History often allows us to better understand our own times. I have been reading quite a bit about Napoleon Bonaparte's empire lately and found interesting parallels between it and modern China.
- Constant expansion: Napoleon Bonaparte's rule rested on expansion. Military conquest was the regime's essence and raison d'être. Napoleon rose to fame after the first campaign of Italy where the young corsican crushed the mighty Austrian armies at Lodi (amongst other places). He then strengthened his aura during the famous campaign of Egypt during which he defeated the fearsome Mamelukes and from which he came back a hero (despite the fact that his fleet was destroyed by the British at Aboukir and that Napoelon was subsequently effectively trapped inside Egypt). During his reign, military expansion was what made Napoleon's legitimacy. Granted this is as much a personal point of view as it is an historical fact (I recently had a heated debate with a good friend of mine about precisely this question) but I strongly believe that military expansion and the Napoleonic regime were consubstantial. Expansion allowed Napoleon to keep is enemies at bay, secure the necessary support at home to implement his domestic reforms and make people accept the authoritarian aspect of his rule. Like the first empire, communist China depends on expansion, albeit of a different kind to survive. To stay relevant, the party needs growth. Lots of it. Without economic growth, people may be less prone to tolerate corruption and inequalities and without a sense of nationalism generated through a hawkish military and diplomatic stance, the party's popularity could suffer. But this reliance on expansion at all costs could one day cause trouble. For Napoleon, it led to poorly planned campaigns in Spain and Portugal and the downright foolish campaign of Russia. In China, reliance on growth no matter of what kind or at what cost leads to unsustainably high levels of investment as a share of GDP, artificially cheap capital, environmental disasters, high inequalities and bank lending policies that make Ben Bernanke look cautious. Even on the micro level, you can see the consequences of this reliance in the way infrastructure projects are managed (excellent article illustrating my point just here). In the long term, China's hawkish foreign policy could alienate its neighbors and lead them to coalesce against it (just like Napelon's enemies did). In many ways, we are already seeing that happening with South Asian countries (along with the US, South Korea and Japan) implementing what I like to call a "reverse string of pearls" strategy to contain the middle kingdom. Bottom line: regimes that rely on constant expansion encounter difficulties at some point or another.
- The "aura". I struggled to find a term to refer to the second parallel between Napoleonic France and Communist China. "Aura" seems the best one. By aura, I refer to the psychological component of power. In the glory days of the empire, military expansion rested largely on fear. France's enemies' feared Napoleon, the great general turned emperor seemed invincible on the battle field. His military genius gradually became a self fulfilling prophecy. We are seeing the same thing with modern China. To be sure, China's achievements have been absolutely remarkable and I have no doubt that it is destined to be one of the great economies of this century. However, in some respects, China is a Potemkine country. Its growth rates are remarkable but are the fruits of an unsustainable and inefficient investment-fueled economic model. Many of its technological achievements merit our praise but it still has a long way to go towards creating an environment that truly fosters innovation and out of the box thinking. Its political model appears to be working fine for now but still has much to prove. I could go on for hours. The point is that the way we think about China lacks nuance. Because of it's strong aura, everything China does or says is magnified, exaggerated and blown out of proportions. Most recent example: the unveiling of the J-20 stealth fighter. As of today we know that this plane is black, can fly for 15 minutes and that its technology is most likely drawn from parts of a American F-117 that crashed in Kosovo in 1999 (good article on that here). And yet papers are full of grim reports predicting that China will threaten the west's military supremacy. I'm not saying that we should not take this entire affair seriously and maybe the J-20 indeed is a remarkable achievement that deserves our attention. But as far as we know, the J-20 is still a question mark. I also remember reading a very long report a few years ago about China's indigenous TD-SCDMA mobile phone standard. The report predicted that the standard would be a huge success because well... it was China and that it would be exported to western markets within 10 years. China, the report said, was now leading the way and sheer numbers would force the world to adopt its standard. A few years later, TD-SCDMA is a huge (and very expensive) failure. It was so unpopular that the government backtracked and allowed two of the three state owned operators to use other, foreign, standards. But I digress. My point is that China seems great because we do our best to make it look greater than it really is. This is regrettable since it not only leads us to overestimate certain aspects of the Chinese model but also prevents us from seeing potential where it really is. China is indeed a country with a bright future but anybody that takes the time to look at things with a cool head and an objective mind will be forced to nuance his point of view. When Napoleon lost his aura, he lost everything. His enemies ceased to be scared and his reign ended in disgrace. Obviously the chances that modern China will go the same way are virtually non existent but once the facade of our completely unrealistic expectations about the Middle Kingdom starts to show cracks, many people will lose their shirts and the country may be in some some tough times economically speaking.