In Search of the Perfect Investment

n the early months of 2023, some Chinese thinkers were expecting that Chinese President Xi Jinping would be forced to pause or even abandon significant parts of his decadelong march toward centralization. Over the previous year, they had watched the government lurch from crisis to crisis. First, the Chinese Communist Party had stubbornly stuck to its “zero COVID’’ strategy with vast lockdowns of some of China’s biggest cities, even as most other countries had long since ended ineffective hard controls in favor of cutting-edge vaccines. The government’s inflexibility eventually triggered a backlash: in November 2022, antigovernment protests broke out in Chengdu, Guangzhou, Shanghai, and Beijing, an astounding development in Xi’s China. Then, in early December, the government suddenly abandoned zero COVID without vaccinating more of the elderly or stockpiling medicine. Within a few weeks, the virus had run rampant through the population, and although the government has not provided reliable data, many independent experts have concluded that it caused more than one million deaths. Meanwhile, the country had lost much of the dynamic growth that for decades has sustained the party’s hold on power.

Given the multiplying pressures, many Chinese intellectuals assumed that Xi would be forced to loosen his iron grip over the economy and society. Even though he had recently won an unprecedented third term as party general secretary and president and seemed set to rule for life, public mistrust was higher than at any previous point in his decade in power. China’s dominant twentieth-century leaders, Mao Zedong and Deng Xiaoping, had adjusted their approach when they encountered setbacks; surely Xi and his closest advisers would, too. “I was thinking that they would have to change course,” the editor of one of China’s most influential business journals told me in Beijing in May. “Not just the COVID policy but a lot of things, like the policy against private enterprise and [the] harsh treatment of social groups.”

But none of that happened. Although the zero-COVID measures are gone, Beijing has clung to a strategy of accelerating government intervention in Chinese life. Dozens of the young people who protested last fall have been detained and given lengthy prison sentences. Speech is more restricted than ever. Community activities and social groups are strictly regulated and monitored by the authorities. And for foreigners, the arbitrary detention of businesspeople and raids on foreign consulting firms have—for the first time in decades—added a sense of risk to doing business in the country.

For more than a year, economists have argued that China is embarking on a period of slowing economic growth. To account for this, they have cited demographic changes, government debt, and lower gains in productivity, as well as a lack of market-oriented reforms. Some have talked of “peak China,” arguing that the country’s economic trajectory has already or will soon reach its apex and may never significantly overtake that of the United States. The implication is often that if only Beijing would tweak its economic management, it could mitigate the worst outcomes and avoid a more dangerous decline.

What this analysis overlooks is the extent to which these economic problems are part of a broader process of political ossification and ideological hardening. For anyone who has observed the country closely over the past few decades, it is difficult to miss the signs of a new national stasis, or what Chinese people call neijuan. Often translated as “involution,” it refers to life twisting inward without real progress. The government has created its own universe of mobile phone apps and software, an impressive feat but one that is aimed at insulating Chinese people from the outside world rather than connecting them to it. Religious groups that once enjoyed relative autonomy—even those favored by the state—must now contend with onerous restrictions. Universities and research centers, including many with global ambitions, are increasingly cut off from their international counterparts. And China’s small but once flourishing communities of independent writers, thinkers, artists, and critics have been driven completely underground, much like their twentieth-century Soviet counterparts.

The deeper effects of this walling-off are unlikely to be felt overnight. Chinese society is still filled with creative, well-educated, and dynamic people, and the Chinese government is still run by a highly competent bureaucracy. Since Xi came to power in 2012, it has pulled off some impressive feats, among them completing a nationwide high-speed rail network, developing a commanding lead in renewable energy technologies, and building one of the world’s most advanced militaries. Yet neijuan now permeates all aspects of life in Xi’s China, leaving the country more isolated and stagnant than during any extended period since Deng launched the reform era in the late 1970s.

