Superpower China

Book Review – The Third Revolution

Last Updated on 6 months by Piyush Jain


Book review

Elizabeth Economy, the author of the book “The Third Revolution: Xi Jinping and the New Chinese State,” is a senior fellow at the Hoover Institution at Stanford University and a senior fellow for China studies at the Council on Foreign Relations. She is an acclaimed author and expert on Chinese domestic and foreign policy, writing on topics ranging from China’s environmental challenges to its role in global governance. (Source – Wikipedia)

(Courtesy – www.cfr.org)

The book was shortlisted for the Lionel Gelber Prize in 2019, a prestigious literary award for the world’s best non-fiction book in English on foreign affairs that seeks to deepen public debate on significant international issues.

I read the book, keeping a neutral outlook as well as keeping my country, India, in mind. Reading the book, you will feel the love-hate relationship coming out of a US citizen. At the same time, the author elaborates on Chinese accomplishments but also criticizes the dark aspects of these developments. One can feel the intensity of force on which the Chinese economy is moving ahead and giving tension to its adversaries. Challenging the status quo and emerging as the world power, the book is a solid read as the author has captured minute details of the progress, events, effects, and further actions in the said context.

One has to definitely concentrate reading this book, as sometimes author goes back and forth in time for a reason, and one has to keep track of the same.

I could somehow relate to many things as I had an opportunity to see China for a week in 2011. I interacted with a few locals there and could get the mixed feelings of the people. One could see the fear lingering in the air, though everything was peaceful. I am creating a separate page stating the anecdotes of my interactions.

In the wake of India-China border tension, I would also suggest that the bureaucracy and the politicians in India should read these sort of books as it is clearly stating the motive of the country, their aims, and how they managed to gather the strength to assert themselves in what they want.

When I see where does the country stands in the list of Ruchir Sharma’s 10 parameters, China does fairly well, passing most of the parameters except for the equality factor. Read it for assessing the same.

The summary only provides a high-level understanding of what the author tries to convey in each chapter. The actual book has thoughts in a much detailed manner.

Chapter 1: Introduction

In this chapter, the author gives the history of Chinese politics where the CCP and the PBSC had the complete control. In a due course of progress, Xi Jinping slowly starts hogging the limelight when he takes up positions and with a visionary goals he succeeds in his efforts and gives a new direction to the polity in China. He takes unorthodox steps and motivates people to rejuvinate the country to achieve new heights. He wants to root off the corruption, double the earnings of the people in 10 years. Aim is to get the country in the center stage of world politics. Now they do not want a introvert foriegn policy. They want to assert themselves in the world arena. They want to open to the world but in a one way street, where they decide what comes in. All may go out. They are ok with this.

Chapter 2: Heart of Darkness

The chapter gives details of the rise of Xi Jinping from the 2000s till 2018. The connections he made, the vision he emitted, and the aim he kept got him the position he is on today. Though the country was progressing well, he could see that corruption had held the country back on many fronts. He understood that for public service, one must be honest. Lately, he eliminated a lot of corruption as he assumes power. He is also much against the foreign influence impacting the society and the foreign companies threatening the local business. As he takes control, he aims to centralize the decisions and make unorthodox decisions like the most famous one, on not electing the general secretary (who typically become the next President). This act means he intends to continue as the President until his wish.

Chapter 3: Chinanet

This chapter details the state of internet usage, access, limitations, checks,, and repercussions of the same in China.

The free internet breaks the distance, knowledge, and social barriers of a country. You can look, listen, voice any opinion without any limitations.

But this is not true in the case of China. The chapter details the thinking of the Communist party, starting from the Massacre of Teinmaein Square to the latest events.

Using technology, the Chinese build up the Golden Gate (firewall), great wall, golden frog, golden shield, great cannon (this could even replace the content one is looking at, instead of the one displayed on the page) and much other such software that could track the internal usage of internet. Since they did not have control over the web applications like Facebook and Twitter, they formed their version in Sina Weibo and Renren. These platforms were highly manipulated. They would promote any CCP favored stuff and appreciated it a lot. The application would censor, delete, or block any anti-CCP stuff. The CCP folks would keep on monitoring the naughty people, and when they cross the limit, they will suspend the user account. They would go to the extent of putting someone in jail or mess up his credit/social history.

