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Passengers wait outside Beijing Railway Station during the Chinese Lunar New Year. Social stability is among the top concerns for the Communist Party leadership.   © Reuters
China up close

US trade demands have China fearful of 'color revolutions'

'Structural reforms' touch the foundations of Communist Party rule

KATSUJI NAKAZAWA, Nikkei senior staff writer | China

TOKYO -- China's police must prevent a "color revolution" this year, the 70th anniversary of the founding of the People's Republic of China, a top law-enforcement official recently said, surprising China watchers around the world.

The stern warning came from Zhao Kezhi, state councilor and public security minister, a vice premier-level official in charge of maintaining public order. It is rare for Chinese officials to publicly refer to the need to prevent popular uprisings, in a country where Communist Party rule is deemed ideal.

But in the speech at the ministry's annual national meeting on Jan. 17, Zhao said police must "stress the prevention and resistance of 'color revolutions' and firmly fight to protect China's political security." The transcript is posted on the ministry's website.

"We must firmly defend the leadership of the Chinese Communist Party and our nation's Socialist system," he said, adding that the police must also "strike back against all kinds of infiltration and subversive activities by hostile foreign forces."

Color revolutions refer to democratization movements that swept through the former Soviet Union, Eastern Europe and the Middle East in the past few decades, toppling long-standing authoritarian regimes.

A protester stands in front of a burning barricade during a demonstration in Cairo in January 2011, during the Arab Spring.    © Reuters

Many movements were named after colors or flowers. The 2004-2005 Orange Revolution in Ukraine is an example, as is the 2010-2011 Jasmine Revolution in Tunisia, which triggered the Arab Spring.

China too saw calls for similar demonstrations in 2011, but those internet messages were quickly taken down as authorities kicked into crisis management mode.

China's economy grew 6.6% in 2018 and was further bolstered earlier this month by an 8.5% increase in consumption during the Chinese New Year holidays. Although both numbers are enviable by global standards, they do not provide Chinese leaders enough comfort.

Looking back, China's economy has continued to grow since the policy of "reform and opening-up" was introduced in 1978.

Despite ups and downs, the Chinese people have never stopped their march toward more affluence. Their sense of satisfaction with economic policy has been the bedrock of the party's legitimacy to rule.

It is hard to predict what will happen to a society that has become accustomed to 10% growth each year, only to see the pie suddenly shrink. But this uncertainty is probably what pushed President Xi Jinping to warn about the risk of a "black swan" in a recent speech. The allusion was to a serious, unforeseen incident that defies conventional wisdom.

People shop for Chinese Lunar New Year decorations in Yu Yuan Garden in Shanghai. A sense of satisfaction with economic policy has been the bedrock of the Communist Party's legitimacy to rule.   © Reuters

For decades, China has talked of and braced against the Peaceful Evolution theory, a belief that the West, primarily the U.S., is trying to gradually transform China's socialist system through peaceful means.

The West, the thinking goes, will do so by spreading Western political ideas or lifestyles, and by inciting discontent, encouraging groups to stand up and challenge the party.

The anxiety is a reflection of the trauma China incurred as it watched the Soviet Union collapse in 1991. The caution China held against the Peaceful Evolution theory later morphed into vigilance against the more imminent threat of color revolutions.

In that January speech, police chief Zhao Kezhi talked about how to prevent a color revolution. The police will deploy a "big data strategy," he said, and tap state-of-the-art digital technology.

In China, it is not uncommon for wanted criminals, for instance, to attend a big concert and to be arrested on the spot. Surveillance cameras installed in arenas and other public spaces allow facial recognition systems to kick in. The same system monitors guests checking into hotels.

This big data strategy is enabled by high-tech companies such as Hangzhou Hikvision Digital Technology and Hytera Communications.

Hikvision, based in Hangzhou, is the world's top surveillance camera maker, while Shenzhen-based Hytera is a major producer of radio transceivers and radio systems for police.

