When the two most powerful men on earth, Donald Trump and Xi Jinping, meet for the summit that's expected to take place soon in the American emperor's summer palace, they will have one thing in common: each is testing his country's political system to its limits.
With independent courts blocking Trump's travel ban, the heads of his security agencies flatly contradicting his claim that Barack Obama tapped his phones, and Congress rejecting his flagship repeal of Obamacare, the checks and balances of the world's oldest liberal democracy are at full stretch. But will even they be enough to restrain this erratic, narcissistic, egomaniac bully?
In the other imperial capital, meanwhile, Xi continues to consolidate a formidable degree of central control through a Leninist party that is reasserting its leading role in all areas of national life. As the joke goes here in Beijing, Xi is now China's COE – chairman of everything. And the 64 trillion-dollar question is whether this re-centralised authoritarian system – part Leninist-Maoist-Dengist, part Chinese-imperial, part entirely novel – can successfully manage the development of an increasingly complex economy and society.
The smog of uncertainty is thicker in Beijing than in Washington, because of the secrecy enveloping the politics of this imperial party-state – but also because this system is something genuinely new. We have no playbook for the evolution of Leninist capitalism.
We can see who loses most directly from Xi's strategy. Most obviously it's corrupt officials and business people, targeted in a draconian anti-corruption drive that is also a purge. But it's also the country's liberals. The annual reports of China's supreme people's court and top prosecutor's office singled out for special mention prosecutions of human rights lawyers and activists.
Civil society is squeezed by a Vladimir Putin-style law on foreign NGOs. Hardly a day passes without news of some website, blog or independent Weixin (WeChat) post being taken down. Liberal intellectuals, once active in public policy debates, have retreated into universities and private life. One scholar jokes that Xi and Trump have another thing in common: they both like attacking liberal intellectuals and media.
If you think, as I do, that free speech is one of the keys to good government, then this is a big loss for China's long-term national development. But unless Xi has an amazing policy reversal up his sleeve, this is where we are.
Recall the political economist Albert Hirschman's triad of exit, voice and loyalty. Voice (ie speaking out) is working overtime in the political system of the US – as its founding fathers intended – through independent media, independent courts and a vigorous civil society.
News coverage in Beijing of Donald Trump's belated wishes for China for the Lunar New Year, February 2017. Photograph: Andy Wong/AP
In China, voice is being reduced to the deferential whispers of the courtier. Exit is on the up: witness the lengths to which wealthy Chinese go to move their capital and their children abroad. A junior party member confided to me that he's got some of his money out to Hong Kong – "not as much as others, but some". However, there are still formidable reserves of loyalty, grounded in both an extraordinary economic performance over the past 40 years and pride at the way a once impoverished and humiliated country has won global recognition.
The question then becomes whether Xi's system can sustain what political scientists would call its performance legitimacy, as it approaches the middle-income trap. We can already see a host of gathering problems.
China powered through the financial and economic crisis with a massive investment and credit splurge. An estimate by financial services firm UBS suggests its overall public, corporate and household debt has soared from about 150% of GDP at the end of 2006 to more than 270% at the end of last year – an alarming level for an emerging economy.
Property prices in big cities are crazy. The supply of cheap labour from the countryside is drying up. Due to the one-child policy, China has a rapidly ageing population. Corrupt collusion between officials and business people has often resulted in grandiose misallocation of capital. While the anti-corruption campaign tackles this, it also freezes decision-making, as frightened officials prefer to sit on their hands.
For political reasons, this regime is heavily backing the state-owned enterprises, whereas giving more space to the private sector (and foreign investors) would be more effective in improving productivity and innovation. Trumpian populism threatens the open markets that take China's exports. And so it goes on.
Goldman Sachs is said to estimate the chance of a financial crisis in China this year at 25%, and in 2018 at 50%. But what exactly would that mean? Is the economy heading for a real crash, with a major negative impact on society, or Japanese-style stagnation – or simply for slower growth?
Against a long list of economic challenges one can compile an impressive list of continuing strengths: for instance, a country with severely limited freedom of speech may not have the disruptive innovation of Silicon Valley. But there is still huge mileage in follow-on innovation, copying and improving on the innovations of others. Weixin-WeChat may have begun as a copy of WhatsApp, but it's better than the original now.
Proffering my debit card, I feel like a provincial uncle in a city where smartphone payment is a matter of course. And Apple boss Tim Cook was just in town to offer the best of these Chinese innovators a slice of his company's cash pile and a place in its Chinese App store.
The prospects for China's highly political economy matter not just for the Chinese people and the world economy. The Chinese political system enjoys relatively little procedural legitimacy, unlike western democracies, which have what a China Daily columnist calls "unpredictable" elections. (So much nicer to have predictable ones.) If the legitimacy it derives from economic performance declines, China is likely to draw more heavily on its other major source of support: nationalism. In the worst case we could see a Chinese version of Putinism, with repression at home and hybrid aggression abroad.
Given the dangerously erratic character of the US president, and the array of possible flashpoints – North Korea's nuclear programme, Taiwan, and the South China and East China Seas – between the US and its allies on one hand and the rising Asian superpower on the other, the conclusion is clear. The internal dynamics of China's unprecedented political experiment are not only of interest to anyone who cares about China – they may yet be a matter of war or peace.
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