The regime also knew that the internet is essential for the country as the technical prowess is vital for the progress of the country. They let the tech giant come in and work for China, but they were under the self-censorship pledge. The companies had to commit that they will not involve in any anti-state political activity. They would be open to audits in case the government wants to do that. The domestic companies also vowed the same. They would not indulge in any activity like this. Further, to ensure that they do not, their CEOs/Chairman would get top positions in the political party.

The use of the Internet also forced CPC on many accounts. In the case of the Wenzhou train crash and Tianjin warehouse blast, the regime tried to hide facts so that they do not become a shame to China’s image, but now people had a smartphone,, and could easily capture and distribute this before the regime could control it. The government also kept an eye on the smallest of incidents like this. A relatively more superficial experience like asking for help in flood control was reprimanded and held in detention. The citizen forced them to take accountability for official actions.

When Xi Jinping took command of the country’s cyber cell, he knew that one could not stop the internet for over 700 million people. He started a parallel stream of government propaganda, where social media posted good deeds and government praise. The main objective was to bury the dissenting voice in the data overload, and any chance of occurrence like the “Jasmine Revolution” is mitigated. They employ over 2 million cyber force to monitor the social media and post more than 500 million pro-government posts in a year.

Further, Xi Jinping started a concept of social credibility score. The National Credit Information Sharing Platform, established in 2015, collects data from various social sites, company records, or other financial institution and derives the individual score. This score would decide your life in the country. This score helps determine if you own a house or get a promotion in a career. If you have a terrible score, “Trustbreaker” is the label you get, and after that, all the other things follow. They might be denied access to airlines or high-speed trains.

The cyber cell came up with the concept of “Internet Sovereignty.” The idea states that like, land, the internet in the country should be in the government’s jurisdiction. It should be used for the mutual benefit of the citizens. It should not be used for creating unrest within the country or allow other countries to do that. In 2016, Xi also scuttled the freedom of foreign media. They could not prepare any creative content, games, media, or float any news without the clearance from the state administration of press, publications, radio, film, and television

Chapter 4: The Not-So-New Normal

In this chapter, the author narrates that the Chinese State-Owned Enterprises (SOEs), who were breaking all barriers until 2014 in the stock market and the world, was now crumbling.

The market forces understood the dynamics and were utterly against them. The CPC (party) had the maximum holdings in these SOEs. The SOEs had the luxury of availing the loan at one-third of interest rates compared to the private companies and had preferential treatment everywhere. The private companies struggled to survive in front of them. The party used all tactics to keep the SOEs in business. Where they saw that the SOE is not performing well, they would involve the private players. This would infuse capital in the SOE, improve the performance, and meet the political goal to include people in the party. Where the SOE performed well, the party would increase the stake in the company. The party was free to make decisions on the SOE without having the responsibility for the outcome.

As a part of the audit, the Party found many SOEs indulged in corruption in many ways. The SOEs spent money on lavish offices, luxury dining halls, liberal reimbursements to their employees, even if the SOE is not doing good. The productivity of the SOEs’ employees was a fraction of that of the private companies. Though reduced productivity results in the reduction in salaries, it would be compensated in the form of reimbursements.

As the markets took over at the start of 2010, and the party allowed more and more private participation, the economy further improved. The party took no single way of giving a boost to the economy. They took all measures and steps that would achieve the goals. While the SOEs, too, had a significant role, the party also wanted the private sector to take the prominent part in the economy.

While going through the whole chapter, one is confused about who controls the course of the economy. Is it the party or the market?

Chapter 5: Innovation Nation

Chinese regime knew clearly that the country could only progress when they are into innovation. Solid innovation. Chinese scientist community was good, but they were involved in secondary design activities, i.e., they would improve on an existing design or make it commercially viable. They were not doing anything new.

There were some exceptions, though, as Jack Ma of Alibaba. He turned around the e-commerce world and is, on some level, challenging amazon and Walmart in their own countries. But he promotes in a healthy manner stating that he is creating a platform where Americans could sell their goods in China.

The party motivated the Chinese industry to change their thinking completely. They were now designing while manufacturing and manufacturing while designing. Xiaomi changed their cell phone designs 52 times in 2014 and continued to manufacture.

