Countries like the Asian “tigers” that experienced rapid economic growth inevitably encounter slowdowns that signal a fundamental shift in their economies. At this juncture, transitioning their institutions and policies often proves to be a most daunting task. Cautionary comparisons like these set the tone for the conference titled “China’s Possible Futures” on May 12, 2017, when the China Program celebrated its 10th anniversary.

As China nears the end of four decades of reforms, “China’s Possible Futures” was a fitting theme to mark the China Program’s first decade at Stanford’s Shorenstein Asia-Pacific Research Center. The launch of the Program in 2007 began with an international conference titled “Growing Pains: Tensions and Opportunities in China’s Transformation,” which resulted in a book of the same title. This year’s 10th anniversary conference appropriately heralded both change and continuity of the themes that were explored in 2007. A decade ago, the conference showcased the tremendous reach and rise of China as an economic and international powerhouse, and in 2017, the conference expanded to highlight the critical juncture that China is again facing on its developmental path.

The full-day conference, held under Chatham House Rule, was divided into four sub-themes with speakers addressing China’s economic future; its political future; the future of its international relations and global economic engagements; and a comparative panel that examined China’s prospects from experiences drawn from Japan, South Korea and former Soviet and Eastern European countries.

Panel I: China’s Economic Future

Speakers agreed that China’s tremendous growth over the last 40 years has no easy parallels in history. Some argued, however, that the policies realized over the next few years will prove critical to China’s long-term growth. Favorable factors, such as demographic, migratory and structural changes supported by a stable international order, enabled China’s spectacular, double-digit growth over the last 40 years. When “miracle growth” countries of Northeast Asia – like Japan, Korea and Taiwan – entered their periods of moderate growth, however, painful readjustments were necessary. Restructuring was required because the very policies and institutions set up to enable rapid growth were counterproductive to creating a foundation for moderate, sustained growth. Speakers variously emphasized China’s need to invest in human capital and undertake financial reforms, urban-rural reforms and state-owned sector reforms.

In addition, several speakers noted that China is facing mounting demographic challenges as its population ages and as its elderly population lives longer. According to one speaker, people who are aged 60 and over in China will equal the population of people aged 0 to 14 within the next couple years; and by year 2045, the population of people who are 65 and older in China will be as large as the entire population of the United States today. This situation implicates rising costs in healthcare and calls for major institutional reforms in China’s health sector.

One speaker spoke of the rapid rise in China’s returns to education, i.e., the rise in income for each additional year of education, over the past four decades, which now looks more closely aligned with that of the international average of approximately 10 percent. Another speaker asked whether China was now pursuing a different developmental model with increasing focus on inland industrial development and explored what this might mean for social inclusion and labor conditions of workers.

Panel II: China’s Political Future

One speaker argued that Chinese President Xi Jinping’s reform agenda does not mark a break with the past, as many have argued, but rather continuity with his predecessors’ policies. Other speakers discussed the scope and scale of Xi’s corruption crackdown; fiscal imbalances in central-local state relations that underpin China’s corruption problems; and the implications of social media on Chinese governance. All speakers spoke about mounting difficulties in the political sphere, including powerful interest groups; local paralysis arising from corruption crackdowns; mounting local government debt and misalignment of central-local interests; and governance challenges stemming from the social media revolution. Overall, speakers seemed to suggest mounting difficulties for Xi’s reform agenda, which the Chinese government must push through to avoid a sharper downturn and slower growth prospects for China’s future.

Panel III: China’s International Relations and Global Economic Engagements

Speakers spoke at length regarding the history of U.S.-China relations since Deng Xiaoping’s “reform and opening”; territorial disputes in the South and East China Seas; China’s “Belt and Road” policy; and China’s outbound capital flows into various regions of the world. The speakers held varying views regarding Beijing’s motivations and intentions in the world, both militarily and economically. Speakers held different opinions about whether Beijing has a well-defined vision for its global role. One speaker questioned whether China’s maritime assertiveness in the South and East China Seas characterizes the expansionary policies of a rising power; or whether it represents something more singular as China protects what it considers its “core interests” in the region. One speaker expressed the view that the United States and the U.S.-led international order is still too important for China’s development for it to threaten its functioning in any meaningful way. Another speaker discerned a “broad brush strokes” of a developmental concept in China’s “One Belt, One Road” policy that the United States might do well to heed as it considers whether to join any parts thereof.

