Editorial: Back to the future

The 20^th National Congress of the Chinese Communist Party (CCP), which comes to a close today, is likely to go down as a watershed in terms of reshaping the politics of China and the global strategic and economic order. With this session, President Xi Jinping would have assumed complete control over the CCP, the military, party and organs of the State, and for an indefinite period – comparable only to Mao Zedong. The Communist state could be recast in its earlier Cold War avatar (after a long post-Deng Xiaoping phase focusing on wealth creation by global private players). The ideological content of Xi’s work report to the CCP Congress points to greater role for the State, common prosperity, a lesser role to the private sector and funds for industrial scale central planning. As Chinese politics lurches to the Leninist Left, consolidating the power of the Party, the equation between the State and private capital will see a shift. The zero-Covid policy is not just about flattening the economy; it sends out a message that the State will exercise greater control over economic agents. China’s singular pursuit of three-decades of high growth accompanied by an approach of strategic neutrality looks to be a thing of the past. The Middle Kingdom is now bristling to take on the US strategically. Xi’s muscular nationalism is built on an antipathy towards US ‘hegemony’ and ‘values’ (overtones of Putin and erstwhile USSR). The reset will could alter trade and investment flows, attuned now to a capitalistic China.

The national security rhetoric points to an assertive foreign policy with Xi saying that China will never renounce the right to use force in Taiwan. Apart from the spectre of US warships prowling in the South China Sea, China’s urge to dominate has repercussions for India -- borne out by images of the Galwan Valley and the PLA Commander Qi Fabao at the CCP Congress venue. India faces challenges in safeguarding its strategic and economic interests. It cannot afford to needlessly antagonise its formidable neighbour militarily; nor should it succumb to its economic might. India has to go atmanirbhar in crucial areas such as pharmaceuticals, for which 70-75 per cent of the active ingredients are sourced from China. Imports from China in 2021-22 were at over $90 billion, despite India’s efforts to indigenise. Major imports include telecom/electronic products, motorcycle parts, photovoltaic cells, synthetic and artificial yarns for textiles.

The US saw this coming. American industry there is pushing a bipartisan bill to bolster domestic semiconductor manufacturing. President Biden has sought to promote huge federal investment in manufacturing and R&D in technologies where China is a dominant player. Export controls on chip supplies to China are in place. While companies such as Tesla and Apple, with their heavy investments in China, are in a spot, a new semiconductor plant with $20 billion investment by Intel is being set up in Ohio. In sum, Xi is carving out new faultlines – plunging the world into confusion.

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