In the months since Beijing ended its COVID restrictions, foreign journalists, policy experts, and scholars have begun to return to the country to assess the future of China’s government, economy, and foreign relations. Many have tended to focus on elites in the capital and have related China’s isolation and economic slowdown to frictions between Washington and Beijing or to the effects of the pandemic. Speaking to people from different regions and classes, however, offers a different view. Over several weeks in China this spring, I spoke to a few big-picture thinkers, such as the business journal editor. But I decided to spend most of my time with a much broader cross section of Chinese people—doctors, business owners, bus drivers, carpenters, nuns, and students—whom I have known for years. Their experiences, along with broader trends in civil society and government, suggest that China’s leaders have begun to sacrifice technocratic progress and even popular support in their pursuit of stability. Beijing’s bet seems to be that in order to withstand the pressures of an uncertain world, it must turn inward and succeed on its own. In doing so, however, it may instead be repeating the mistakes of its Eastern bloc predecessors in the middle decades of the Cold War.

MOVING MOUNTAINS, BUILDING FORTRESSES

The Xi administration’s obsession with control might seem to be something that mainly hurts intellectuals or urban professionals. And it is true that ever more pervasive restrictions on civil society have shuttered magazines, driven artists out of the country, and caused hundreds of thousands of middle-class people to emigrate. Yet the tightening is having a deep impact on ordinary Chinese people as well. Consider the experience of participants in an annual folk religion pilgrimage to a holy mountain near Beijing. Mao’s zealots destroyed many of the original temples in the 1960s, but in the late 1980s, the mountain’s mainly working-class visitors raised money to rebuild them, and for more than 30 years, the annual 15-day event was largely self-managed and self-financed. Over the past two decades, authorities encouraged this traditional communal activity, which drew on Han Chinese folk practices, as a useful counterweight to religions such as Christianity, which they view as foreign and subject to outside influence. Officials showered the pilgrimage with positive media coverage, allowing it to grow rapidly into one of the country’s largest religious festivals, attracting hundreds of thousands of visitors.

But state sponsorship has now brought state supervision. Over the past decade, the government has imposed rules on religious sites across China, closing down unauthorized places of worship, forbidding minors from attending religious services, and even insisting that religious sites fly the national flag. In the case of the holy mountain near Beijing, the government transferred management of the site’s temple complex to a state-owned company, which has deployed private security guards and uniformed police to patrol the shrines and has cluttered the mountain with party propaganda. Near the top, next to a shrine to the Buddhist goddess of mercy, managers from the state enterprise erected a giant billboard emblazoned with hammers and sickles. One panel displays the oath of allegiance that new members must take when they join the party. Another panel announces in huge characters: “The Party is in my heart. Eternally follow the Party line.”

As a result of this overt politicization, the number of visitors is down, and on some days this spring, no pilgrims came at all. Many people who attend the temple or work there are intensely patriotic and support the party line on many issues. Bring up the United States, the war in Ukraine, or a possible invasion of Taiwan, and they will passionately argue that the Americans seek to contain China, that Washington is to blame for Russia’s assault on Ukraine, and that Taiwan must reunite with China or face invasion. But they are also dismayed by the slowing economy, the government’s handling of the pandemic, and political “study sessions” at work—even bus drivers must now listen to lectures on “Xi Jinping Thought” and download mobile phone apps that instruct users on party ideology. Observing a squad of police officers march past, one manager who has worked on the mountain since the 1990s expressed disappointment at how much the pilgrimage has changed. “In China today,” he said, “you can’t do anything without taking care of one thing first: national security.”

Still more consequential may be the state’s now ubiquitous presence in Chinese intellectual life. Chinese leaders have always viewed universities somewhat suspiciously, installing party secretaries to oversee them and surrounding them with walls. Still, for decades, universities were also home to freethinking academics, and their gates were rarely shut to visitors. Since Xi came to power, however, these freedoms have gradually been eliminated. In 2012, the government began to impose bans on teaching subjects such as media freedom, judicial independence, promoting civil society, and independent historical inquiry. Then, with the onset of the pandemic, the government expanded surveillance and added new security measures that have since become permanent, transforming universities into fortresses.

