China’s Power Structure Supported Xi Jinping, But Financial Markets Didn’t: NPR

NPR’s Steve Inskeep talks to Stephen Roach of the Paul Tsai China Center at Yale Law School about China’s economic relationship with the world under Xi Jinping.


Share prices of Chinese companies lost some value this week. Chinese stocks plunged in Hong Kong and New York after Xi Jinping confirmed a third five-year term as China’s leader. The Chinese power structure was behind Xi, but the markets were not. So we called Stephen Roach, a senior fellow at Yale Law School’s Paul Tsai China Center. He is also a former chairman of Morgan Stanley Asia. Good morning.

STEPHEN ROACH: Good morning, Steve.

INSKEEP: What do investors see that I think the Chinese government would find difficult?

ROACH: They see a China that is really cutting itself off from the rest of the world, and one that is focused on conflict as it tries to achieve Xi Jinping’s ambitious goal of being a great power by the year 2049 and the 100th anniversary of the founding of the People’s Republic of China.

INSKEEP: Are you saying that Xi, as president, has priorities that don’t — that don’t put China’s economic growth first, as you might say some past Chinese leaders have?

ROACH: From the days of Deng Xiaoping, growth was always No. 1. And in Xi’s China, national security, broadly defined, is now No. 1, although in this party congress communiqué he said that maintaining growth is our number one priority. stays . That was a very hollow statement in light of everything else he said.

INSKEEP: You know, the Chinese authorities have made it pretty clear in the past that they felt they needed constant growth to keep their people happy, to avoid any risk of revolution or unrest. Does Xi no longer worry about that?

ROACH: Well, I think, you know, in his darkest moments, he has to worry about it. But what he’s been doing for the past 10 years, Steve, is tightening up homeland security, surveillance. And now at this party congress, he has eliminated any opposition from senior leaders, and in fact he has given more power to one of his partners in the so-called standing committee, a gentleman named Wang Huning, who is responsible for China’s deepening of the ideology, and wrote it book on the conflict between America and China. So he continues down the road of conflict. And I think that’s very worrying for the US and the rest of the world.

INSKEEP: Well, I’m glad you brought up the United States. What role has the United States played in its conflict with China that has raised doubts about the Chinese economy?

ROACH: Well, we played a big part. This is a relationship problem. I have written a new book that will be out soon on this subject. But you know, in the last five years we’ve started a trade war with tariffs. We’ve started a tech war. And we just upped the ante on that big time about two weeks ago with sweeping sanctions on all tech products going to China. And we are now embroiled in the early skirmishes of a new Cold War. So we did our part. And China has responded in kind. And I think we’ll see more of those responses in the coming weeks.

INSKEEP: Do you think the US crackdown on semiconductors is a particularly serious wound for China or something they will just tackle and gradually overcome?

ROACH: I think it’s a serious wound, really. One of the things that China most aspires to is to be a world leader in artificial intelligence, advanced technologies. And they need American chips for that. They have tried for years to build their own chip production capacity, but they have not succeeded. And there is no quick fix for that. So this is at the heart of what Xi Jinping is trying to do with China’s modernization to achieve his ambitious goals.

INSKEEP: Can you help me with anything else, Mr. Roach? It has been clear for years that the US and China are facing increasing conflict. It had been clear for years that Xi Jinping would seize a third term for himself. And yet something happened this week that must have been unexpected since stocks plummeted. What was the surprise of all this?

ROACH: Yes. That’s a good question, Steve. I think the surprise was that we just stared these seven members of the standing committee in the face as they marched onto the podium of the National People’s Party – the end of the National People’s Congress and saw that there is not one person there who is willing to should act as an honest broker, give truth to power and give Xi Jinping a different perspective on many of the problems he is fixated on. So this is a strong perception that the markets wanted to admit didn’t happen, but unfolded before our eyes.

INSKEEP: Stephen Roach is at Yale. And while you were talking, I looked up your book here, “Accidental Conflict: America, China, And The Clash Of False Narratives.” Thanks for taking the time.

ROACH: Thank you very much.

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