When China's Long Game Short Circuits
The idea persists that China’s political system and culture makes it uniquely adept at planning ahead for the distant future. But is the Chinese Communist Party really in it for the long-term?
China’s National Day on October 1 last year marked seven decades in power for the Chinese Communist Party. For political commentators in the West, the anniversary was an opportunity for reflection and reassessment, particularly given the fact that a number of single-party regimes in the past have come to points of fatal decline at the 70-year mark – the so-called “70-year itch.”
For the Chinese Communist Party, 70th anniversary celebrations were all about putting the country's enviable economic, political and military strength on full display. Aside from the expected pomp of the National Day parade, with 15,000 goose-stepping soldiers and a showcase of new weaponry, a costly new airport in Beijing was unveiled.
One common myth about China's political system and its leaders is that they favor long-term thinking and strategizing and are better equipped for it than democracies, which are focused on short-term cycles. This view, a common theme in Chinese propaganda, has also captivated some in the West.
However, many of the examples of long-term policymaking in China collapse under closer scrutiny, whether in the area of environmental protection, infrastructure or population policy. For example, China’s solar power growth has been driven by government subsidies, resulting in market distortion, huge debt and waste. In the construction of infrastructure, such as the high-speed rail system and local airports, there is lack of coordination and long-term planning. Without any deliberation or supervision, all costs are ultimately borne by taxpayers.
The most significant shared factor in these examples is the absence of public values, a lack of real consensus about the rights and benefits to which citizens should be entitled. Democratic countries should focus on improving their democratic processes instead of seeking imagined panaceas in autocracy, which has always been a raw deal for the underprivileged and underrepresented.
China’s confident front gave no hint of unease or decline, and the message from state media was one of unchallenged continuity. The official People’s Daily quoted Ronnie Lins, director of the China-Brazil Center for Research and Business, as saying that “the Chinese government has maintained the continuity of its policies, enabling it to accomplish many major projects to build the national economy and the welfare of the people.” The greatest guarantee of the Chinese miracle, Lins added, was “upholding the Party’s leadership over all work.”
This view of authoritarian continuity and long-term vision as a core advantage of China’s system is one commonly found in its external propaganda. Long-term planning topped the list in 2010 when the official China Daily named the reasons why the country’s political system is superior.
The idea has also captivated some in the West. In 2014, British astronomer Martin Rees wrote that “[o]nly an enlightened despot could push through the measures needed to navigate the 21st century safely.” Asked more recently whether he was serious about this statement, Rees offered China as a concrete example of an authoritarian regime that excelled at long-term planning – as evidenced by its policies on solar power development.
In 2017, former Austrian Chancellor Wolfgang Schuessel praised China’s long-term thinking in an interview with the official Xinhua News Agency, saying that China's political system, with officials serving for “set periods of time,” provided a “certain stability” as opposed to "the Western approach where political themes and perspectives often have a much shorter life-span." The article mostly paraphrased Schuessel’s views, but the former chancellor has expressed similar ideas elsewhere, as in a 2017 article for China Daily in which he called on the European Union to join China in the “visionary projects” pursued as part of its Belt and Road Initiative.
At other times, the belief in China’s gift for long-term strategizing is explained, or romanticized, as a fundamental cultural gap, a “difference in thinking patterns.” “And why is China being pragmatic in the short term?” asked Kishore Mabhubani, a professor of public policy at the National University of Singapore, in 2018: “The answer is simple. Chinese leaders, unlike Western leaders, think in the long term.”
But are China’s leaders really playing the long game? What can we really say about “long-term” policymaking in China and its supposed efficiency and pragmatism? In fact, if by “long-term” we mean policies that are forward-looking and have continuity, and if by “efficient” we mean polices that improve the public welfare, then many of China’s most obvious examples of long-term policymaking collapse under scrutiny.
For the purposes of this article, I will focus on three policy areas: environmental protection, infrastructure and population.
Movement-style Environmental Policies
In the environmental arena, we can look more closely at the development of solar power in China. The view expressed by Martin Rees is one shared by many in the West – based on partial information. While it is true that solar power generation in China has topped world rankings for the past five or six years, and is also growing at a faster rate than anywhere else, this development is not driven by environmental protection goals – and related long-term thinking – but rather by short-term infrastructure investment patterns.
This is an issue I dealt with in a previous article for Echowall, talking about China’s debt-for-development approach.
