2022, the Year that has Upset China

As 2022 began, the year was shaping up as one of great significance for China. It appeared that the nation had successfully contained COVID-19 and could become the first country in the world to return to pre-pandemic normalcy and witness a soaring economy. China would host the Winter Olympics, making Beijing one of the few cities in the world to have hosted both the summer and the winter Games. In addition, the Chinese Communist Party (CCP) would convene its 20^th National Congress without the prospect of producing a new paramount leader.

Unexpected developments, however, changed expectations and raised the prospect of greater uncertainly or even potential conflict.

Three Surprises

The first surprise in 2022 was Russian President Vladmir Putin’s visit to China before the Winter Games. The two countries agreed to form a partnership of “no limits.” On February 24, four days after the Olympic flame was extinguished in Beijing, Putin’s military began its brutal invasion of Ukraine. Despite a history of being invaded by foreign powers and a sensitivity to the issue of territorial integrity and political sovereignty, China is one of a small number of nations that has refused to condemn Russia’s invasion. Beijing believes NATO’s eastward expansion pressured Moscow to act, and that Putin was justified in launching the war. Although China has been careful not to provide material support to Russia’s war effort, its position has gravely alienated the U.S. and other developed nations.

The second unexpected development has been China’s adherence to the draconian “zero COVID” approach that has led to lockdowns of many major cities or urban districts, even as most other countries are slowly but firmly coming out of the pandemic. The government has used the pandemic to deploy the strictest mechanisms of surveillance. Many people under lockdown have been getting upset, and the economy has been a victim of collateral damage. The pace of China’s economic growth last year and this year is the slowest since the beginning of the opening and reform in the late 1970s. In late May, Premier Li Keqiang convened an emergency meeting, asking more than 100,000 officials at all levels who attended the meeting virtually to do their utmost to stabilize the economy. What China used to be proud of — its quickness in mobilizing resources and its efficiency in getting the public to cooperate with government policies — has now been turned into an effective tool to control people’s movement and has become fertile ground for rent-seeking corruption.

The third event that jolted China was the visit to Taiwan by U.S. House Speaker Nancy Pelosi. After the Financial Times leaked word of the possible visit, China orchestrated a rare popular and official campaign to stop Pelosi from going to Taiwan. Chinese Foreign Ministry spokespeople used the strongest language to warn the U.S. government not to cross a red line regarding Taiwan. The PLA declared it would not remain idle when the nation’s sovereignty was at stake. Hu Xijin, former editor-in-chief of Global Times, a tabloid affiliated with the People’s Daily, publicly called the Chinese military to escort Pelosi’s plane to the Taipei airport. When there was no sign of Pelosi backing down, Hu declared Chinese fighter jets could shoot down her plane. However, it was all quiet in China on the evening of August 2, when Pelosi landed in Taipei to a hero’s welcome. For those Chinese who were hoping to see a strong reaction from their government, it was a long and painful night. China’s retaliation was late but massive.

Diplomatic Isolation from Developed Nations

The Russian invasion prompted the U.S. government to put on hold its decision to abolish some of the tariffs imposed by the Trump administration. President Biden sent a high-level delegation to Taiwan to reassure Taipei of the American commitment to Taiwan. The Pentagon released its National Defense Strategy, labeling China as the biggest threat to American national security. In May, President Biden made a trip to East Asia, introduced the Indo-Pacific Economic Framework, and attended the QUAD summit in Tokyo. Many suggest QUAD eventually will evolve into a NATO in Asia.

In their isolation, Chinese leaders are getting to the point of believing a new normalization of U.S.-China relationship is hopeless. If they reach that conclusion, they may do the following: 1) Move more aggressively to implement the dual circulation strategy, which involves shifting exports to the domestic market; 2) Sell off Chinese holdings of U.S. Treasury bills and transfer Chinese assets in the U.S. elsewhere; 3) De-list its companies from American stock exchanges as soon as possible; 4) Discourage Chinese people from studying in or even traveling to the U.S.; 5) Deepen its relationships with countries that are on America’s sanctions list.

China’s best chance to drag Europe away from the U.S. bandwagon was in January 2020 when Beijing and Brussels signed the EU-China Comprehensive Agreement on Investment. This opportunity was doomed after China reacted strongly and overbearingly to EU sanctions on Chinese government officials believed to be responsible for China’s policies toward ethnic minorities in Xinjiang. China’s refusal to condemn Russia’s invasion of Ukraine has alienated European countries further. The last EU-China summit was characterized by EU leaders as tone deaf. Latvia and Estonia’s decision to withdraw from the 16+1 bloc, a regular forum for China to discuss issues of common concerns with Eastern European nation, is a strong indication that China-Europe relations have entered a cold winter.

