Andy Nathan on China’s Future

In this podcast edition of Foreign Affairs Unedited, expert Andy Nathan discusses the future of China with Foreign Affairs Editor Gideon Rose.  

This interview has been edited and condensed. A rush transcript is below.

Gideon Rose: Andy, we had a package on the domestic controversies inside China today, what's going on in our most recent issue, and one of the themes that came out was China has picked a lot of the low hanging fruit of modernization, and it's now reaching sort of authoritarian middle income status, and its future is gonna be somewhat troubled. And the question that emerged from my reading of the package is, will the regime be able to keep moving forward the way it has over the last several decades, or will it bump up against really hard challenges of development and fall to them? What's your take on this?

Andy Nathan: Experts are terribly divided about this issue, and people have been saying, ever since the reforms began in 1978 or '79, people have been saying the same thing, that the reforms that have been undertaken were the easy ones, the next ones would undermine the authoritarian system, I'm not sure that it's true. I mean, I'm not sure that it's not true, but I'm not sure that it is true. They are trying to create a different model of a fully modern system, one that's wealthy, one that's educated, one that has mobility, but at the same time, doesn't allow an independent civil society, and doesn't allow, of course, anything like competitive democracy. And I can't say that they're necessarily going to fail at that effort, though I can't say, on the other hand, that it will necessarily succeed. The level of uncertainty that we have about China's future is so striking.

Gideon Rose: You're a political scientist, can you point to any examples of truly modernized high income countries that don't have some kind of representative system, that aren't oil or petrol states?

Andy Nathan: I can't point to an example of a country that has done what the Chinese leadership seems to be aiming to do, but we could think of something like Japan, maybe, as a quasi-example of a society in which there's been for most of the time one dominant political party, but we have to admit that it is a competitive system. That's not what the Chinese are aiming at, and another example perhaps would be Singapore, but Singapore is so different, it's so small but it is remarkable when you meet people from Singapore who are very wealthy and very highly educated, that they accept a kind of political and social discipline from the leadership that would be hard to imagine in the US, in Europe, in India for example. Still, that's not really a model either, so what the Chinese government is aiming to do is something that hasn't been done before.

Gideon Rose: Some people have argued that the experience of countries, one party authoritarian regimes like that, the PRI in Mexico, or the KMT in Taiwan might be the model, that it's sort of a gradual controlled transition over time at higher levels of development where the main party still retains a lot of power, is that possibility do you think?

Andy Nathan: That's certainly a possibility, and if it were to happen it would happen probably after the current leadership and who knows who the future leaders will be and what their vision will be? And we don't even really know what the vision is of the current. Let me try to imagine the mind of Xi Jinping, which is to say, "Look, our forefathers fought with blood against many domestic and international enemies to create this regime. We have a vision for the greatness of our society, but we are surrounded by enemies. And we're ruling a society that's very turbulent with a lot of selfish and undisciplined people, and the only way to realize this vision of national greatness is to keep control. We trust ourselves, we trust our small group of basically heirs of the revolution forever for the country. It's not selfishnesses, it's not against human rights, it's for the greatness of the vision of the China.  
Gideon Rose: What are the challenges that the regime is facing, even with that mindset?

Andy Nathan: The challenges that people talk about that are bumping up against the edge of reform are the dysfunctions that are inherent in a state-dominated economy and state-dominated society, where you try to have the vitality of entrepreneurship, but you don't allow people the freedom and the rule of law, and you're consistently intervening, so that's a challenge. And then I think from the regime's own point of view, they are also, we find this rather paranoid, but from their point of view, they are surrounded by enemies, especially us, the United States. And their view is that, that the US wants to overthrow the communist system for some crazy idealogical American missionary reason about democracy and human rights, and that they have to be vigilant against us and our domestic friends within China, who are also constantly testing the system, and then they see other enemies around them, the Vietnamese, the Japanese, the Indians, even the Russians, with whom they cooperate now, they view as inherently unfriendly. They feel they have no friends really in the international system that they can rely upon.

Gideon Rose: As growth slows, what are the tools that the regime has to be able to try and deal with some of its problems, like increasing debt levels and things like that?

Andy Nathan: Well, growth is slowing, but it is still fast, and I think the target is not to let it collapse, but to keep it growing at a robust level, 7%, 6%, by increasing domestic demand, which at the same time then will raise the living standards and raise the security level through health insurance and retirement insurance and so forth, of the domestic population. It's kind of a win, win situation in which you pacify the population while also maintaining growth and reducing your dependency on outside markets. But as far as the debt bubble that financial people talk about, which is partly a bubble of local government debt, and partly a bubble of big bank debt, the asset that the regime has is money. The regime is rich. It has a huge foreign exchange reserve. It controls the exchange rate of the currency, even though that's basically at a market rate according to the IMF. It controls the levers of the domestic economy so, I'm not a finance person but, there's reason to think that the regime can work its way through this debt bubble.

Gideon Rose: What does all this mean for US policy towards China?

Andy Nathan: There's a debate among the strategy community with three views. There's no view that says that we can stop the rise of China. It's too late to stop it. There is a view that says that we've gotta double down on containing China basically. Obama rebalanced to Asia that, that has to be beefed up, it's not strong enough. And then there's a view that says that we should seek a kind of a compromise with the Chinese. For example, give up Taiwan, which is a big source of controversy, or yield some of China's demands in the South China Sea, so that the Chinese feel more comfortable.

And then there's a third view, which is even yielding more, which is to try and strike some kind of condominium thing, some agreement with China that UN and we, will rule Asia. My view is more to the double down on the rebalance to Asia position. That is to say I think there's no bargain you can strike with another power, it's not just China, but that in international relations, there have been some cases, the Congress of Vienna and so forth. But I'm not a big believer in a negotiated stable solution. I think power speaks, and if the US has the power, and has the determination to protect its strategic position in Asia, time will tell. And if that's the case, other countries will respond accordingly.

Gideon Rose: Is there likely to be any intersection between the domestic Chinese story, and the foreign policy story?

Andy Nathan: If you think China's going to collapse, then that is a nightmare. And among all the nightmares we worry about, we don't worry enough about that one. It would be horrible because China is very big. Anything that happens there influences the rest of the world, and it's profoundly interdependent in so many ways. I think the reason we don't worry so much about it is that few people, there are some but few people, really seriously predict a collapse whatever that means. It's hard to imagine what it would even be.

But China's domestic scenario is intensely linked with its outside. First of all, there's the economic piece. You've got to keep that economy going, and that involves foreign resources, foreign markets, and then there's the big minority piece, the Tibetans, the Uyghurs, the ethnic Koreans who live in China who have Chinese citizenship and other minority groups who all have foreign connections, diasporas and so forth. And then there's the issue of China's domestic evolution. Will it be a democracy? Does the new middle class have demands on the government? And they're tremendously penetrated by outside ideas and culture.

Gideon Rose: Is the rise of China the single largest story of our age?

Andy Nathan: It's the single largest story for us, China specialists, who teach about China. I hate to make that claim, but the rise of China is a big, big story, and it sort of has happened now, and we know it's happening. And so, but one perhaps could argue that the rise of China from a military and strategic point of view for the foreseeable future is chiefly an Asia story. So whether China will develop really a strategic footprint, it has a small military position, but will it develop a major military position in Africa, the Middle East, Latin America, Europe, the Mediterranean? I'm a skeptic about that for this magic thing called the "foreseeable future," because which is perhaps 10 to 20 years. If we look beyond that, then we can do all kinds of Hollywood movies about the rise of China. Nobody knows what will happen.