The Three Gorges Dam, one of China's biggest mega-projects of the past century, emerges from the mist. Image by Egor Grebnev available at Flickr.com under CC license.

09:27 am | January 29, 2020

Knowledge Gaps / China Myths

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?

By Hui Zhou

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, 70^th 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.

Key Points:

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.

An article by former Austrian chancellor Wolfgang Schüssel for China Daily's "China Watch" section praises the Belt and Road Initiative.

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 “12^th 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.

A pedal cart in rural China is loaded with cylinders of soft coal for cooking and heating at home. Photo by Brian Kelley available at Wikimedia Commons under CC license.

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 70^th anniversary celebrations.

The new Beijing Daxing International Airport. Photo by Wang Zhitong available at Wikimedia Commons under CC license.

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.

The spillway of the Sanmenxia Dam during the process of silt flushing. Image by Rolf Mueller available at Wikimedia Commons under CC license.

If we look back from recent times through to large-scale energy infrastructure projects in the past, from the Sanmenxia Dam on the Yellow River (1957-1961) to the numerous large-scale projects including the Three Gorges Dam and the South-North Water Transfer Project, we can see clearly that China's infrastructure policy has always been short-sighted, and has always ignored public values.

The Sanmenxia Dam was constructed in the middle of the 20th century with the guidance of Soviet experts. Chinese expert Huang Wanli strongly opposed the project, noting the dangers of sedimentation and the immense cost of relocating local populations. But his warnings were to no avail, and he wrote angrily of how political symbolism had won the day: "Chinese scholars are extremely political,” he said. “As soon as the Sanmenxia plan came out, they gave up their opinions, singing big praises instead. . . . These are just the sort of experts our party and our government adores.”

The Sanmenxia Dam was hastily launched, and Huang was persecuted as a “rightist” as the Anti-Rightist Movement got underway. Serious problems emerged with the dam almost immediately, undermining the project’s benefits, and by 1964 the government was already weighing the possibility of destroying the dam. Today, Sanmenxia is a textbook case in the perils of sedimentation and poor planning. All of its anticipated benefits, including power generation, irrigation, shipping and so on, have come to nothing. Meanwhile, its long-term ecological effects are left unresolved.

Today, Sanmenxia is a textbook case in the perils of sedimentation and poor planning. All of its anticipated benefits . . . . have come to nothing.

In the 1990s, Huang Wanli once again resolutely opposed the construction of the Three Gorges Dam, and once again his warnings were disregarded. The Three Gorges Dam necessitated the forced relocation of millions of people, caused serious ecological damage to the middle and lower reaches of the Yangtze River, and in the end never fulfilled its designed purpose economically.

The South-North Water Transfer Project, which was planned to transfer part of the water resources of the Yangtze River basin to more arid regions in northern and northwestern China, similarly emerged in a wave of hurried enthusiasm. Construction of the project was rushed ahead in 2002 in hopes of supplying water to Beijing ahead of the 2008 Olympic Games. But Wang Weiluo, a water conservancy expert who lives in Germany, has pointed out that the feasibility study for the first phase of the South-North Water Transfer Project was not even reviewed and approved by the State Council until October 2008, by which time the Games had already come and gone.

The South-North Water Transfer Project has resulted so far in the relocation of more than 300,000 residents, and experts warn it will have serious environmental consequences. American geographer Jared Diamond wrote in his book Collapse that the Chinese project will lead to the spread of pollution, imbalances in river water resources, and ecological disaster. These mega-projects, he believes, reflect the persistent idea in Chinese decision-making that man can and should conquer nature, an idea that runs counter to the concept of sustainable development.

The “One-Child” Policy

Perhaps the most powerful counter-example to the notion of China’s advantage in long-term strategic planning is a policy widely known in the West – the so-called “one-child” policy.

The “one-child” policy was a basic state policy for a period of more than 30 years, but was actually intended as a temporary measure introduced in the special political environment of the late 1970s. By this time, China had been under a planned economy for more than two decades, and the focus was on seeking a new economic path. In assessing the causes of the extreme economic troubles facing the country at that moment, leaders focused on the chaos of the Cultural Revolution, out of which China had just emerged, but also singled out population as a persisting obstacle to growth. The reason for this was simple enough. Capital, natural resources and consumer goods were in short supply, and people habituated to a closed system generally assumed that stocks would not significantly increase. Added to this was a Malthusian fear that population would grow indefinitely, precipitating a crisis.

The political will at the time to break with the old ways and forge new ones also encouraged bolder policy measures on the part of Chinese leaders. And so this major new policy was introduced to control population as a means of reducing pressures on economic development and maintaining social control.

The implementation of the “one-child” policy has meant a large-scale, multi-generational campaign of sterilization and abortion. Wang Feng, a former public policy expert at Brookings, who has called the “one-child” policy “one of the most draconian examples of government social engineering ever seen,” has estimated that between 1979 and 2009, the strict one-child policy reduced the number of births by 200 million people. The Chinese government has publicly said it believes that number is 400 million, though some economists argue that the drop in births can be partially attributed to economic development itself, and changing views of the family.

A sign from a local government office in China in 2006 reads: “For the prosperity of home and country, please carry out the one-child policy.” Photo by Venus available at Wikimedia Commons under CC license.

