Sisci: global economy and the new “china syndrome”

It is a “ready for whatever” China that emerges from the words of Francesco Sisci in his double speech dedicated to the political and economic situation of the Asian giant and to the geo-political picture of the area for the cycle of lessons “Economic Scenarios” organized by Francesco Giavazzi for the SDA Bocconi MBA. A China who is perhaps worried about a slowdown in its growth and tensions with the USA, but certainly determined not to abdicate its role as an economic (and not only) superpower able to heavily influence the global balance. And to do so it is willing to play on different tables.

Sisci, a journalist and senior researcher at Renmin University of China who has lived in the country for more than 30 years, highlights three main reasons for internal concern: a level of corruption in the public administration that has reached such “dysfunctional” levels (i.e. whose costs far outweigh the possible benefits of a “lubricating” action of the bureaucratic machine) that in 2012 it started an anti-corruption campaign of historic dimensions with more than one million public officials under investigation; the substantial failure of the reform of state-owned companies, which remain largely inefficient (using 70-80% of assets to contribute only 20-30% of GDP), while still representing an enormous center of power, including political power; and, last but not least, the strong sense of insecurity and external pressure of private entrepreneurs who, also as a result of the moralization campaign of public life, have experienced a dramatic reduction of that “grey area” – neither illegal nor perfectly legal – in which they often have to move. An area that, after all, has become a good habitat for private business in a country that has been living (and growing) for decades with an intrinsic historical contradiction: a genuinely communist centralizing state against an economic system that has reached forms of capitalist “extremism”.

If to this internal situation – which according to Sisci shows aspects similar to those that led to the Tiananmen Square revolt of 1989 – we add the precarious geo-political balances in Southeast Asia – China has difficult border issues with almost all neighboring countries – and the tug-of-war with Trump’s USA on strategic issues such as duties or the protection of intellectual property, the overall framework can become disturbing. There are too many blank variables, too many cards that China isn’t laying on the table, to allow for reliable forecasting. Certainly, the fact that President Xi Jinping has declared that they are “ready for whatever” while talking to the military can only increase concerns. But, as Sisci points out, “the Chinese are more businessmen than warriors” and even their economic strength, so dependent on foreign trade, needs a relative international balance. Whatever kind of war is on the horizon, it’s to be hoped that China will be “too big to fight”.

SDA Bocconi School of Management