypocritical for the United States to embrace a leader like Mohammad Bin Salman, the Saudi hereditary monarch who had a dissident slaughtered in his country’s consulate in Istanbul in 2018, while still arguing that China’s system lacks legitimacy. The difference, of course, is that while the Saudis will never challenge US dominance, China is doing just that.

To complicate matters, Americans are suffering buyer’s remorse with China. Washington, or at least much of its national security leadership, long believed that China would not buck the US-led global order because they were such beneficiaries of it, either through a liberal trade regime or, for example, through the constraints the United States forced on regional rivals in Asia such as Japan. “The United States has always had an outsize sense of its ability to determine China’s course,” wrote Kurt Campbell and Ely Ratner, who both moulded Asia policy in the Obama administration. “Again and again, its ambitions have come up short.”

Washington’s policy was based on a series of misjudgements, many of them quite reasonable at the time. Sandy Berger, Bill Clinton’s late national security adviser, for example, depicted China in a speech in June 1997, as being a divided country, “with conflicting forces pulling in opposite directions: inward-looking nationalism and outward-looking integration”. In truth, China’s integration with the world has always been tailored to reinforce the nationalist narrative at home. In the words of analyst Tanner Greer, the ‘let’s engage China to make it a responsible stakeholder’ policy was not as stupid as it is now portrayed. “What should have been an opening gambit became a stale dogma,” said Greer. “But it was a good strategy initially, one that terrified the Party leadership, so they took action to defeat it.”

The Americans overrated their intrinsic attractiveness and strength as a benign, inclusive, unassailable superpower, especially in the post-Cold War glow of victory against the Soviet Union, another rival communist state. More to the point, they underestimated the Party’s equal and opposite sense of its own exceptionalism. “We wanted to believe that we could convince China that they would be better off with us in charge, and that somehow, with more interaction and engagement, the Chinese would come to believe that, ‘I like to be told what to do by the United States’,” said Oriana Skylar Mastro, of Georgetown University. The United States also failed to understand, says Ms Mastro, that China felt compelled to build up its military. China’s leaders never “felt safe surrounded by the US military, and … at some point, if they could, they would reduce US military presence in their periphery”.

It is too early to judge the enduring impact of Trump’s presidency. Trump has never bothered with consistency, which is a good thing because his administration’s China trade policies are riddled with contradictions. Trump is trying to bully US industries to pull production lines out of China, if not to bring them home, then at least to put them into friendlier countries. Alongside this policy of disengagement, Trump has been pressing the Chinese for greater market access, which will only tighten the two countries’ economic ties. But blowing up China policy doesn’t mean there is agreement about what should take its place. “The new consensus is that the old strategy is not working,” said Ely Ratner. “But there’s no consensus on what that means or what comes next.”

The short-term assumption about China has long been that it wouldn’t take the United States head-on until it was ready. But the Trump administration has reversed this formula. The question is no longer what might happen when China confronts the United States. Rather, the United States is bringing on the confrontation itself, for fear of leaving the contest too late. Superpowers do not like to retire. More to the point, for one with as many allies as the United States, it is dangerous for them to do so because of the vacuum they leave in their wake.

The rally-around-the-flag sentiment produced by the showdown with Trump over trade and technology has dampened criticism of Xi for the moment. It may even help some of his advisers, such as Liu He, the vice-premier in charge of the US trade negotiations, persuade Xi to adopt more liberal economic policies. But for the moment, fighting foreigners has prompted a spike in nationalistic fervour and a determination to back national champions in technology. “For us, this is a real “people’s war’,”’ said Xinhua in May when Trump increased tariffs on Chinese goods. Trump initially rattled the Chinese leadership. But his compulsion to constantly up the ante means he overplays his hand and alienates potential allies. With Beijing, rather than creating space for a deal, Trump’s tactics may in fact close one off.

Many Chinese in the Obama era viewed American power as an empty throne. In its place, they now see a mad king, fronting for a hostile American empire. In such circumstances, the benefits of engagement from Beijing’s perspective are diminishing. “Even if a trade deal with the United States is still possible, some in the Chinese leadership are now starting to ask, why bother?”, wrote Kevin Rudd, Australia’s former prime minister in late May. “Perhaps it’s better, in China’s view, to cut its losses now and get ready for the next Cold War.”

There is no foreseeable scenario under which Beijing will back away, either rhetorically or in practice, from its territorial claims in Taiwan and in the South and East China Seas. As Xi Jinping told the then US Defence Secretary Jim Mattis in June 2018, China will not give up ‘even an inch’ of its territory, which includes expansive maritime claims and a large land area disputed with India. Within the Chinese system, any leader who stepped back from these claims would be committing political suicide. The internal sensitivity of the territorial issue helps explain the bellicose way that Beijing handles the disputes outside of its borders. China constantly schools its Asian neighbours on its red lines in territorial disputes, all while rapidly building up its military capability and regional diplomatic sway to entrench them. With the possible exception of Vietnam, smaller countries have taken to either submitting or swerving in the face of Beijing’s pressure.

