The same factors that led to the downfall of the Qing Dynasty in 1911 are still inescapable today. China is showing classic symptoms apparent before the end of dynasties: the disruption of internal economic wealth, increasing gaps between rich and poor and between regions, the economic encroachment of outside powers and the undermining of the social contract with the state. The central government has lost its legitimacy after trading ideology for money that is now supplied from afar rather than from within.The balance between the center, which seeks to pacify and stabilize the vast interior population, and the coastal periphery, whose economic and political interests lie in foreign trade and are therefore ultimately aligned more with foreign nations than the center of China, continues to create friction. The center, in order to maintain control of the interior, must take money from the periphery. Fears of issues of social stability lead the center to take action in the interior, which might be anathema to the interests of the coastal provinces.
The forces at work within China’s SOE-based economy are preventing the country from capitalizing on its current growth and will eventually drain the energy from the import/export economy. Fearing the urban unemployed even more than the rural unemployed, since poor farmers at least have land and can feed themselves, Beijing is offering life support; but unemployment, which in 2002 was between 6.2 percent (official data) and 13.1 percent (estimated by a 2004 University of Michigan study), continues to rise. This triggers wave after wave of demonstrations and protests—which have thus far been isolated incidents—but the chances for coordination increase daily. And Beijing’s only response will be repression, sending in troops to end by force whatever opposition it perceives, as it did at Tiananmen Square.
China recovered from Tiananmen not because of the continued crushing of the students and their supporters but through capitulation to the population, which resulted in the state taking a steadily decreasing role in the lives of the average Chinese. But this capitulation to the masses, while initially resulting in pacification, also has served to raise material expectations. Turning back is no longer an option. Beijing is, therefore, stuck. It options are limited and time is running out. The mandate of heaven, it appears, is being repealed.
Beijing knows the troubles it is in. The strains between the coast and the interior, the rich and poor and the north and the south are growing more and more tense, and Beijing’s ability to maintain the system is fading. This is compounded by corruption, which not only drains government coffers but further de-legitimizes the Party.
The government is challenged now to prove its legitimacy as the center of the nation. Under Mao, the underpinning was ideology and a sense of international embattlement. Under Deng and Jiang, that underpinning was the promise of money and material goods. China’s rapid growth economy is very young, and tearing that promise away—even in the name of market fundamentals—is extremely dangerous. The only way South Korea managed it was to rely on a very close sense of ethnic nationalism and to put the blame for the pain on a non-state actor, the International Monetary Fund. China has neither the ethnic homogeneity nor pervasive sense of nationalism to ask for much self sacrifice, and the stresses on the system will continue to compound.
If China adheres to the World Trade Organization (WTO) accession agreement and opens its banking system in 2006, the SOEs will collapse, since China’s banks would no longer able to funnel money to bail out non-performing companies. Strengthening the SOEs through reform creates massive new pools of unemployed labor, leaving even more disgruntled and disillusioned former state workers with no jobs and nowhere to turn. Ending bank lending to the state institutions creates hundreds of millions of new unemployed. A social cataclysm of that magnitude will tear the country apart—or at minimum lead to the collapse of the Party and the government. Therefore, China will choose another path.
Beijing will want to prop up the SOEs as long as possible to buy time to convert them into productive members of China’s economy. However, time is not on China’s side; the country must open its economy before the SOEs can be converted. The center will want to forestall this as long as possible and is therefore unlikely to accede to its full obligations under the WTO agreement.
Beijing, then, will seek to mitigate the internal upheavals now apparent from the 1979 economic opening and reform the system. Mismanagement, rampant corruption and the combination of an Asian (growth-driven rather than profit-driven) and Communist (social control over profits) economy has left Beijing with few immediate solutions. If China slows its opening and reforms—the most likely path, albeit done in a subtle Chinese way—FDI will begin to dry as foreign investors shift away from China. When FDI dries up, growth in the import/export economy will slow down. When growth slows down, social stability issues will become more pronounced, since there will be less and less money to pump into the SOEs. Capital flight by Western investors already has begun, with Asian investors making up the difference, but they will be unable to sustain adequate levels for very long.