Like every country in their pursuit of progress, faces many dilemmas. Like China did for cars. While they wanted clean air and the use of public transport, but they also produced the highest number of vehicles in the world. They sold and made 28 and 24 million vehicles, respectively, in 2014 itself. This was balanced out as they went ahead with the development of electric vehicles. They gave a notable boost to the R&D of electric cars. One of the examples is that of promoting Wan Gang, an automobile engineer studied by the Clausthal University of Technology in Germany. He headed the research program and further, as a minister of science and technology, promoted electric taxis and buses in many cities in China as the “Ten cities, thousand vehicles” program in 2009.

The program went ahead with a lot of turbulence, as every new program goes through. Customer acceptability, logistic issues, and support services had the program grounded for a few years. Further, they went ahead in developing the technology within China to avoid the royalty cost. They kept all the foreign players out of the arena even though they were better and had the required technology. They developed their ecosystem, gave tax incentives, and now are the leading users of electric cars in the world, leaving the difference in the 2nd positions by less than 50% capacity.

Xi Jinping stressed the fact that China needs to revive its spirit of innovation. Ancient Chinese had invented the magnetic compass, papermaking, printing,  and gunpowder. Fu Xi created marriage (So you got to know who made this blunder), writing, music, and more. Sheng Nong developed medicines and farming techniques. Xi stressed the need to revive the spirit of innovation that China had in 1300 BC. 

It was not wholly the fault of the generation, as the earlier rulers scuttled the innovation. They punished the educated people for their elitist inclination. Only in 1970, when CAS (Chinese Academy of Science) started the Chinese keyboard and Lenovo computers, did the progress started.

The thinking of the party restricted the education system. It did not promote free-thinking somehow. A professor quotes that China can never make a product like iPhone as it is not technology; it is a product of human nature. The party under the regime of Xi Jinping also does not want to free up the thoughts. Somehow or the other, the ideas have to in consensus with their political objectives and thinking.

This push for innovation had many aspects. Chinese governing body had put up a target of 2 million patents by 2015. Of the patents filed, 60% of patents were on utility and not on basic science. The money invested in patenting was around $21 billion, while they received $800 million only. Other countries like Japan, Singapore, the US received the royalty in the magnitude of billions, $130 billion is the highest for the US.

China has been producing counterfeit product since a while. In a similar manner, they also major the intellectual property infractions; in fact 96% of the world over occurrences. They promote companies to set up the R&D units in China andll slowly get more Chinese to higher positions. They will get all the knowledge and further switch to other companies to share the knowledge and advantage to China. Win-Win clause in China, two wins are for China. Under Xi Jinping, he forced the companies to share the code with the computing power China purchased from them. Some succumbed to the pressure, and some held back.

The author further narrates that education and innovation in China go hand-in-hand. All the major universities have science and technology parks—the biggest one being in Tsinghua university, housing more than 400 companies on the campus. The limitation that the whole ecosystem faces is that even though the Chinese students are the smartest and hardworking, their education system forces them to rote learn and not be creative and thoughtful. This makes China not the most favored destination for the best students. The US is the most preferred destination for the best students. The focus of the Chinese ecosystem is more on business-related innovations. Chinese can boast that they need to carry any cards or cash anywhere. They need to have their smartphone, and even the local street vendor will accept payment using it.

The rulers in China have their objectives clear. The innovation should come up within the country by their own toat they do not let the money flow out of the country, though it may take time to develop it. They are already a market of more than 1.3 billion people, and their domestic consumption can suffice their financial viability.

Chapter 6: War on Pollution

China faced such a pollution pressure that in the major cities, it had to go to an extent to stop the airport operations. Schools, colleges, and offices were the apparent targets. Development, rise in the economy, industrialization all accompany with pollution. If the former has to increase, then the latter will follow. The author paints a ghory picture of the situation, leading to national shame, loss of tourism reputation, as well as pollution of the land and water resources, which were further costing the GDP of the country.

Though many measures were taken, the government had to balance between the two. They could only shift the plants to the western part of the country. Still, the cat and mouse game is on for the country, accompanying a lot of social and political unrest. Yet the government has controlled a lot of it, and keeping it that way remains a challenge every day.

Just to mention, that China is just 2nd to India in number of deaths due to pollution.

