It’s not uncommon to see China under President Xi Jinping labelled as ‘nationalistic’ and ‘populist’ – along with Trump and Brexit. But should they be lumped together? And how should foreign business engaging with China react?
Adjunct Professor Clinton Dines shared his thoughts on these and other questions at a public event hosted by Griffith Asia Institute this month, chaired by Professor Sara McGaughey. With over 36 years of business experience in China, there are few better credentialed than Clinton Dines to speak on these issues.
“Populism isn’t new”, says Clinton. “It’s a feature of developed world democracies. Essentially, these things are driven by the electoral process, enabled and magnified these days by social media and by an increasingly emasculated mainstream media who get more and more of their information from social media, amplifying the effect. It’s underpinned, since the global financial crisis in particular, by mistrust in the elites, in corporations, in experts.
“Nationalism, also, is not a new thing. The Nation State concept has always been about the prosecution of self-interest. Nationalism in economic terms almost always translates into protectionism in one form or another, or at least self-interested actions.
It is always good to be able to point to an ‘evil other’ when your economy is not going so well.
“The emergence of China, in last quarter Century, to some degree attests to the impact of an open global trade regime. One of the nationalist and current policy conversations we’re having in the Western world is around ‘global imbalances’. We see the emergence of a nationalist momentum to recoil from multilateral agreements, from free trade, from globalisation in general, and adjustments to market access.
“And these are expressed in both populist terms and in nationalistic terms. It is always good for a populist leader to be able to point to an ‘evil other’ when your economy is not going so well. It is easy to point to an imbalance and blame it on someone else. Donald Trump’s recent tour of Asia was pretty much emblematic of that.”
So, how should we think about China in this context of nationalism and populism?
“There is a lot of ink spilled about Xi Jinping’s accumulation of power. It is important to remember that China is a civilisation and culture where power has always been vested in the individual rather than in an office or an institution.”
Xi Jinping is extremely popular, but not that much of a populist.
“The recent past leadership of China, before Xi Jinping, was perceived as relatively poor by most commentators: reactionary, sometimes accidental leaders, unable to restrain the vested interest power cliques in China. Xi Jiping is popular for articulating a consensus based vision of the “China dream”, and is very popular by virtue of acting on the things that irritate most Chinese – notably corruption. Ask any taxi driver in China! At a populist level he has been very, very effective – but he doesn’t only talk the talk, he actually walks the walk.”
What does it mean for foreign business in China? Reflecting on his 21 years with BHP before retiring as President of BHP Billiton China in 2009, Adjunct Professor Dines observes:
“The implications for foreign companies in China are complex and multifaceted. But then it has always been that way in China. It has never not been complicated. It’s never not been intense.”
“To deal with China, you deal with China on China’s terms. You have a civilisation that has a very strong sense of self, its identity, its history. It’s a chauvinistic culture to interact with. You rarely get the whip hand with a commercial situation in China. When the Chinese are at a disadvantage, they can tough it out. When they are at an advantage, they exploit it to the full. And that’s pragmatism.”
The Chinese have always been very pragmatic in their commercial relationships. And relatively transparent.
“Surprisingly, the Chinese have always been relatively transparent in relation to foreigners about how they would utilise foreign investment and what foreigners could bring to China. The phrase “to utilise foreign investment” has been a very clear policy dictum in China since the mid-1980s. If you didn’t pick up on that, it’s not the fault of the Chinese.
“Pragmatism, and government policy, is very dependent on context. In the 1980s, the Chinese didn’t have much in terms of infrastructure, technology, foreign currency and so on, and so the intent of their pragmatism and the way they set up policy at that time was very different to now. The context has changed – the developmental momentum China now is such that their need for ‘help’ from foreign companies has changed. It has diminished significantly. And, with pragmatism driving policy, naturally policy settings have changed along with this changed context.
“Why should we be surprised by this? This change is not a function of rising nationalism or populism, as much commentary and media implies. China has always been nationalist in the sense that they’ve always put policy settings in place to serve their best interests – as have we. Their interests have evolved, policy settings have evolved. It’s more or less that simple.”