Panel IV: China’s Future: A Comparative Perspective

The conference also included speakers who provided comparative examples from Japan, South Korea, the former Soviet Union and Eastern Europe to inform their views on China’s “possible futures.” One speaker warned against directly applying Japan’s development model to China, warning that Japan experienced a massive credit boom and debt accumulation in the 1980s like China is experiencing today. Zombie firms were a key factor in Japan’s economic stagnation. As the speaker warned, zombie firms also proliferate in China’s economy. Another panel member highlighted Korea’s struggles to attract and retain global talent and drew lessons for China as it strives to escape the middle-income trap and build an innovation-driven economy.

Another panel member spoke of the key difference between China’s political environment in 1978 when Deng Xiaoping announced his “reform and opening” policy and today when Xi is implementing his Third Plenum decision of 2012. Vested interest groups are stymieing the implementation of urgently-needed reforms, especially in the state-owned sector and in China’s financial sector. In 1978, by contrast, the catastrophic results of the Cultural Revolution ironically enabled Deng to successfully champion and implement his agenda because bureaucratic interests had been gutted by Mao. The speaker spoke of the urgent need for Xi to change course in the next 3-4 years and use his personal power to push through tough, market-oriented reforms. Beijing’s leaders must not only craft correct policies and identify the most effective structural correctives, they must also break through the political logjam of entrenched interests that have benefited from the current system.

Panelists pointed to the increasingly difficult challenges that the government faces as China tries to avoid the middle-income trap after four decades of impressive gains and usher in sustained economic growth driven by innovation and domestic consumption. Speakers also agreed that the leadership is encountering a more complex and diverse society, a fractured elite, and the Gordian knot of economic and demographic predicaments, which require not only painful structural adjustments but also tremendous political will to realize policies that will ensure an optimal future for China.

Related links:

Brochure: Celebrating the First 10 Years of the China Program

Former ambassador reflects on US-China relations, Thucydides Trap

Colonel Patrick Winstead, the 2016-17 FSI senior military fellow at Shorenstein APARC, writes about the second annual orientation at U.S. Pacific Command headquarters

The mission of the Department of Defense (DoD) in the Indo-Asia-Pacific region recently became a bit clearer for 22 faculty and military fellows from Stanford, the Massachusetts Institute of Technology, the Naval Postgraduate School and the Daniel K. Inouye Asia-Pacific Center for Security Studies (APCSS). The U.S.-Asia Security Initiative at the Shorenstein Asia-Pacific Research Center (APARC) in the Freeman Spogli Institute (FSI) organized a group of faculty and fellows for a two-day orientation of United States Pacific Command (USPACOM) and its component military organizations in and around Honolulu, Hawaii, April 13-14, 2017. The purpose of the orientation was to provide researchers with a comprehensive understanding of how America’s armed forces both develop and implement U.S. national security strategy, doctrine and policy throughout Asia.

The trip began with a visit to the headquarters of USPACOM at Camp H.M. Smith. After receiving briefings about USPACOM's mission and operations, the group engaged in roundtable discussions with General Terrence O’Shaughnessy (Commander, U.S. Pacific Air Forces); Major General Kevin B. Schneider (Chief of Staff, USPACOM); Rear Admiral Mark Montgomery (Director for Operations, USPACOM); Major General Steven Rudd (Director for Strategic Planning and Policy, USPACOM); as well as other key joint directors and members of the command staff. The faculty and fellows provided short presentations on the situation in the South China Sea, U.S.-Philippine relations and cyber warfare to an audience of mid-grade military officers and civilian personnel assigned to USPACOM.

In addition to meeting with the leadership of USPACOM, the group was also afforded the opportunity to interact with personnel from the four separate component commands. Deputy Commanding General of U.S. Army Pacific, Major General Charlie Flynn, provided a command briefing at the U.S. Army Pacific headquarters at Fort Shafter. The briefing stimulated a wide-ranging discussion about Army initiatives and activities in support of USPACOM’s mission in the Indo-Asia-Pacific region. At Marine Corps Base Hawaii at Kaneohe Bay, under the guidance of trainers, the visitors took part in a hands-on experience operating Humvee simulators in a virtual-reality convoy setting and firing simulated weapons that Marines typically employ in combat operations. The first day of the trip ended with a working dinner at the historic Nimitz House with the Commander of the U.S. Pacific Fleet, Admiral Scott Swift, where the conversation ranged from Chinese military modernization to evolving U.S. naval doctrine.