One day in May, I arranged to meet a professor and four of his graduate students at Minzu University of China, a leafy campus on the western side of Beijing founded to train new leaders among the country’s 55 recognized non-Han ethnic minorities, such as Tibetans, Uighurs, and Mongolians. Before the pandemic, I usually met him at a university canteen or café. Now, visitors entering the campus must present their faces to a camera at a turnstile so that the authorities know precisely who is entering. The professor suggested that we convene off campus at a Mongolian restaurant, and we used a private room to avoid eavesdroppers. “Maybe it’s better that they don’t know we’re meeting,” he said.

The professor was hardly a dissident. He strongly supports unification with Taiwan and has researched the shared cultural roots of mainland Chinese and Taiwanese society. With the help of local officials, he rebuilt a traditional meeting place for members of a clan in his hometown in southeastern China. In earlier years, he also traveled widely and held fellowships abroad, and he is now working on a book about a religious movement that took hold in China in the 1920s.

Over the past decade, however, the government has incrementally stymied much of his research. He now needs approval to attend conferences abroad and must submit his writing for vetting before publishing it. His new book cannot be published in China because discussions of religious life, even that of a century ago, are considered sensitive. And state authorities have so thoroughly obstructed the anthropology journal he has been editing that he has resigned his post. Over the past three years, the journal has prepared 12 issues, but only one has made it past the censors.

Outside universities, the boundaries of what can be published have similarly narrowed, even affecting analysis of initiatives and ideas that Xi supports. In the first decade of this century, for example, one public intellectual I know wrote several groundbreaking books on old Beijing. Although Xi is widely seen as a champion of the capital’s old city, the writer now avoids the issue, and publishers will not reprint his earlier works because they discuss the endemic corruption that underlies the destruction of historic areas. Instead, he has reverted to seemingly distant and apolitical subjects in order to obliquely criticize the present situation. His new focus: Beijing’s thirteenth-century history under Genghis Khan, which he portrays as an open, multicultural time—in implicit contrast to today. “It’s easier to write about the Mongolians,” he said. “Most censors don’t see the parallels.”

WHAT MISTAKES?

Ordinary Chinese workers have a different set of concerns, mostly relating to the economy and the pandemic. During the first quarter of 2023, China’s slowing economy barely reached the government growth target of five percent, and it achieved that level only with heavy state spending. The youth unemployment rate is over 20 percent, and many people wonder how their children will be able to get married if they cannot afford to buy an apartment. Figures for the second quarter were slightly better, but only compared with the second quarter of last year, when the economy was nearly brought to a standstill by COVID lockdowns. A variety of indicators show growing vulnerabilities in a range of sectors, and many Chinese feel they are in a recession. A group of textile manufacturers from Wenzhou in coastal Zhejiang Province told me that sales across China are down 20 percent this year, forcing them to lay off staff. They believe the economy will recover, but they also think that the go-go years are gone. “We’re in a cloudier era,” one of them said.

Many business owners point to the sharp decline in foreign visitors. The plunge is partly due to COVID travel restrictions, which have been relaxed only recently, but it is also a reflection of how difficult it has become to move around the country. To visit China today is to enter a parallel universe of apps and websites that control access to daily life. For outsiders, ordering a cab, buying a train ticket, and purchasing almost any goods requires a Chinese mobile phone, Chinese apps, and often a Chinese credit card. (Some apps now accommodate foreign credit cards, but not all vendors accept them.) Even a simple visit to a tourist site now requires scanning a QR code on a Chinese app and filling out a Chinese-language form. On one level, these hindrances are trivial, but they are also symptomatic of a government that seems almost unaware of the extent to which its ever more expansive centralization is closing the country off from the outside world.