(Courtesy – www.ft.com)

Chapter 7: The Lion Awakens

Napoleon Bonaparte once said that China “is a sleeping lion,” and “when China wakes up, the world will shake.” In fact, the lion of China has awoken, but what the world sees now is a peaceful, amiable, civilized lion. — Xi Jinping, March 2014

The author expresses that the country has vowed to become great in all ways. It knows that historically China had been a superpower of the world, governing a major part of the global GDP, trade, and a say in the international capacity.

The country has progressed industrially, but overcapacity is yet to be utilized. It knows that it can do that by increasing its trade. China proposes OBOR or BRI (Belt and Road Initiative) to the world. This includes roads passing through 60 countries across Asia and Africa. China is ready to invest in the infrastructure. This initiative directly challenges US positions in the world as well as gives a quantum boost to the Chinese economy as the complete over-capacity can be utilized across all these countries as well as raises the global stature of China. I also proposed AIIB (Asian Infrastructure Investment Bank), but the world skeptically looks at its motives.

Pakistan scrapped the China-funded CPEC project for the clauses it had over the paybacks and maintenance. Chinese also demanded the right to construct dams even there. If one looks at it neutrally, this is an excellent initiative to promote peace, trade, and prosperity in the region. Still, it also had geopolitical intentions to gain control over these areas. Further to protect the assets, China could consider building a military presence in the regions.

China further asserted its rights on the areas which it considered as lost territories. It has proof of old documents and history that these belonged to them. This has been a significant source of tension in the south china sea. China went on to build artificial islands to maintain the territorial claim over the south china sea. Not only these regions, but China also claims the Arctic region to be its backyard. It has achieved observer status in the Arctic region and further wants to be in an influencer position towards the decision of the resources there. The Arctic region holds the worlds’ one-third of the rare metals minerals stock and natural gas in the area.

They went ahead and strengthened their military forces. The indigenous production and technology up-gradation was their high priority. Their forces conducted exercises with the other country’s forces to understand strategies various countries use. PLA officers attend courses in military universities round the world. China now happens to be the 3rd largest exporter of military equipment to 37 countries after the US and Russia. Now the world talks of the country that has an alliance with China. China has given an impression to the world that it does not need an alliance with anyone. Instead, others can seek an alliance with it.

The country has spread its influence by promoting its culture across the world. The Chinese government has opened 400 institutes worldwide in the universities in the name of Confucious to promote the Mandarin language and culture. Awareness of the Chinese language and culture increases the soft-power of China in all spheres. As people know about China, they will be ready to listen to them and be their ambassadors in forums they are on. (Seems this book also makes me one of their ambassadors).

Not only this way, where ever the Chinese delegation is there, but they also have gifts for everyone. They develop that soft-power and win hearts, which is not a known phenomenon in the American context. They gift souvenirs to the heads of states to be placed in the palaces and monumental buildings, thus showing their presence. To camouflage their power, they do not publish reports of their fundings in various projects worldwide. They do not comply with the OECD guidelines. The project funding is generally exaggerated to keep the funding level, a guessing game. Along with the financing, they trade typically for the right of usage of ports or access to the local markets for increased trade.

Somehow the diminishing popularity/greatness of President Trump has put the spotlight on President Xi Jinping. With initiatives like BRI and AIIB, the world sees this as a significant step in contributing to the world’s economy. While this serves the interests of China, they do put risk on the US interests.

Chapter 8: The Road Forward

The author states that as China feels insecure from the US activities, it will continue to assert itself. The countries should ideally be talking about keeping politics out and focusing on economic development, which in benefit of all.

As China is exerting its pressure in multiple ways, the same should be done by the US. They should develop their soft power or at least stop China from exercising its soft power. For example, reduce the growing number of Confucious institutes’ influence. The US Should engage with multiple countries to keep out the Chinese influence and reduce its vulnerability.

The US should involve itself in a partnership where ever possible. If it wants to stop the wrong sort of alliance of China with other countries like that of North Korea, it will have to think of pressure using sanctions. The US also should commit itself to innovation at speed China is working on so that they can remain in the competitive state going further. The countries should remain assertive of their positions and keep it that way with the help of alliances. The author also says that China cannot get the world leader position if it does not open its market to ideas, capital, and free flow of information from the world (which is debatable, seeing the progress till now).

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