Yu Jie

WHICH ROADS WILL CHINA FOLLOW TOWARDS 2035? Dr Yu Jie is senior research fellow on China in the Asia-Pacific Programme at Chatham House, focusing on the decision-making process of Chinese foreign policy as well as China’s economic diplomacy. Chatham House, also known as the Royal Institute of International Affairs, is an independent policy institute headquartered in London. Its mission is to provide authoritative commentary on world events and offer solutions to global challenges.

Yu Jie taught at the London School of Economics, she has been recognised as a ‘Leading Woman’ of the LSE for her contribution in teaching and engaging the public debates on China’s foreign affairs in 2018.

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Yu Jie, when did you move to Europe?  

I moved to the U.K. in 2002 at the age of 16. So now it’s 19 years. It wasn’t easy to integrate, not just studying A Levels at British high school, but also the culture shock.  

Did you move here by yourself or with your family?  

By myself. It was my own decision because I was keen to study international relations, and I won a scholarship to go to a British school. At high school in China, my history teacher told me the United States and the UK are the only two places in the world you can study the subject of international relations, because these are the dominant world powers and you have to be there to know how the world has been organised. He was referring to the world order after 1945, not the world order now.  

Do you go back to China from time to time?  

I do. My parents still live there and I’m the only child. But obviously, given Covid, I’m not able to go back at the moment because my country has the world’s most stringent quarantine criteria.  

During the Trump regime the U.S. accused China of being the cause of this pandemic?  

He used the term China virus or Wuhan virus constantly, but at the end of the day who knows where the origin is. A scientific investigation would be a benefit for all, but if the investigation is based on damaging China’s international reputation the Chinese government will very much disapprove of that. This is probably another strain on China/U.S. relations.  

What is the population of China today? 

One point four billion.  

How many people are literate with a middle class standard of life, and how many are illiterate and poor? 

The literacy and numeracy rate in China is extremely high, 95 per cent. However the middle class is only around 60 per cent of the entire population. 40 per cent of the Chinese population still live on a salary of under one hundred and fifty dollars a month, so are not yet in the bracket that we consider as being part of the middle class. 

How many very wealthy people are there in China?  

China has around 132 billionaires, more than the United States. I tell my German friends that it is a country run by two Karls, because it deeply believes Karl Marx’s communism with the political establishment but also acquired the very extravagant taste for Karl Lagerfeld’s design. Karl Marx for ideology, but Karl Lagerfeld for consumerism.

Yu Jie and Alain Elkann in conversation at Chatham House in London on September 22nd, 2021

Yu Jie, in the last 20 years many Western countries and brands have relied on the Chinese market. Is it a good strategy for them to continue to do so? 

Not a very good strategy, because most of the customers that the Europeans would like to attract have already acquired that taste for luxury that they wanted to buy and a proportion of the population can’t afford, and perhaps will never be able to afford, those luxury products. Also, in recent years a wave of Chinese younger population – born after the 90s – is very much in favour of buying the Chinese own luxury brands, for example, the expensive range of Huawei mobile phone. Apple sales in China really stalled in recent years. They’re not hugely popular as in the past, and that sense of revival, of buying China’s own brands, also jeopardises the Western luxury companies’ strategy. The clienteles are just not interested anymore. Chinese consumers, and especially the Chinese young consumers, are rightly proud that their country has achieved so much, but feel it has been constantly criticised by Western media. Chinese youngsters nowadays are seeking a sense of respect from Western society, and they feel, quite sadly, they have not received the respect that they wanted. So perhaps that is another way that the Western luxury companies no longer have the same appeal as in the past, like, for example, for my generation who were born in the 70s and 80s.  

Is there a strategy in China giving their Covid vaccines Sinopharm and Sinovac to other countries? It helps a lot of people, but is it also a way to become more popular among neighbours or in continents like Africa?  

The Chinese have to protect their own past investments in infrastructure and development projects, so perhaps the best way to do so is to send vaccines to those countries where China has invested very heavily in the Belt and Road Initiative and infrastructure projects. That is firstly out of necessity, but secondly it is a political strategy, that China is keen to have and extend its political influence to many of the developing countries. The Chinese have this old saying, “You always provide a burning coal in a time of heaviest snow.” The recipients will remember you helping friends in need.  