Those themes carried into the second day, when the group met for several hours with faculty at APCSS for plenary presentations and multiple breakout sessions to facilitate in-depth dialogue on select topics including the threats posed by nuclear weapons on the Korean Peninsula and in South Asia. The day continued with a tour of the U.S.S Hopper, an Arleigh-Burke class guided missile destroyer, based at Pearl Harbor, Hawaii. Once onboard, the ship’s captain, Lieutenant Commander J.D. Gainey, provided briefings on Hopper’s mission and operational capabilities. In addition, the group spoke with members of the ship’s crew. The experience allowed the faculty and fellows to interact informally with sailors who serve in the Asia-Pacific theatre and to candidly discuss issues of concern. The second day of the orientation ended with a visit to the headquarters of U.S. Pacific Air Forces and a dialogue with O’Shaughnessy and his staff about the unique security challenges of the Indo-Asia-Pacific region, such as tyranny of distance, limited support bases and multiple emerging threats, and how those challenges impact the Air Force and the entire U.S. military’s preparations for contingencies in the region.

Overall, the orientation provided a unique opportunity to engage directly with high-level leaders of USPACOM and to learn first-hand about the challenges faced by those who serve in the armed forces. The orientation also provided a forum to discuss the United States’ national security interests in the region and its efforts to maintain peace and stability in the Indo-Asia-Pacific and to help maintain a rules-based, liberal democratic order.

Related links:

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China is encountering a religious resurgence. Its revival symbolizes tension between the past and the present, as people search for purpose in a country that’s been shaken by expansive reforms and modernization efforts over the past four decades.

That was the message shared by veteran journalist Ian Johnson, the 2016 winner of the Shorenstein Journalism Award, who gave a keynote speech followed by panel discussion titled “Religion after Mao,” part of the Award’s 15th anniversary ceremony at the Shorenstein Asia-Pacific Research Center on Monday.

Johnson, who has spent 30 years as a journalist, has written extensively about Chinese history, religion and culture, and is also a teacher and published author, most recently releasing the book The Souls of China: The Return of Religion after Mao.

“Ian is maybe one of the most remarkable awardees we’ve had in recent years,” said Daniel Sneider, Shorenstein APARC associate director for research, who introduced the event by talking about Johnson’s distinguished career, which has included writing for the New York Times, Wall Street Journal and New York Review of Books and led to a Pulitzer Prize win in 2001.

Xueguang Zhou, a Stanford professor of sociology and senior fellow at the Freeman Spogli Institute, and Orville Schell, the director of the Asia Society’s Center on U.S.-China Relations and former dean of the Graduate School of Journalism at U.C. Berkeley, joined Johnson on the panel, while Sneider moderated the discussion.

In a wide-ranging conversation, the panelists discussed the varied history of religion in Chinese society during the 20th and 21st centuries, offering stories of their experiences living and working in China.

According to Johnson, religious persecution in China is often thought to be associated with the anti-religious campaigns of Mao Zedong following the Chinese Communist Party’s assumption of power in 1949, but in reality, it existed decades before and has lingered in national memory.

Into the late 1980s and early 1990s, the Chinese government remained superstitious of religion, trying to redefine religious groups as “culture” alone, under the assumption that religion could be desensitized enough to eventually disappear, Johnson said.

But that did not happen, he said, and instead an opposite trend did. Reaching a high point in the 2000s, China’s economic reforms – both sweeping and fast-paced – brought growing angst and anxiety and prompted people across every socioeconomic background to turn to religion as an outlet.

Johnson, who has spent weeks at a time living among religious groups, noted a shift from the time he was in China in the mid-1980s to the past decade, where now “the government sees that religious groups can provide some sort of moral framework for some people.”

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Chinese people today are searching for meaning, the panelists said, and are driven to join religious groups amid resource competition and mass migration that has usurped traditional family structures and disquieted many people who have moved from close-knit rural towns to alienating urban centers.