The whiplash course of the pandemic in China—from months-long closures to the uncontrolled spread when the harsh measures ended—has also left lasting scars. Although much of the international coverage focused on the lockdowns in big cosmopolitan cities such as Shanghai, rural areas were hit particularly hard by the subsequent wave of infections. Outside urban centers, medical services are often rudimentary, and when the authorities suddenly began ignoring the disease, many people succumbed to it. One doctor who works in an emergency ward in a rural district near Beijing said he was stunned by the number of elderly people who died in the weeks after the controls were lifted. “We were told that it was normal that old people died,” he said. “But aren’t we supposed to be a civilization that is especially respectful of the elderly? I was so angry. I guess I still am.”

In elite circles closer to the government, it is common to hear such concerns downplayed or brushed off. In May, the editors of the Beijing Cultural Review, a mainstream media publication, told me that the government’s handling of the pandemic may have been a bit heavy-handed and that officials underestimated the economic damage caused by zero COVID. But now that they had reversed course, they said, the economy would soon bounce back. “Maybe it’ll take three years,” an editor told me. “But it will recover, and people will move on.”

That’s not necessarily a Pollyannish view. Over its nearly 75 years in power, the government has withstood a series of major crises: the Great Famine of 1958–61 and the Cultural Revolution of 1966–76, which together led to tens of millions of deaths; the Tiananmen Square massacre of 1989, in which the government unleashed the military on peaceful student demonstrators with the world watching; the Falun Gong crackdown of 1999–2001, in which the authorities killed more than 100 protesters and sent thousands to labor camps; and the Sichuan earthquake of 2008, in which more than 60,000 people died—in significant measure because of faulty government construction, especially of public schools. These incidents riveted the country and led some to wonder whether China’s leaders could escape repercussions.

Especially over the past 40 years, the party’s control of the media and its ability to maintain fast-paced growth allowed it to quickly tamp down grievances. After the Falun Gong protests, for example, the government’s portrayal of the group as a cult became part of the historical narrative; at the same time, the authorities loosened control over folk religious groups as long as they avoided politics. In 2001, China joined the World Trade Organization, and under a technocratic leadership that encouraged international investment and private enterprise, the country enjoyed double-digit economic growth.

It is possible that such techniques can still work. As the Chinese astrophysicist and dissident Fang Lizhi observed in 1990, “About once each decade, the true face of history is thoroughly erased from the memory of Chinese society.” Likewise, if faster growth returns, the current crises could quickly be forgotten, making the immediate post-COVID era just another blip in the party’s relatively stable control of China over the past nearly half century. At least that may be the government’s assessment, helping explain why it has not changed course despite the recent upheavals.

But such comforting assumptions ignore a key lesson of the past: that the party also survived by adapting and experimenting. After Mao died, for example, party elders around Deng realized that the party confronted a crisis of legitimacy. They introduced market reforms and relaxed the party’s grip on society. Likewise, after the 1989 Tiananmen massacre and the collapse of the Soviet Union in 1991, Deng and his immediate successors came to believe that a lack of economic progress underpinned both events and pushed through wide-ranging reforms that transformed China into an emerging economic superpower.

This adaptive authoritarianism can be attributed in part to a generation of leaders who saw the People’s Republic as a work in progress that could be continually improved rather than as a fixed political system that had to be preserved at all costs. Leaders such as Deng had helped found the new country in 1949, but they knew that it was prone to large-scale crises that needed correction. In the aftermath of the Mao years, they also realized that their rule was precarious. Relinquishing political control was off the table, but most other things were open for discussion. Today it’s almost shocking to read government policy documents from the Deng era. For example, the 1982 party directive Document 19 explicitly allowed religious practices that are now increasingly banned, such as home-based preaching and baptism. Underground religious movements were to be treated gently because the state had “used violent measures against religion that forced religious movements underground,” the document said.