What’s happening in the Chinese economy?  

Before the 1st of July this year, the legitimacy of the Chinese Communist Party (CCP) to the population was based on creating double digit growth, but that perhaps only benefitted a small portion of society, the entrepreneurial classes. After the 1st of July, the Party’s centenary, the Party’s legitimacy has shifted to pursuing equality, improving the standard of living for the rest of the population, for all, plus a very nationalistic foreign policy. It’s a different kind of social contract.

They say that China is doing less well and that the Chinese economy is not in such good shape as it used to be. Where is the truth?

The truth is that the economy is now experiencing great difficulties, for short term and longer term reasons. Short term because the global demand in terms of export is in decline, so the old models of using export generated economic growth are no longer sufficient for China. Longer term is the demographic decline, because there is a less and less young labour force to compete with. In the past there simply were not enough social resources, housing, schooling or even food, to have more children and therefore the one child policy was introduced. I am part of that one child policy generation of children, but nowadays society realises they have to mitigate the risk of having reduced the number of the labour force. The Chinese labour force will be far more expensive.

Will you have more competition with other countries, so that instead of opening factories in China, people will open them in Croatia or other places?

That has already happened. Even Chinese entrepreneurs are opening in Vietnam or Cambodia. The Chinese government intends to increase productivity amongst the labour force, because the current generation of Chinese young workers know how to do exams but don’t know how to make things. They don’t have the proper training to prepare them for a proper job. Now children are only allowed to play online video games for three hours a week, because video games do not help the general productivity of the population. 

How much are the country’s foreign policies determined by domestic politics? 

Any country’s foreign policy is determined by domestic politics, and for China that is even more so than the United States. 95 per cent of Chinese foreign affairs are determined by its domestic politics. The leadership of the Communist Party want to present the narrative that this People’s Republic of China (PRC) government is respected across the world. That is the key message that Xi Jinping wanted to send back home, so before the pandemic he was the most travelled Chinese President since the country was founded in 1949. He intended to show his domestic audience that he was very much welcomed by everyone across the world, for example in 2015 there was a state visit to the UK with the British Queen present that was well perceived at home.  

To show legitimacy all over the world? 

It is not so much about legitimacy, that is a domestic governance element, but about respect. Respect is the word that the Chinese leadership seeks, both for the leaders and also for the Chinese general public. They yearn for that sense of respect that they didn’t get for many years in the past. The country is looking to reassert its global status, and, most importantly, that global status needs to be presented back to the domestic population, to show that the government is respected, and therefore to let the population support the leadership.

Are they really supported, or are people frightened, as happens so often under totalitarian regimes?

The whole point is that because of the one point four billion population you have all sorts of opinions towards the leadership. I’m sure the discussions across the household dinner table are as vibrant as many other countries, even if the Party control most of the press.

Yu Jie, what about the protection of human rights?

From my observation back home, the Chinese population’s perception towards human rights is that the right to eat, the right to have shelter, a roof, is more important than, for example, the right to vote or the right to speak up for oneself. This is a country that hasn’t really achieved that much up until 1979, so the Chinese population have never had a better life than they have now. The likelihood of going against the leadership is low, because they haven’t reached that stage of looking for greater political freedom, or for a greater number of voices that hold different opinions. When I taught at the London School of Economics, I observed many overseas Chinese who have either studied or worked in Western liberal democracies who become even more patriotic, and the Chinese younger population who have studied abroad and then return to China become even more convinced that the one party state fits China better than the liberal democracy where they studied. Interestingly, there are at the moment 200,000 Chinese students studying in the UK whereas the UK undergraduate students come to China is 20 times less in recent years.

Does the fact that the economy is not as strong as before worry the Party?

Very much.  Xi Jinping has set up the so-called 2035 goal – that by the time of 2035 China will join the club of middle to high level income countries; which requires 4.5 percent GDP growth per year – and that is very hard to sustain given current Chinese productivity.

Europeans need a strong China in order to sell as much as possible of various kinds of products to China. Will this change?