“Everybody is out there…trying to reify that part of life which isn’t filled by bread alone, by commerce alone,” said Schell, who has written about China since the 1970s as an author and journalist. “It’s a pretty chaotic quest and it’s very hard to know where it will all end.”

At the moment, religious groups in China remain heterogeneous and fragmented, Zhou said, but cohesion is growing in some regions and participation of local government leaders has drawn greater attention to the practice of faith.

“In grassroots China, religion, spiritual life and the Party, really go hand-in-hand – they’re intertwined,” said Zhou, whose research focuses on Chinese bureaucracy and economic development. “Local elites are involved both in the spiritual world and the Party world, and they shift back and forth simultaneously.”

However, the future of the relationship between religion and the government remains to be seen, according to the panelists.

Religious groups could fracture, or the government could continue to favor “native” religious groups, which if exacerbated over time, could lead to quasi-state religions, Johnson said. (Today, China recognizes five religions: Buddhism, Catholicism, Daoism, Islam and Protestantism).

While religious groups increasingly provide a service to some people, the Chinese government continues to be wary of them as an alternative source of knowledge and values, Johnson said, which hold the potential to coalesce into a nascent civil society.

“Every dynasty in China knows that one way dynasties usually ended was with some millenarian movement,” Schell added of the government’s apprehension. “They are afraid of religious movements because they do bespeak of higher values, higher loyalties and different organizational structures that don’t owe fealty to the Party.”

A video of the keynote speech is posted at this link.

Uncertainty about U.S. intentions in Northeast Asia has increased fear that events could spin out of control in the region due to American disengagement. That engagement cannot be taken for granted, Shorenstein Fellow Thomas Fingar writes on the Stanford University Press blog, and it remains to be seen just how well regional political leaders adjust to the Trump administration’s evolving foreign policy.

The blog post highlights themes from his book Uneasy Partnerships: China’s Engagement with Japan, the Koreas, and Russia in the Era of Reform (Stanford, April 2017).

President Trump hosted Chinese President Xi Jinping last week at Mar-a-Lago for their first meeting which set out to address economic, trade and security challenges shared between the two countries. Shorenstein Asia-Pacific Research Center (APARC) experts offered analysis of the summit to various media outlets.

In advance of the summit, Donald K. Emmerson, an FSI senior fellow emeritus and director of the Southeast Asia Program, wrote a commentary piece urging the two leaders to prioritize the territorial disputes in the South China Sea in their discussions. He also suggested they consider the idea of additional “cooperative missions” among China, the United States and other countries in that maritime area.

“A consensus to discuss the idea at that summit may be unreachable,” Emmerson recognized in The Diplomat Magazine. “But merely proposing it should trigger some reactions, pro or con. The airing of the idea would at least incentivize attention to the need for joint activities based on international law and discourage complacency in the face of unilateral coercion in violation of international law.”

Kathleen Stephens, the William J. Perry Fellow in Shorenstein APARC’s Korea Program, spoke to the Boston Herald about U.S. policy toward North Korea and a potential role for China in pressuring North Korea to hold talks about denuclearization. She addressed the purported reports that the National Security Council is considering as options placing nuclear weapons in South Korea and forcibly removing North Korean leader Kim Jong-un from power.

“The two options have been on the long list of possible options for a long time and they have generally been found to have far too many downsides,” Stephens said in the interview.

Writing for Tokyo Business Today, Daniel Sneider, the associate director for research at Shorenstein APARC, offered an assessment of the summit. He argued that two events - the U.S. airstrike on an airbase in Syria following the regime's chemical weapons attack and the leaked reports about tensions between White House staff - shifted the summit agenda and sidelined, at least for now, talk of a trade war between China and the United States.

“Instead of a bang, the Mar-a-Lago summit ended with a whimper,” Sneider wrote in the analysis piece (available in English and Japanese). “On the economy, the summit conversation was remarkably business-as-usual, with President Trump calling for China to ‘level the playing field’ and a vague commitment to speed up the pace of trade talks. When it came to North Korea…the two leaders reiterated long-standing goals of denuclearization but ‘there was no kind of a package arrangement discussed to resolve this.”