Economic Recession and Popular Anger

Regardless of what the official media says about the CCP, its only claim to legitimacy comes from its ability to deliver on economic growth in the past four decades. However, China’s spectacular economic growth has now come to an abrupt stop. It has been caused by a series of domestic policy reversals and unprecedented pressures from abroad. Domestically, the reversals have brought a pivot to the state-owned enterprises, an attempt to control capital and get rich Chinese people to give up their wealth under the banner of common prosperity, heavy dependence on the real estate sector that cannot sustain itself, and a banking crisis. Internationally, the U.S. has been leading the campaign to contain China through a large-scale trade war, stifling sanctions, strenuous efforts to freeze investment flows, and economic coalition-building. At the national economic conference in December 2021, the top Chinese leadership indicated that the people should be prepared to tighten their belts as the economic situation looked increasingly bleak. The last straw may be self-inflicted — COVID lockdowns. Since this policy is so intimately associated with China’s top leader, it will not be reversed at least until after the Communist Party’s National Congress in late October.

The economic recession and the subsequent popular discontent, which was on display during the Shanghai lockdown, will pose a serious threat to the leadership in 2023. Currently, the unemployment rate of China’s more than 10 million college graduates is hovering above 20%. The Chinese leaders are keenly aware that this is the group that has a historical track record of wreaking havoc on the nation. They were marchers in 1919, 1976, and 1989 in Tiananmen Square. Each of these movements led to drastic political change.

Taiwan, the Damocles Sword

Jiang Zemin stepped down in 2002 as China’s top leader. During his reign, he famously declared that there must be a timetable on liberating Taiwan. Almost 20 years after Jiang stepped down, China has yet to make its final move against the self-governing island.

Xi Jinping came to power in 2012 and he has since made the return of Taiwan to the motherland more urgent because unification is now one of the most important benchmarks of China’s final national rejuvenation. There is speculation that China’s constitution was amended so that the Taiwan issue could be resolved while the China’s current leader is still in power.

In the wake of the Russo-Ukraine war, the Party cannot and will not make this final move until they know answers to the following questions: 1) How hard will Taiwanese fight to defend their freedoms and country? 2) How should it deal with U.S. military intervention (the Biden Administration has repeatedly indicated that U.S. WILL intervene militarily)? 3) How united will the West be in confronting a Chinese invasion? 4) Can the Chinese economy survive drastic sanctions and stifling boycotts? 5) Can China pacify Taiwan after the war is over?

But the visit by Speaker Nancy Pelosi may have changed the thinking on Taiwan among China’s top leadership. First, the high-profile welcome Pelosi received in Taiwan made it clear that the emotional distance between mainland and Taiwan is probably too vast for the two sides to come close again. Furthermore, more lawmakers from the U.S. and leaders from other developed countries will swarm to Taiwan in the coming months. Taiwan is inching toward de facto independence. Second, China not only failed to stop Pelosi from going to Taiwan but did not take any military action when she landed. Chinese people tend to interpret this as the top leadership being too timid and not as decisive as previous leaders like Mao Zedong, who decided to intervene in Korea, and Deng Xiaoping who invaded Vietnam. Third, the Russian war in Ukraine is a live classroom for Taiwan to learn how to defend themselves successfully against a stronger enemy. Finally, it appears that despite President Biden’s rhetoric, the U.S. has not made up its mind on whether to intervene militarily in the wake of its withdrawal from Afghanistan and in the context of China’s expanding military capabilities.

Conclusion

What happened in 2022 has upset China in a significant way. Its support for Moscow after Russia’s invasion of Ukraine has turned it into a pariah in the international community. U.S. policies toward China before and after the invasion have made it impossible for Beijing to revise its moral support for Moscow. Pelosi’s visit may prompt China to consider offering material support. This would further alienate China from the club of developed countries whose markets are vital to China’s economic growth. The already troubled situation of the Chinese economy has been aggravated by its own stubborn and unscientific approach to COVID. Pelosi’s visit has made the resolution of the Taiwan question more urgent. Radical nationalism, deliberately nurtured by the Chinese government, has reared its ugly head and it will make pursuit of patience in dealing with Taiwan impossible.

In their recent writings, Michael Beckley, a professor at Tufts University, and Ryan Hass, a senior fellow at the Brookings Institution, suggest pessimistic powers are more prone to use force to achieve national objectives. From 1992 through 2012, China was rising and confident of its future. The leadership sought to convince Taiwan to come back through peaceful means. In the last 10 years, China’s rare luck seems to have run out. And 2022 hit China hard.

After the Party’s 20^th National Congress in late 2022, the leadership will enter 2023 with more concerns about its faltering economy, growing social discontent and increasing resentment against the Western bloc’s collective effort to contain China. It will have less patience on the Taiwan issue. In this volatile domestic and international environment, it is not unthinkable for top Chinese leadership to make rash decisions that will plunge the world into an uncertain dark era of great power rivalry and rob China of its historic dividends since the opening to the world in the late 1970s.