America now closes its doors and becomes more self-resilient, and a similar trend also happened to China, because the Chinese leadership does not want to be making the same mistakes as America did in the past by overstretching itself. China is also closing its doors, gradually; and will choose what kind of foreign investment China wants and in which sector. The era when China was open arms, welcoming all investments from overseas, is ended, and China itself becomes more self-reliant. That is very clear in the latest economic 5 year plan, the 14th Five Year Plan published this year.

If China becomes too strong and the leading power in the Western world, with America losing its power, how will it be for Europeans under the “Chinese umbrella”?

There is never going to be a Sinocentric world order, because China simply doesn’t have the capability to convince the rest of the world that its political system could be applicable across the world. The only element I can see of it is using economic development as the founding principle. Of course Europeans are afraid of unknowns that come from China, but China has also been quite disappointed by the Europeans, because China was much hoping that Europe, specifically the European Union, would become a pole in global politics, and that would counterbalance the United States to some extent – and that didn’t happen at the turn of the 21^st Century. After the global financial crisis and the sovereign debt crisis, China was hoping the European Union would step in, playing a big role. Again, that didn’t happen. China has now really lowered the expectation of the capability of E.U. So it’s not just the Europeans’ fear of China, but the disappointment from the Beijing side when they realised the limitation of what the European countries and the EU can do.

Do you think that the Yuan will become the new dollar?

No, the Yuan will not become the new dollar. The Yuan hasn’t got that capability, because it is not internationalised. To internationalise the Yuan you need to have both demand and supply, but the demand is not there. In the IMF basket of currency the Yuan is only around ten percent. It is significantly smaller compared with the U.S.. Being in the basket is of political significance, but no way that the Yuan has sufficient demand to become an international currency to circulate in a short period of time. Given China’s very closed political system, so different from the rest of the world, they can’t convince international investors to let the Yuan become an international currency and without stringent capital control.

How is China reacting to the global Green movement and the growing attention to the sustainability of the world which we see today?  

Climate change, sustainability and carbon reduction are very high up on the domestic political agenda. Xi Jinping inserting the term “ecological civilisation” into the Party charter marked the significance, and several crucial policies are being introduced. For example, when judging whether Beijing want to promote a senior provincial official or not you have to look into how many tons of carbon reduction that particular person has made for that particular institution or for that particular industry. So domestically China takes a radical and interventionist approach when it comes to environmental protection, because this is about tangible benefit, to show that the party can deliver clean air and clean water for the population. Internationally however China seems to be rather timid, suggesting that China is a developing country and therefore shouldn’t shoulder a similar responsibility as the Western countries because the Western countries obviously have been polluters for a much longer time than China and India. Internationally China’s commitment is more limited, and China’s leaders don’t want to be seen to follow the agenda put forward by the United States. Once again, it’s about how the domestic audience view China.

How do the young people in China feel about it?  

They don’t feel much about it. A small proportion of youngsters and some students care about the environmental stuff and promote such ideas in college. You have Green-focused student societies established in two of the top universities of China, Peking University and Tsinghua University.

China’s National Museum at the south corner of Tiananmen Square is a place where “the China Narrative” is being presented.

The Bund in Shanghai marks the modernity that the Chinese government aimed to pursue in the past 4 decades.

At the moment, 70 percent of the total trade volume between China and the rest of the world has to go through the Strait of Malacca – which is controlled by the United States. The waterway connects the Andaman Sea (Indian Ocean) and the South China Sea (Pacific Ocean). It runs between the Indonesian island of Sumatra to the west and peninsular (West) Malaysia and extreme southern Thailand to the east and has an area of about 25,000 square miles (65,000 square km).

Yu Jie, are the Chinese investing more and more in an ever stronger military?

They are. This is part of the so-called People’s Liberation Army modernisation process.

But they are not as strong as the U.S. at the moment?

They’ll take years to finish that catch-up stage, while the United States are still developing. It will take years to come to that.

What about China and Taiwan? 

Another very long standing legacy of history, this also largely depends on how badly US/China relations go. The Taiwan issue serves like a barometer of China/ U.S. relations.

If China put their hand on Taiwan, it could be war. Is this situation very dangerous?