Yet it is far from game over, if history is any guide. Total capitulation in international relations is rare. Behind the scenes in Beijing, there has always been recognition that it was dangerous for China to bully its way to regional domination. ‘The history of contemporary relations does not provide any precedent of a large country successfully bringing to its knees another country,’ wrote Wang Jisi, formerly of Peking University, and for many years an informal government adviser. Wang pointed to America’s experience in Vietnam and more recently Afghanistan, where its vastly superior firepower couldn’t drag it out of a military and then political quagmire. Wang was writing in 2014. Such strategic humility is rare in Beijing these days, either because the Chinese themselves have become cockier or because the country’s diplomats fear being caught out of step with the temper of Xi’s times. But the point stands nonetheless. Beijing cannot bully its way to superpower status without engendering a strong pushback from other countries, which is exactly what is happening.

The opacity of Beijing’s internal politics makes judgements about disruption inside China difficult. As a leader, Xi is unique in post-revolutionary party politics in not having any identifiable rival or successor, largely because he has ensured that none have been allowed to emerge. Even Mao Zedong had rivals, which of course resulted in his instigating violent campaigns and reprisals to remove them. Xi has so far done the same, without the mass mobilisation campaigns. Victor Shih, a US China specialist, was doubtless right when he said that the threshold for some kind of ‘intra-party uprising’ against Xi was very high: “He would need to commit a catastrophic mistake that jeopardises the continual rule of the Party for his potential enemies within the Party to rise up against him.” For the moment, Xi’s only real rival is offshore, in the form of Donald Trump.

The idea that Xi is literally ‘president for life’, however, as he is often referred to in the wake of the 2018 abolition of term limits, in all likelihood will be proved wrong. From mid-2018, Xi was already facing a public backlash on economic policy, where it has always been safest for Chinese to speak out. Xi has a legion of critics on foreign policy as well who believe he has overreached and left the way open for the United States and others to bind together on issues ranging from trade and technology to military and strategic influence in east Asia. Finally, the abolition of term limits summed up the rage that many influential officials and scholars felt about their country’s leader. In one decision, Xi confirmed his critics’ view that he was an unrepentant autocrat willing to take China backwards in the service of his agenda.

Wang Jisi was one of the few scholars to admit that the US backlash was at least in part Xi’s making. “If we are looking for the cause, it was the change in Chinese policy that led to adjustments in US policy towards China,” he said in late 2018, referring to issues such as Beijing’s harder line on Taiwan and the Party’s tightening grip on politics and society. “US policy has changed because China changed.” Another scholar, Yan Xuetong, generally regarded as hawkish, blamed the United States for the collapse in bilateral relations in a 2019 article. But he obliquely criticised Xi as well. “The recent popularity of strongmen in major states will also devalue the strategic credibility of foreign policy and only increase the uncertainty of international politics in the coming decade,” he said. “Such leaders’ personal interests may often overwhelm national interests, including strategic credibility.”

That even famous Chinese scholars have to guard their words so carefully about Xi is a reminder of the fear that his power still strikes through the system. But just as it is difficult to anticipate where any challenge will come from, it is equally hard to see how Xi’s supremacy in domestic politics can be sustained. In the face of criticism, especially over economic policy, Xi has displayed a pragmatic streak since mid-2018. He has talked up the private sector, agreed to tax cuts to spur growth and also scaled back the ambitious Belt and Road Initiative.

So far, Xi shows no sign of modifying his core objectives or being willing to share power, which means his opponents will have to take increasing risks to force him to do so. Other factors out of Xi’s control also weigh against him. China’s slowing economy and rapidly declining demographics can be leveraged in favour of maintaining tight authoritarian controls. But they are much more likely to work against Xi in future. The same applies to China’s tightening fiscal situation. Beijing’s ability to throw money at every problem, such as bailing out cash-strapped local governments, will only get harder. By the time of the next party congress, due in late 2022, the issue of succession should return with a vengeance.

In the short term, the showdown with the U.S. has pushed the widespread anger at Xi’s authoritarian ways back underground. When those tensions resurface, as they inevitably will, China’s domestic battles will flow out into the world in unpredictable, volatile ways. China’s domestic insecurity, after all, feeds rather than restrains its desire to assert itself overseas. Even more reason, then, for Western countries to stand in solidarity when China overreaches. That does not mean replacing cooperation with confrontation at every turn. It simply means competing with China, speaking openly about its actions and standing up to it when necessary. Such policies might come at a cost. But to do otherwise will allow Beijing to pick off smaller nations such as Australia one by one. That would leave not just regional nations isolated. Eventually, the United States would be on its own as well.

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