A key factor behind solar power growth is central planning and subsidisation policies that in fact have distorted the entire market. The expansion of China’s solar power industry began in 2013, when the State Council introduced measures to support the growth of the industry in the face of new anti-dumping measures introduced by the European Union and the United States, which drove a sudden decline in the overseas market for Chinese-made solar products. As subsidies became available, a large number of enterprises, many of them state-owned, rushed headlong into the field of photovoltaic power station construction.
During China’s “12th Five-Year Plan” (2012-2017), solar power generation targets were continually adjusted upward, from the original 5GW eventually to 35GW. An energy report from a consultancy released in December 2013 found that 130GW of solar power projects were already in the works. No other industry in China has seen such massive expansion over a five-year period, with no control whatsoever of goals in terms of capacity.
As subsidies became available, a large number of enterprises, many of them state-owned, rushed headlong into the field of photovoltaic power station construction.
The consequence of this race for solar projects is, first and foremost, overcapacity. According to one report on China’s state-run television network, CCTV report, the photovoltaic power generation in northwest China – including Ningxia, Shaanxi, Gansu, Qinghai and Xinjiang – was 39.286 billion kilowatt-hours in 2017, an increase of 37.8 percent on the previous year. Meanwhile, annual power consumption in the region, including experts of electricity, rose by just 7.79 percent. More production in this case simply mean more waste.
Renewable energy companies in China are now facing an industry-wide crisis. Many companies started off with targets on what they could expect from subsides and support, and now find that the constantly shifting subsidy regime is unable to plug the gap. By the end of 2018, a total of 200 billion yuan in subsidies for renewable energy were still unpaid (meaning that projects listed as receiving state subsidies had yet to receive them), and this did not account for new subsidies after 2019, according to the calculation of the Energy Research Institute of the National Development and Reform Commission. Even if the subsidies are all withdrawn after 20 years, it will cost about 3 trillion yuan in total. In the photovoltaic industry alone, as of 2018, more than 70 percent of projects with a total size exceeding 120GW have not yet entered the subsidy list.
Another factor to consider is that the low-tech solar energy industry expansion we’ve seen over the past two decades in China has actually been highly polluting and energy-intensive in its production. It was already more than a decade ago that China experienced its first mass protests over local environmental pollution by solar companies, and these happened in several regions. In 2015, before controls on media intensified, it was still possible to see reports in the Chinese media about communities that lived in fear of the harmful effects of photovoltaic manufacturers nearby.
Unlike Germany and other countries, China does not yet have policies and regulations for recycling solar panels. According to estimates by one solar manufacturer, discarded solar panels in China could by 2030 amount to 1.45 million tons of carbon steel, 1.1 million tons of glass, 540,000 tons of plastic, 260,000 tons of aluminum, 170,000 tons of copper, 50,000 tons of silicon and 550 tons of silver. Currently, China has no policy for how to deal with the waste of these resources and the pollution left behind.
Studies inside China have addressed solar industry policy, which they judge to have been defective across the chain from production and operation to recycling – as a textbook case of ineffective government intervention. And some have suggested that the problems of excess capacity in the solar industry only deepen as government intervention grows.
Seen in this light, holding China up as a role model on the grounds of massive and growing capacity enabled by government vision is a serious misinterpretation.
Looking at environmental policies across the board, China is actually a prime example of policies that shift constantly, without efficiency or continuity – and often having less to do with environmental protection than with other political consideration. For example, to ensure clear skies for the grand military parade planned for last year’s National Day on October 1 in Beijing, the government issued an order for all manufacturing companies north of the Yellow River to suspend operations from September 1. This popularized a special term, “military parade blue.” Does such a policy have anything to do with continuity?
Another famous example of misguided policy was the 2018 drama over “switching from coal to gas.” The Chinese government issued a ban that year on coal-fired heating, ordering homes to switch to natural gas in order to improve air quality in northern China. This one-size-fits-all approach resulted in chaos in both the energy market and in society.
Some residents had their old-fashioned stoves and furnaces destroyed by the authorities to implement the policy. Chimneys were blocked to prevent the use of soft coal, long a source of winter heating in this part of China, and wholesalers of coal were detained. As all of this happened, gas prices soared, and supply shortages resulted in a heating crisis for both urban and rural residents just as the winter cold came. Even schools and hospitals were without heat. The Ministry of Environmental Protection finally responded by putting on the emergency brakes, suspending the “switching from coal to gas” policy.
This rash approach to policy-making is what we sometimes refer to in Chinese as the “movement-style,” a reference to broad and sweeping moves made from the top to achieve goals expediently – and not always the goals explicitly stated by the policy itself (as when blue skies are really about grand political gestures).