There are few signs today of such self-critical reflection. Although it is difficult for outside observers to know the inner workings of the current leadership, the about-face by fiat on zero COVID is in keeping with Xi’s overall approach. In decades past, if accidents or disasters occurred that reflected poorly on the party, leaders such as former president Hu Jintao and former prime minister Wen Jiabao visited the locales in question to show they cared, drawing on much the same playbook as their Western counterparts in such situations. Xi also travels often around China, but rarely to express condolences, let alone to take implicit government responsibility for failures. Instead, he mostly visits local communities to exhort them to comply with party doctrine and government policy. This feeds into the impression among many Chinese people of an increasingly remote leadership that allows few dissenting viewpoints, shuns internal debate, and feels no compulsion to explain itself to the public.

THE BERLIN TRAP

For many who live in this era of neijuan, the question is how long it will last. Although the Chinese Communist Party of today differs from its historical counterparts in other countries, some Chinese thinkers see broad parallels between China’s inward turn and the stifling atmosphere of Eastern bloc countries during the height of the Cold War. One striking analogy that some mention is the Berlin Wall. When it was first erected in 1961, this symbol of communist oppression consisted of rolls of barbed wire strung down the middle of the street; it only gradually acquired its final form as an all but impermeable series of concrete barriers buttressed by a network of watchtowers and searchlights. From the start, it seemed to demonstrate the inherent failure of the East German state to build a desirable place to live, and many saw it as an anachronistic effort to lock people in their own country. Yet it was also remarkably successful, allowing the regime to stabilize itself and survive for another three decades. The wall couldn’t save the German Democratic Republic, but it bought the leadership time.

Now, China’s rulers seem to be building and perfecting their own twenty-first-century version of the Berlin Wall. Although tens of thousands of Chinese citizens languish in prisons or house arrest for their views, the barrier is not primarily physical. Instead, state power is exercised through an increasingly complete system of censorship of speech and thought, whether on the Internet or television or in textbooks, movies, exhibitions, or even video games, to create a widely accepted historical narrative that makes the party seem essential for China’s survival. It also now includes the idea that China should build all key technologies on its own, rejecting the principles of comparative advantage that have been the bedrock of globalization. These efforts amount to a more subtle form of control, giving people the illusion of freedom while guiding them away from anything that would challenge the regime.

But like its East German counterpart, China’s wall is intended to forestall an existential challenge. Just as East Germany faced collapse from uncontrolled emigration in the 1950s, China was facing its own crisis in the two decades before Xi took the helm as new technologies such as the Internet helped foster the first nationwide movement against the party. The source of dissent was not an organization with members and bylaws but a loose alliance of critical intellectuals, victims of party abuse, and ordinary citizens unhappy with local conditions. Condemnation of one-party rule began appearing in the media, online, and in underground magazines and documentary films. Leaders such as Hu and Wen had to respond.

At first, they did so by allowing a public discussion of national crises and sometimes by undertaking reforms in response. In 2003, for example, after the death of a student who had been beaten by police caused a national outcry, Wen announced an immediate modification of police custody laws. But fearful that too much citizen oversight could challenge the party’s authority, leaders soon resorted to new social controls. A turning point came in late 2008, after the Beijing Summer Olympics had ended and the world’s spotlight was off China. The government arrested the dissident writer and future Nobel Peace Prize laureate Liu Xiaobo and soon implemented greater surveillance of social media. Xi ramped up this trend and systematized it. To cap it off, he oversaw the rewriting of the party’s official history in 2021, downplaying past debacles such as the Cultural Revolution and glorifying his own policies. Using the tools of the digital age, Xi transformed China’s wall from an ad hoc assembly of rules and regulations into a sleek, powerful apparatus.

As in East Germany, this tactic has been successful—at least up to now. Many people have internalized the party’s version of history: in that telling, its leaders saved China from foreign domination and made China strong and powerful, and therefore only the party, even if it has a few flaws, can lead the people into the future. This belief system, however, relies on the party’s efficient management of China’s many challenges. That was relatively easy over 45 years of remarkably durable economic growth, which allowed people to set aside their objections to the long arm of the party-state; as in most countries, it is difficult to organize against a regime that is bringing rapid gains in standards of living. In the communist states of Eastern Europe, the general prosperity of the immediate post–World War II era had diminished by the 1970s, causing many to look to dissidents and critics for explanations of their new reality. Could this happen in a China entering a similar long-term stagnation?