What the Chinese government did not foresee as the “one-child” policy took shape was that the process of economic deregulation would make population the driving force of economic development as tens of millions flocked to emerging urban centers of manufacturing. Based on unrealistic assumptions about the future, China’s leaders blindly implemented policies that created untold misery. Once again, they had gone ahead with these policies over the objection of demographic experts like Liang Zhongtang, an early proponent of a two-child policy based on his experiments in the countryside.

In 2001, 18 independent demographic experts in China formed a research group on fertility in the 21^st century. They concluded that the “one-child” policy had resulted in low fertility, a serious aging population problem, and shortages of labor. Between 2004 and 2009, the group submitted a series of proposals to the central authorities calling for the relaxation of the “one-child” policy. It was not until 2016, however, that the policy was finally scrapped. Wang Feng has said that he believes the policy change came at least a decade too late.

Why was such a harmful policy not corrected in time? The main reason is that population control had already become an integral part of the ruling bureaucracy and its political legitimacy. The ubiquitous slogans for the “one-child” policy, like that picture above, demonstrate how closely linked the family planning regime had become with notions of economic development and poverty alleviation. Within the official political discourse, the idea that “400 million births have been prevented” was a standard declaration of the great contributions made to national development.

The unassailable status of family planning made the system ripe for abuse.

By the 1990s, the implementation of family planning policies had become a core component of assessments for government officials, and poor enforcement could impact promotion. From ideology to practical management, family planning became "politically correct,” meaning in a Chinese context that it was an unquestioned pillar of the political culture and system.

The unassailable status of family planning made the system ripe for abuse. The so-called “social support fees” collected by local governments from citizens for alleged abuses of the “one child” policy reportedly ran into the tens of billions, and yet the whereabouts of these funds today remains a mystery. The political and economic interests behind the policy made it that much harder to reform.

In the case of the “one child” policy, we have a prime example of the continuity that Western observers sometimes praise in the Chinese system – the ability to sustain a course for more than three decades. But in this case, we can also see that this continuity is deeply problematic. The longer the policy continues, in fact, the greater the damage to public values.

Though serious human rights violations are often the primary point of criticism of the “one child” policy in the West, we can see that it was also a social and economic disaster – resulting, for example, in a serious imbalance between men and women. According to research by Professor Zhou Tianyong of the Central Party School, in 2015 alone the population reduction due to family planning polices resulted in a loss of household income of around eight trillion yuan, or one trillion euro, equaling 12 percent of national income that year. The estimated loss of GDP due to population controls in 2015 was .5 percent. These losses are cumulative and will continue to grow as the fertility rate falls.

Two elderly Chinese exercise in a public park. Image from video by Peter McGahan available at Flickr.com under CC license.

Also lurking behind the economic legacy of the “one child” policy is a massive aging population. Official data shows that there are currently around 250 million people over the age of 60 in China, 18 percent of the population. Nearly every young person in China now bears the expenses of at least one elderly parent. In the not-too-distant future, many elderly people in China, and those on whom they depend, may face difficulties due to lack of income and healthcare coverage.

Public Value

The cases outlined above are not merely isolated instances of policies tried and failed, but rather examples of large-scale, wide-ranging, costly and long-term policies to which China’s government was committed in the face of serious long-term questions.

It is difficult to suggest, in light of the facts, that these policies reflect “long-term” and “efficient” policy-making by a system that is strategically playing a long game. But if we do draw lessons about the system from these cases, what can we say is the crux of Chinese policy-making? What is it that links all of these approaches?

I believe the most significant common factor is the absence of public values.

What are public values? According to the definition given by public administration scholar Barry Bozeman (2007), public values are those providing normative consensus about the rights and benefits to which citizens should be entitled; the obligations citizens have to the state, society and each other; the principles on which the government and its policies should be based.

Public policies should be evaluated on the basis of such key questions as: What is the intention behind the overall policy activity? Why is the public sector allocating resources to this purpose? How do individuals and groups within society benefit from these policies? When it comes to specific policies, the definition of public value is itself a negotiation process. Public value is defined and redefined through a continuous process of democratic negotiation between the public, politicians, service providers, and users.

Policies may have continuity, and may by certain standards be forward-looking and efficient. But if they lack public value we have to ask: Who is this efficiency for? If we look, for example, at the Great Firewall, China’s vast technical system of internet control and censorship, we can say that it has outstanding continuity and efficiency for its purpose – and it is forward-looking, addressing long-term objectives. But exactly whose efficiency is this? Who is served by the Great Firewall? Clearly, the policy is meant in this case to serve the Chinese Communist Party.

Where there is no democracy and little room for negotiation, the long-term effects of public policy can be highly suspect. In fact, if we look back on the “long-term” strategies undertaken in authoritarian regimes, it is not difficult to see, considering the real costs borne by the larger population, how they are often pursued in order to protect the interests of the regime itself.

Further, there is little evidence to suggest authoritarian regimes perform better than democratic regimes when it comes to long-term planning and strategic considerations. The Nordic countries and Germany, for example, do not rely on authoritarian systems and can nevertheless achieve status as global leaders on the environment.

Protesters gather in January 2018 for Fridays for Future marches in Germany. Photo by Bodo Hoffmann available at Flickr.com under CC license.