In October 2019, official statistics in China showed the consumer price index (CPI) rising 3.8 percent, a seven-year high. One noted increase was the price of pork, which had doubled over the previous year, a key factor in the overall index rise. A lesser known fact was that "movement-style" environmental policies implemented since 2016 were a key contributor to the drop in domestic pork supply in China, which in 2018 became a full-fledged nationwide supply crisis as these policies met unexpectedly with an outbreak of swine fever.
Objectively speaking, pig farming methods in China to date, which have largely involved small-scale and backyard operations that directly dispose of fecal and other waste, have resulted in serious soil and water pollution, and action is urgently needed. After the release of a new Environmental Protection Law in 2014 and other regulations, more environmental pig farming in China became a real policy objective, making it into the planning goals of local and regional governments.
But as related reforms became a political agenda – a way, in other words, that local officials could demonstrate their seriousness with a mind to their own personal advancement – the result in practice was the use of what we call in Chinese "single chop" methods. Rather than be given assistance and encouragement in reforming their methods and finding ways to transition production into more sustainable channels, local pig farmers were subjected to slogans and ultimatums. Some counties began sloganeering about the goal of becoming "zero-pig counties."
Recently, the Ministry of Agriculture released new policies to support the pig farming industry. The real costs of this back-and-forth process are borne by farmers and consumers.
The creation and implementation of such policies is premised on the government's unrestricted resources and coercive force. But the end of the day, such sweeping actions harm public values, and they are not at all effective when it comes to environmental improvement. In 2019, air quality in China’s 39 major northern cities deteriorated across the board.
Infrastructure and “Face”
When we look at infrastructure construction, an oft-cited example of China’s long-term vision and planning, we can certainly say that there has been continuous investment and construction over a long period of time. As to whether this investment and construction is visionary it is far too early to say. But we can note in any case that the continuity we have seen in investment is largely the result of efforts at stimulating the economy in order to achieve GDP goals.
This rash approach to policy-making is what we sometimes refer to in Chinese as the “movement-style,” a reference to broad and sweeping moves made from the top to achieve goals expediently.
At the national policy level, the lack of real long-term planning in infrastructure has followed a pattern, much as I described above for solar subsidies, true also for subsidies in wind energy. Companies swarm into the sector, recognizing that a “movement” is underway and eager to capitalize. What follows is a massive gap in actual government subsidies that leaves companies heavily indebted, and the entire industry trapped in overcapacity.
Frequent policy changes are common at the local level in China, where there is a rather revealing saying about policy-making: “Plans, plans, not so key as a leader’s commands.” In fact, major project investments are crucial to the “face” of individual leaders in China, whether at the central or local levels.
One of the most recent outstanding examples of this is the Beijing Daxing International Airport, which formally began operation during last year’s 70th anniversary celebrations.
Built at a cost of 80 billion yuan, or about 10 billion euro, the project was criticized early on as a non-solution to the problem of crowded airspace in China. Currently, less 30 percent of China’s airspace can be used by commercial airlines – versus 80 percent, for example, in the United States. This is the root cause of overcrowding and flight delays, and if nothing is done to resolve the airspace problem, building a new airport is a meaningless gesture.
Chinese economist Song Qinghui has pointed out that 70 percent of Chinese airports are losing money. So why is there such a rush to build new airports? A county-level officer in Sichuan Province put his finger on the issue when he said: “Whether a city has an airport, and what kind of airport a city has reflects on the city’s image, and [a good airport] makes it easier to attract investment." Airport construction, in other words, has been an important part of the inter-regional competition for GDP performance, feeding the investment and construction cycle.
It goes without saying that such construction lacks coordination and long-term planning, and that it is a waste of resources. Nor can we forget that it comes with significant social costs, for example through the forced acquisition of land and the deprivation of local residents.
Among the many other examples of blind construction we can also count China’s high-speed rail system. Despite being an oft-used symbol of China’s vision and technological prowess, the high-speed rail system epitomizes the lack of planning, poor transparency and deep unfairness behind infrastructure policies. Scholar Wen Kejian has written already for Echowall about the hugely unprofitable nature of China’s high-speed rail system.
The high-speed rail system was achieved because all of the costs for this government-supported project could be borne by taxpayers without any deliberation or supervision, and under such political conditions many countries might similarly be able to create their own legacy systems.
But is this really an example of long-term thinking and its advantages? Put simply, if we cannot demonstrate that the positive externalities outweigh the costs – including the deterioration of the national transportation infrastructure by the high-speed rail system as it further marginalizes smaller communities – then we cannot say there is a long-term advantage.