It is a very precarious situation. In Taiwan, between 2008-2016, there was a mainland Beijing-friendly party (Kuomingtang) in charge, and therefore the status quo was well maintained, and also for economic interdependence between the two sides. The incumbent government under the Democratic Progressive Party is very much for independence, and the opposition Kuomingtang party that used to get on with Beijing very well now also shifted its view in a search for Taiwan’s unique identity. These factors make the situation become more complicated. Also, in Beijing there’s a very strong voice among the People’s Liberation Army who entertain the idea of a military escalation. Ultimately the Taiwan issue is determined by two factors; first the healthiness of China/US relations, but second how President Xi Jinping wants to be remembered in the pantheon of the Chinese Communist Party. Whether he wants to be remembered as someone that made China become a middle to high level country – the 2035 goal – or to be remembered as someone that reunited the country and therefore achieved the great national rejuvenation. But surely an imminent military escalation with Taiwan is not in China’s interest if China is going through a very painful economic transition simultaneously. China would have to fully cut off from the rest of the world.

How do you perceive the relationship between China and the United States?

A peaceful coexistence would be the best mode, but at the moment both Beijing and Washington’s domestic environments won’t cultivate that. China is prepared to have protracted confrontation with the United States. In the United States domestically there is a bipartisan consensus. There’s only one thing Republicans and Democrats agree on, which is about countering China. The real worry is that the two sides haven’t got the mechanism for mitigating the constant confrontations that they have one way or another.

Do the Chinese still perceive America as very strong?

They do. The Chinese Communist Party always aspired to become like America in terms of economic wealth and that sense of power status, some kind of hegemon. Much of the Western media have reported that the Chinese leadership suggest that the West is in decline, but the second half of the sentence is that China is facing the so-called unprecedented challenge, the like of which has not been seen in the last hundred years. Clearly the leadership is aware that in future it will become more and more difficult for China to be able to compete with U.S. than in the past. It’s much easier to grow faster than to maintain that speed.

Do Americans and Chinese understand each other well? One is a communist dictatorship and the other a democracy and therefore peoples’ values are very different.

I don’t think they understand each other very well at all to be honest, because since the establishment of formal diplomatic relations America has tried very hard to make China more like America, more like a liberal democracy. The one thing that several generations of Chinese leaders resist is to become like a multi-party democracy. It is part of the American dream, but it is not part of the China dream, so from the ideological level the two are not on the same page. In China they value individual pursuit, but every ordinary Chinese citizen somehow feels that if the country goes up it means that the individual will also go up accordingly. There is a sense of collective progress that does not exist in the United States.

The United States has many internal problems with changing proportions of ethnicities, just as the growing Muslim population in Europe is a big change there. What about China?

China remains ethnically homogeneous. It is a country that hasn’t got a substantial amount of migrants who go into China. It’s a mono-cultural country. This is a huge difference compared with the United States, where individualities are much preserved, whereas in China you are supposed to have one set of standards, one set of values.

What are the most important values for the Chinese today, for your generation or younger?

Stability. Stability of having jobs. The stability to be able to have shelter. That sense of stability is what the younger generation are looking at. Nowadays it is all about whether you can learn the job and pay your rent. That’s the needs of the ordinary Chinese young person at 25 years old, so in a way Chinese young people’s aspirations are not so much different from their Western peers.

Is there a lot of nationalistic pride?

Yes, there’s a very strong nationalistic sentiment across the younger generation.

A huge percentage of Americans don’t have a passport and never went abroad. How many Chinese people travel?

I would say around ten percent of the entire population. The most favoured destinations are Europe and America, because they want to know the outside world, what’s going on, because in the past they can only read about it from books. Up to the late 1990s it was not possible to go abroad freely for normal tourism without permission from your employer or your school. It is only a matter of twenty or so years, and gradually more and more international travel.

Do the rich Chinese who own beautiful cars, art collections, fashion, create jealousy amongst the people who don’t?

Yes. There is a very strong anti-rich sentiment amongst the majority of the population.

How is the Party dealing with that?

It is almost like a Robin Hood approach, letting the rich pay a larger proportion of the societal or charitable contribution. But at the moment China doesn’t even have a proper inheritance tax or wealth tax in place.

How does that work for a rich Chinese?

We shall see when that policy is introduced, which I expect to be very soon, within the next 12 months.

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