THE WAITING GAME
The differences between Xi’s China today and the Eastern bloc of the 1960s and 1970s are many. In those years, the countries in the Soviet sphere experienced a shortage economy, with lines for bread and years-long waits to buy automobiles. There are no signs of such privation in China today. Nonetheless, the government’s pursuit of total control has set the country on a path of slower growth and created multiplying pockets of dissatisfaction. Critics of the regime point out that Beijing’s restrictions on information very likely created the conditions that led to the COVID-19 crisis: in late 2019, local officials hushed up early warnings of the virus because they feared that bad news would reflect poorly on them. That silence allowed the virus to gain a foothold and spread around the world. Although censorship keeps these and other government-induced problems out of the public eye, it also cuts off some of the smartest citizens from global trends and the latest research. Such knowledge barriers, as they become self-reinforcing, can only hurt China. If even the United States is dependent on other lands, such as the Netherlands and Taiwan, for advanced chips and other technologies, one wonders whether China can really go it alone, as its leaders now seem to imagine.

The party can control and weaponize information, but dissenters are also surprisingly well entrenched. Aided by digital technology, they are also far more nimble than their Soviet-era counterparts. Among China’s educated elite, many persist in opposing the regime’s version of reality. Even though they are banned, virtual private networks, which allow users to bypass Internet controls, are now widespread. Underground filmmakers are still working on new documentaries, and samizdat magazine publishers are still producing works distributed by basic digital tools such as PDFs, email, and thumb drives. These efforts are a far cry from the street protests and other forms of public opposition that attract media attention, but they are crucial in establishing and maintaining the person-to-person networks that pose a long-term challenge to the regime.

In May, I visited the editor of an underground magazine in a relatively remote part of south Beijing. He publishes a fortnightly journal featuring contributions by academics across China, who often use pen names to protect their identities. Their articles challenge the party’s account of key crises in its history, filling in events that have been whitewashed. Some of the editing work is now done by Chinese graduate students working abroad. This model of underground digital publishing was adopted last year by protesters, who used VPNs to upload videos to Twitter, YouTube, and other banned sites. Such online platforms function as storehouses, allowing Chinese people to download information that the state is trying to suppress.

In this case, the editor commissions the articles, edits them, and sends them abroad for safekeeping in case the authorities raid his office. The journal’s layout is also created abroad, and volunteers inside and outside China email each issue to thousands of public intellectuals across China. The magazine is part of a growing community that has been systematically documenting the party’s misrule, from past famines to the COVID pandemic. Although his journal and similar efforts may ordinarily reach only tens of thousands of people in China, the articles can have a much larger impact when the government errs. During the COVID crisis, for example, the magazine’s editor and his colleagues noticed a spike in readership, and others found that their essays were even going viral. In good times, this pursuit of the truth might have seemed quixotic; now, for many of the Chinese, it is beginning to seem vital. As they spread, these anonymous informal networks have opened a new front in the party’s battle against opposition, the control of which now requires far more than simply throwing dissidents in jail.

I sat with the editor in his garden for a couple of hours, under trellises of grapes he uses to make wine. The skies were deep blue, and the sun was strong. The cicadas of a Beijing summer day drowned out the background noise. For a while, it felt as if we could be anywhere, maybe even in France, a place that the editor has enjoyed visiting. He has published the journal for more than a decade and has now handed off most of the work to younger colleagues in China and abroad. He was relaxed and confident.

“You can’t do anything publicly in China,” he said. “But we still work and wait. We have time. They do not.”

This article came from Foreign Affairs magazine. For the piece, click here.

I deliberately didn’t end this blog with a joke.

I feel very sad about China.

See you tomorrow. — Harry Newton