China will struggle on through 2008. The Olympics are a powerful force, driving economics and providing a rallying point to keep divergent interests temporarily subdued. That will not last. Nationalistic entreaties playing off the Olympics, space programs and the like can do little to hold the disparate interests and factions together. Intentionally or not, the face of the Chinese Communist Party will shift in the years shortly following the Olympics.
The turmoil this will likely cause will lead to a loss of central control and a regionalization of power, as has often been seen in Chinese dynastic transitions, in which the country—while nominally unified— will in fact become a cluster of fiefdoms, effectively modern warlord states. The capital will have a national leader but the center’s reach and influence will be at the mercy of the regions. In a place such as Afghanistan, this is called status quo; in China, warlordism—only this time, there will be nuclear weapons in play.
As China’s economy triggers social upheaval, other Asian states will look for different sources of strength and regional leadership. The alternative to China is Japan, and Japan is embarking on a more aggressive assertion of its leadership role in Asia and seeking to spread its influence and security sphere along its energy supply lines through the Indian Ocean to the Middle East. This process will continue through the decade.
Japan already has the capability of projecting its military power better than China. Although the Chinese possess a larger fleet of Landing Ship Tanks (LSTs) and landing craft, they lack important logistical and support elements necessary to project maritime power. China’s navy also lacks a sufficient number of large-scale and advanced landing ships—amphibious assault ships and dock landing ships. Although China can eventually build these capabilities, Japan already has the experience and the technical ability to sustain forces overseas for extended periods of time. Its involvement in Iraq—where Japan has 900 troops, naval vessels, helicopters and aircraft (the biggest deployment since 1945) -- and Aceh, Indonesia, demonstrate that. By the end of the decade, Japan also intends to have a significant aerial refueling capability, which is essential for power projection. China’s aerial refueling capability continues to be based around the aging H-6. With no deliveries of the Backfire bomber, the H-6 continues in the bomber role and few have been converted to aerial refueling. Finally, Japan has the experience of training with the United States and its allies for decades.
Japan is a modern state suffering from a lasting economic malaise and looking to reshape its role while seeking new economic strength and security. The Japan of the Cold War was content to rely on Washington for its security needs, and the unnatural state of the world’s largest economy protecting the fundamental interests of the world’s second largest economy with little outlay by Tokyo is long gone.
Japan sits in a volatile region, and the United States is looking to establish Tokyo as a cornerstone of an enhanced regional security alliance system. With Japan watching a fading China, however, Tokyo is unlikely to stand by and simply watch the downturn—and unrest -- and wait to see what happens. Tokyo will seek to exploit the economic advantage, supporting coastal areas of China, backing Taiwan and generally assisting in the disintegration of the Chinese state apparatus.
Looking at a China that is fanning the flames of nationalism, Taiwan will seek to align itself with Japan, because Tokyo can offer Taipei security benefits that Beijing cannot. This situation will feed on itself: China will react strongly to a Taipei-Tokyo axis, and Chinese reaction will prompt closer cooperation between Taiwan and Tokyo.
That the confrontation between China and Japan will move beyond the political and economic sphere toward the military realm before the end of the decade appears likely. Should there be a war between China and Japan, Korea will attempt neutrality, though leaning toward one side—China. However, Korea will seek U.S. assistance to stand between its two neighbors. If Washington is unable or unwilling to stop Beijing and Tokyo, Korea will be left dangling.
Korea is clearly defined by its geography. A peninsula situated between two regional, historic, competitive powers, Korea has been a conduit for technology and culture and the main avenue for invasion—in several directions. Korea’s traditional solution was to pay suzerainty to China—its contiguous neighbor— while isolating itself from Japan, its maritime neighbor. When faced with invasion, Korea calls on outside powers, be they China, Russia or the United States.
This pattern is ingrained in the geographic features of Korea, and has been unchanged by the division of the peninsula.
Korea is, therefore, a reactive state—whether the reaction is expressed as isolationism or as an invitation to foreign powers. Korea’s future is rarely shaped by domestic desires or strategic planning because its size and location leave it always vulnerable to the designs and actions of its neighbors.
The divided Korea has exploited its neighbors in an attempt by each side to gain the upper hand. The Cold War gave Korea tremendous strategic importance in the confrontation between the Soviet Union and the United States, as well as in the often contentious relationship between the Soviet Union and China. Seoul clearly benefited from the former, Pyongyang from the latter.
