US-China Watch

The passing of China’s third-generation leader, as Jiang Zemin’s presidency (1993 to 2003)  is categorized in modern Chinese history, underscores the important contrast between then and now.  He was Deng Xiaoping’s (China’s second-generation leader) hand-picked successor, and, as such, played an important transitional role for modern China. I would highlight three important developments during Jiang’s leadership that stand in sharp contrast with those in the fifth-generation tenure of Xi Jinping:

Reforms. In the second of his two terms in office (1998-2003) Jiang empowered his premier, Zhu Rongji, to implement a massive wave of state-owned enterprise reforms.  That was powerful impetus to productivity and efficiency which underpinned the hypergrowth of the Chinese economy that averaged 9.8% during his ten-year leadership.  Xi Jinping’s “Third Plenum Reforms” of 2013 were ambitious on paper but the implementation was disappointing, as was the lack of autonomy of his premier, Li Keqiang.   Under Xi’s first ten years as leader, Chinese real GDP growth averaged 6.2%, nearly 40% slower than the pace under Jiang Zemin.

Globalization.   Jiang Zemin cemented China’s commitment to the broader world economy with his push for WTO accession, which after more than a decade of negotiations finally bore fruit in late 2001.  The US quickly became China’s largest trading partner, providing a powerful boost to the export-led growth model of Jiang Zemin and underscoring China’s role as the leading beneficiary of globalization. Under Xi Jinping, this phase of the Jiang Zemin movie has run in reverse. While Xi has spoken forcefully in Davos of China’s leadership role in globalization, his actions say otherwise.  The mounting conflict with the United States over the past five years — trade war, tech war, and early skirmishes of a new cold war — frames Xi’s legacy as a muscular, conflict-prone leader who favors more of a decoupling from the US.

Style. Jiang Zemin was outgoing, multi-lingual, and curious.  He loved music and enjoyed singing in public; his rendition of Elvis Presley’s “Love Me Tender” was especially memorable.  He provided China with a likable face at a time when it was struggling to make a mark on the global stage. Jiang’s approach, consistent with what Deng Xiaoping dubbed “hide and bide,” was aimed to dispel deep concerns over China that had arisen in the West in the years immediately after the tragic events at Tiananmen Square in 1989. Xi Jinping is obviously cut from a very different cloth on all of the above.  Demonstrations are back — although today’s “zero Covid” protests are very different from the political awakening of the democracy movement in 1989. But especially disconcerting by comparison with Jiang, is China’s new unlimited partnership with the Russian Federation, signed with Vladimir Putin just three weeks before he launched a horrific war with Ukraine.  By aligning China with the world’s most dangerous pariah state, Xi’s geostrategic muscularity is the opposite of hide and bide.

I met Jiang Zemin a couple of times in my travels to China.  One exchange stands out from a visit in February 2000. He was always enthralled with financial markets. He asked me about America’s NASDAQ market which was surging toward a record high at the time. He said, “I would love to have a NASDAQ in China.” When the dotcom bubble burst a month later, I wanted to call him back and talk about market risk.  Alas, that never happened.

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