Op-ed: Will China's President Xi’s big bet pay off?

The most daring geopolitical wager of the 21st Century is made by the Chinese President Xi Jinping.
The head-spinner series of seemingly unrelated moves in recent months amounts to nothing less that a generational bet that Xi can make the world's most powerful country for the foreseeable future. He will double down on his state-controlled economy and party-disciplined societies, as well as his nationalistic propaganda and global influence campaigns.

Each week, Xi increases the stakes, from limiting seemingly simple personal freedoms such as karaoke bars to three hours per week to the multimillion-dollar investor hit by his increased control on China's largest technology companies and foreign listings to the multimillion-dollar investor.

Only in the context of Xi’s increasing repressions at the home and increased ambitions abroad can one fully understand the decision by Australian Prime Minister Scott Morrison this week to enter a new defence pact with the United States and United Kingdom.

The news was dominated by the Australian deployment of eight nuclear-powered submarines or the French outrage at their deal to sell diesel submarines directly to Australia. This was described as a "betrayal" by French officials and a "stab inthe back" by close allies. France even recalls its ambassador to the United States, a first in the history NATO alliance.

The important message of this ground-breaking agreement should not be obscured by all the noise. The U.S.-U.K. alliance in an Indo-Pacific environment rapidly changing saw more strategic advantages and military capabilities for Prime Minister Morrison, replacing his previous position of trying to balance U.S. interests with Chinese.

Morrison stated that the relatively calm environment enjoyed over many decades in our region was now behind us. "We are entering a new era that presents challenges to Australia and its partners.

China's new era is characterized by a rapid rollback in economic liberalization, a crackdown against individual freedoms, and an escalation in global influence efforts and military buildup. This all happens in advance of the 20th National Party Congress in October 2022, where Xi hopes he will secure his place in history and continue his rule.

Kevin Rudd, former Prime Minister of Australia, is one of the most respected experts on China. He spoke out as president of The Asia Society to highlight Xi's "bewildering array” of economic policy decisions.

They began last October with the shocking suspension by Ant Group, Alibaba's financial affiliate, of its planned initial public offering in Hong Kong or Shanghai. This was clearly directed at Jack Ma, Alibaba co-founder. In April, Chinese regulators fined Alibaba $3 billion for "monopolistic behaviour".

China's cyber regulator took Didi, the ride-hailing company, from its app stores in July. An investigative unit also launched an investigation into Didi's compliance to Chinese data-security laws.

This month, China's Transport Ministry regulators called senior executives from Didi and Meituan, as well as nine other ride-hailing companies. They ordered them to "rectify their digital misconduct." The Chinese state took an equity stake at ByteDance (the owner of TikTok) and Weibo (the micro-blogging platform).

Xi was willing to pay the $1.1 trillion in shareholder loss that China's top six technology stocks suffered between February and August. This doesn't include losses in the entertainment, transportation, food delivery and video gaming sectors.

A dizzying array policy and regulatory moves that appear to have a dual purpose seem to be less well-known. They are meant to strengthen state control over just about everything.

Rudd says, "The best way is to sum it up is that Xi Jinping decided that in the overall balance of the roles of state and market in China it was in the Party's interests to pivot towards the state." Xi Jinping is determined to make modern China a global great country, but the Chinese Communist Party retains full control.

This means that there are increasing restrictions on the freedoms enjoyed by its 1.4 billion citizens.

Xi, for instance, has restricted video gaming by school-aged children to just three hours per week and banned private tutoring. Chinese regulators ordered broadcasters to promote masculinity and eliminate "sissy men," also known as niang pao, off the airwaves. The Chinese regulators banned competitions based on "American Idol" and took any mention of Zhao Wei, one of China's most wealthy actresses from the internet.

Lily Kuo, Washington Post: "The orders were sudden, dramatic and sometimes baffling." Jude Blanchette, Center for Strategic and International Studies, says that "This isn't a sector-by–sector rectification. This is an entire economic and industrial rectification."

Xi also launched a push for the sharing of the successes and virtues of the Chinese authoritarian system with the rest of world.

"Foreign Affairs" by Charles Edel and David Shullman. "Beijing wants less to impose an Marxist-Leninist ideology onto foreign societies than it does to legitimize and promote its own autoritarian system." "Foreign Affairs" stated that the CCP does not seek ideological conformity, but power, security and global influence for China as well as for itself.

The authors describe China's efforts worldwide to not remake the globe in its image but to "make the world friendlier for its interests and more welcoming towards the rise of authoritarianism generally."

Edel and Shullman explain that these measures include spreading propaganda, expanding information operations and consolidating economic influence. The ultimate goal is to "hollow out democratic institutions and norms between and within countries."

Two opportunities lie within President Xi's bold wager for the U.S.A and its allies.

First, Xi will overreach in his domestic control and undo the economic and societal liberalization China requires to succeed. The world's democracies like Australia are becoming more open to finding a common cause to address Beijing.

However, Xi's coordinated moves will require a similarly concerted response by the democracies around the globe. This week's French-U.S. defense agreement was just one example of the difficulty that this will be.