The end of the Cold War also ended the support network that kept Korea divided. That is not to say the situation cannot continue, but the interests of the two Koreas have rarely been different—only the ideology has. Both Koreas seek a strong, independent Korea, and with the Cold war structures shattered, the two are working closer together to achieve this—in spite of their ideological differences.
Over the next decade, this cooperation will become more apparent, though ideology will still present a barrier for significant cooperation early on. While there is concern in the South for the economic affects of unification, it is ideology—seeking a face-saving way for neither ideology nor elite to be de-legitimized—that stands in the way of unification.
Friction points between Japan and China will include areas beyond Korea and Taiwan, with competition for sea-lane control, however one-sided. The wild card is whether the tensions between Beijing and Tokyo at some point exceed Washington’s comfort zone—or interests. Intervention between two Asian powers is something not readily leaped into, and Washington could engage in a balance-of-power strategy between the two, keeping them occupied in East Asia and preventing either from ever rising to challenge U.S. control of the seas.
The Indonesian archipelago will be a friction point while Australia peruses a policy of using Indonesia and the Pacific Islands as a bulwark against encroachment from the mainland and the South China Sea. Indonesia could be out of oil by then, but Canberra must ensure Jakarta (or Australia) remains in control of the islands in order to keep the Chinese (or multiple militant groups, criminal gangs and other powers) away from the Australian heartland and prevent them from having interdiction capabilities in the major shipping lanes. Australia can expect U.S. support in this endeavor.
The Communist Party is likely finished in Russia; it will not be the driving force. A new, anti-Western leading force will emerge from street protests and popular anger. Moreover, a completely new elite will probably form from this period of turmoil. The new elite will consist of national capital representatives, mostly from the production economic sector; patriotic intellectuals; officers in the military, security and intelligence; and popular resistance leaders.
The regime will probably become more religion-oriented, with the Russian Orthodox Church taking a leading role, joined by moderates from other large religious traditions in Russia, such as Islam and Buddhism. A new regime will have to draw upon one resource or another for its strength; traditionally, Russian morality and human capability have been vital to the country’s success. With the communist ideology in crisis and the market ideology inspiring relatively few Russians, moral strength can be drawn from revived religious values that argue for a strong Russia and a just society. Also, it will probably be a very conservative regime, resting on the foundation of a production economy, with low-paid workers, intellectuals and peasants as well as those dependent on social benefits.
As the largest continental power and chief influence over Eurasia, Russia cannot escape its geopolitical fate: to maintain its territory by fighting seafaring powers (the United States, the United Kingdom and Japan) looking to assert influence in the strategically valuable Eurasian region. Russia and its immediate neighbors—within whose borders Russia has direct security interests—happen to be located in a very strategic area. If Russia disagrees with the U.S., U.K. and Japanese visions of its future and that of its neighbors, then Russia will have to fight. Thus, no matter the extent to which Russia’s current pro-Western government shies away from confronting these forces, it will not be able to avoid the fight forever. It will probably join forces with other continental powers—Germany, China and India –the next five years.
The regime will accept the idea of private property and adopt some form of market economy with state control. The economy will give priority to the development of Russian national capitalism, caring for Russian internal economic development and creating Russian competitive high-tech products. It will not cater to Western monopolies or be based on selling Russia’s natural resources as it is now. The government will be much more geopolitically assertive, having as its foundation the principle of respected international power and Russia’s international greatness.
Similar struggles between pro- and anti-Western forces will take place in all FSU countries this decade, with Muslim FSU countries also experiencing an upsurge in Islamist militancy and radicalism, which is attractive to the impoverished. The Islamist force with the most potential to succeed is not a militant group, such as the Islamic Movement of Turkestan—militant groups have drawn the attention of intelligence and security services and are thus more likely to be crushed. A radical organization called Hizb ut-Tahrir, which is not militant in nature, could avoid defeat as it spreads the message of overthrowing secular regimes in Central Asia during the coming decade.
As in Russia’s case, various outcomes are possible in these countries - from the disintegration of some states to armed conflict in others. In the end, when a reversed, militarily and politically stronger Russia emerges sometime in the next decade, some FSU nations will realign themselves with Russia while others will remain in the pro-U.S. camp.
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