The Chinese experiment, which separates the Communist socio-political system into a political dictatorship and a Wild West-type market economy, has failed.
In China, the market economy is private but under the total control of the Chinese Communist Party. It has granted ownership to the country’s private citizens from big corporate groups and let new ones develop, but only under the control of Communist Party apparatchiks. They work for their own interests and profits, yet under the political direction of the Party, which has its share in the profits.
As a result, the Chinese economy has witnessed spectacular growth because it developed with practically no labour rules, without trade unions, and without an effective regulatory framework for entrepreneurs. That is why Chinese products are the cheapest in the world.
Indeed, labour laws in China don’t come close to meeting US or EU standards and protections, including many more cases that look like forced labour and abuses that the West has struggled to fight against in the last century.
This is an element to consider whenever the real trade war between the United States and China escalates. In order to contain China, and under the lack of labour rules excuse, Washington may well ban all Chinese products and introduce a generalised total embargo on China that Europe will be forced to follow in order to be “politically correct”. Consequently, Russia will also have good reasons to follow suit.
Under this scenario, the Western business community will sense the likely outcome and American and European companies operating in China will have started moving out before any official embargo is in place. That will, however, only be an afterthought.
The coming weeks, starting on 1 October, will be highly important and symbolic for the Communist regime.
The ongoing, growing Hong Kong protests combined with the seven day celebrations that begin on 1 October for the 70th anniversary of the establishment of the Communist rule, will be politically the most important fanfare in the history of the Chinese Communist Party and may escalate into a major incident for reasons that have both a domestic and international dimension when it comes to projecting the global prestige of China and its leader.
It should not be a surprise to anyone, despite the fact that nobody speaks about such a probability, of a possible intervention by the Chinese to “restore law and order” in Hong Kong and fundamentally end the status “one country, two systems”.
This may happen by the People’s Liberation Army garrison maintained by Beijing in Hong Kong which, under the excuse of the 22nd garrison’s annual rotation last week, was more than doubled from an estimated 3,000-5,000 Chinese special forces in Hong Kong was raised to between 10,000 and 12,000 – more than enough to take total control of the city.
If China decides to intervene it will unilaterally end the status of Hong Kong as a Special Administrative Region of the People’s Republic of China provided by the joint declaration that was signed by then-British Prime Minister Margaret Thatcher and Chinese Premier Zhao Ziyang in 1984, under which Hong Kong would return to China in 1997 and to be governed under the “one country, two systems” doctrine for 50 years.
This is the worst-case scenario as it will give no excuses to the West to isolate China, which in order to save face and address the mounting domestic deadlocks, after assessing the probable verbal reaction of the Western powers in the case of Hong Kong, may even escalate the situation by invading and occupying Taiwan or move to expand its military presence on the strategic islands in the South China Sea.
From there on, the sky will be the limit.