These companies are now at the center of the U.S.-China tug of war that at a glance is over economic and trade issues but under the surface is a fight over technological supremacy.

The U.S. began sanctioning these companies with the enactment last summer of the fiscal 2019 National Defense Authorization Act. Beginning in August 2020, companies simply using products made by five Chinese tech companies, including Hikvision and Hytera, in their offices will be banned from doing business with U.S. government organizations.

Mobilizing big data and bringing about a "Digital China" are important pillars of "Made in China 2025," a policy to develop high-tech industries. Washington has demanded China withdraw the initiative altogether.

China's tight control of information is well represented by the country's outright blockage of overseas social media platforms like Google, Facebook and Line. The fear is that the free flow of information could threaten the Communist Party's governance system.

Meanwhile, WeChat and other Chinese social networks can be freely used in Western nations. Through them, the West fears, information is gathered from around the world into mainland China. Internet memes critical of the party are deleted, and in some cases accounts are abruptly suspended.

With a newly acquired confidence in its information technology skills, China is switching from its traditional defensive stance to a more offensive one, trying to expand the reach of its informational net.

SenseTime surveillance software is shown identifying details about people and vehicles during a demonstration at the company's office in Beijing.   © Reuters

The battle for supremacy over data is the underlying factor behind the move to exclude Chinese tech giant Huawei Technologies from providing infrastructure for next-generation 5G communications technology. The U.S. wants to prevent the world's information, including information about the U.S. itself, from flowing into China.

As long as the confrontation exists, there is scant possibility that China will allow Google searches and unlimited Facebook access at home without censorship.

Doing so would affect the basis of the party's propaganda policy and governance. The same is true of trade negotiations between the U.S. and China, which have entered a crucial phase ahead of a March 1 deadline.

U.S. Trade Representative Robert Lighthizer will lead the U.S. delegation at ministerial-level trade negotiations in Beijing, which start today. Lighthizer has said "structural issues" are important, as is a mechanism to make China comply with agreements.

But China insists it is impossible to change its basic economic system. Divisions between the U.S. and China are deep.

The central focus of the Sino-U.S. talks is no longer the bilateral trade imbalance. It is, rather, about "protecting China's political security," as the public security chief Zhao said in his speech. 

U.S. trade demands are inching close to the heart of party rule. Washington's insistence that Beijing abolish subsidies for state-owned Chinese companies, is one such example.

But strengthening state-owned enterprises is a pillar of Xi's "new era."

Strengthening state-owned enterprises has been a pillar of Chinese President Xi Jinping's economic policies. Now that is being challenged by the Trump administration as part of necessary "structural reforms."    © Reuters

Xi himself has spearheaded calls for "stronger, better and larger" state-owned companies. If the U.S. interferes, Xi's achievements could be denied, resulting in his authority being undermined.

Even inefficient state-owned companies can make profits and survive in China as they receive favorable treatment from a government that also permits their oligopolies.

Furthermore, top-echelon personnel changes at state-owned companies are made with the same mechanism that the party and government use in reshuffling their leadership. Senior executives at state-owned companies are reshuffled on a regular basis in accordance with the wishes of the party's Central Committee. They are not business people in the Western sense of the term but bureaucrats who play a role in Communist Party rule.

Xi, then, cannot deny himself this pillar of his new era. Neither can Chinese leadership change its grip on big data, which it uses to maintain a surveillance net it believes will prevent a color revolution.

Ahead of today's trade talks, U.S. President Donald Trump has been noncommittal about whether he will meet with Xi, putting pressure on the Chinese leader. The Trump administration has threatened to raise punitive import tariffs on $200 billion of Chinese products from 10% to 25% if no deal is reached before March 1.

Time is running short.

Katsuji Nakazawa is a Tokyo-based senior staff writer and editorial writer at Nikkei. He has spent seven years in China as a correspondent and later China bureau chief of Nikkei. He is the 2014 recipient of the Vaughn-Ueda International Journalist prize for international reporting.

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