Is Xi The Chinese Reagan?

And The Trap The US Is Falling Into

The title sells the idea of this article so I will not write it as a contrived plot twist, but really, hear me out.

And this is not meant either as praise or as a negative take on Ronald Reagan either.

I am a Frenchman living in Estonia, I really could not care less about 4 decade-old American politics.

Remind You Of Anything?

If I told you the new leader of a large and powerful country is:

• Increasing the military budget massively.

• Explicitly focusing this increase on a specific foreign adversary, with a somewhat Orwellian-style catchphrase to match.

• Leading to rising tensions with said adversary, worsening relations significantly.

• Cracking down on powerful interests in the country.

• Sticking to a hardline policy which disrupted logistics and supply chains and air traffic.

• Pushing for large stimulus to the economy.

  • Ignoring a rising level of debt resulting from this policy.

• Ignored or annulled laws and regulations inconvenient to his agenda.

• Tried to broker peace in the Middle East.

• Look to invade a nearby island to install a friendly government.

• Impose sanctions on foreign countries.

Who would you think I am talking about?

Of Course!

And yes, of course, I am not all referencing to Emperor General Secretary of the Chinese Communist Party Xi Jinping.

But back to the Reagan presidency according to the Britannica:

• He increased the already significant, Cold-war era, military budget by 35%

• This was called, somewhat paradoxally, “peace through strength.“

• He faced a massive strike from PATCO (Professional Air Traffic Controllers Organization). Then fired all of them.

  • Which for a little while severely disrupted air traffic and trade in the US.

• Reagan also cut taxes by 30%, both corporate and income taxes, while also still boosting military spending.

  • The US treasury deficit would rise as a response, even with cuts to social spending.

• He “relaxed or ignored the enforcement of laws and regulations administered by the Environmental Protection Agency (EPA), the Department of the Interior, the Department of Transportation, and the Civil Rights Division of the Department of Justice, among other agencies.“.

• Reagan sent marines to Libanon, actions that would lead to 241 marines dead in a suicide bombing.

• Reagan intervened in Granada after a coup by leftist insurrectionists.

• Reagan imposed sanctions against Lybia after a series of terrorist attacks.

Reagan Jinping

A Dishonest Comparison?

Of course, this is not a one-to-one comparison. But the parallels are actually quite striking.

And yes I am aware I might irritate quite a few Republicans by comparing a political idol to a foreign “evil” dictator.

I also think it pays off to look beyond the anecdotical and look at the outlook on the world of both leaders.

Both are staunched nationalists seeing their role in history is to bring their country forward above all other nations.

They both care little about damages it might do previous diplomatic efforts.

They are both willing to upend the status quo and the establishment, in favor of a more focused power structure centered around themselves.

This allows both to push for reforms that had been so far impossible to achieve:

• reducing social spending and the entrenched power of unions for Reagan.

• take back control of the real estate and tech industries and their magnates for Xi.

They are also both very open about their opinion that national strength and diplomatic influence are first and foremost a result of military power. And are not shy of using if needed.

Now they are also both open to a dialogue once such a position of strength is asserted. Xi's friendly meeting with Macron or partial opening to US diplomats is not parallel to how the second Reagan presidency saw a restoration of dialogue with the USSR. You can be in a growingly unfriendly relationship with another nation or bloc, and still keep the diplomatic channels open.

Both men are not figures of unhinged nationalism and imperialism, even if their opponents, both domestic and abroad, often think they are.

While somewhat Machavielian, they are before anything pragmatic and realist and very ambitious. Reagan was not a career politician but an actor, and Xi still remembers his youth spent in exile in the rice fields. For such profiles to rise to such power indicates strong political skills and a certain ruthlessness.

The Retrospective Bias

Something coloring this comparison is recency bias. People tend to idealize the past, or see it through an ideological lens.

For example, Reagan is often presented as some sort of arch-republican, smashing unions and redressing the country’s finances.

But really, are exploding deficits sound finance? Was a military program called Star Wars really pragmatic?

And is his policy with the USSR just praised with the hindsight the USSR would collapse in 1989? Instead of carelessly risking nuclear war?

In the same way, opinions on Xi Jinping tend to be very short-term focused. But in the long run, will he really be remembered for the petty details in Communist Party conventions?

Or as the leader that made China autonomous in high techs like chips and commercial airplanes, reined in the real estate bubble, broke the tech monopolies, secured new vital supply lines for energy and food, while being lionized for pushing back against an increasingly less influential America, at least among BRICS countries and the "Global South”.

A Dangerous Foreign Policy

Which brings me to the limitations of the Xi/Reagan method.

Increasing tensions with another superpower is a … daring proposal. And I am being charitable by saying that. Other terms could come to mind and be equally fair.

Like unhinged, dangerous, irresponsible, amateurish, crazy.

Criticisms that were leveraged against Reagan at the time, as well as currently against Xi’s Policy.

And the worst is that we know it is somewhat of a fair criticism.

Declassified Soviet documents show that a big part of the USSR leadership was convinced by Reagan’s agressivity that the USA was planning a first-strike attack, and wanted to do it themselves first.

Increasing tensions are the fast track to a nuclear Armaggedon.

The thing is, China is interested in avoiding a miscalculation by the USA, so why would they take the chance?

They know as well as us how the Soviet leadership feared a first strike at the time. In that context, imitating Reagan seems rather unwise. Why take such a risk?

Is it just the case of a single man taking decisions without considering the risks, and being too powerful to be stopped?

Maybe.

But I would at least consider an alternative view.

The Chinese Obsession For The USSR

The CCP is notorious for having been “traumatized” by the collapse of the Soviet Union. As the first and most prominent communist country, the USSR collapse was a VERY concerning event for the CCP.

“What if it happens to us?” is a question that has been lingering since 1989.

Standard Of Living

The first part to avoid this fate has been a focus on economic growth. The USSR collapse from its inability to provide its citizens with a decent amount of milk, meat, eggs, etc…. And even less “luxuries” like continuous power, fuel, heating, TV, roads, warm water, soda, chocolate, exotic fruits, etc…

The lifestyle difference between East and West Germany had become too dramatic for even the politburo to pretend things were okay.

This is why you see the Chinese government so proudly bring forth the (indeed amazing) growth of Shanghai, Shenzen, high-speed railroads, etc…

“What we have works, why risk it?” is the overall message.

Controlled Reforms

Another part has been to tightly control ideological discussion. And to be sure to never let a reform or localized protests turn into a free-for-all contestation like the Perestroika did.

This is why reforms always have to come FROM the CCP. By being less inflexible than the old Soviet ideologues, the CCP can coopt talent and solve problems, as well as get praised for it.

And that’s also why there was a need to crack down on billionaires/oligarchs like Jack Ma when they get too uppity.

And avoid tech monopolies and large conglomerates (Alibaba, Tencent, etc…) from taking control of the state, something I must say the US could learn a little from (Amazon, Google, Lockheed Martin, Boeing, Pfizer, Chevron, etc…)

“You can be a billionaire in communist China, but only if you are a CCP billionaire” is the message.

The Arms Race

But there is another less discussed topic. It is that the USSR's inability to provide its citizens with a first-world level of comfort was only partially due to communist inefficiency and failure to motivate workers.

Another was the terrible weight of military expenditures.

I read some estimates that put military spending at 30% of USSR's GDP. Even if this grossly overstates it, this would still be enormous even with 10% of GDP.

Military spending is unique in economics in that they are uniquely wasteful. A man learning to walk in step is not learning any transferable skills. A fighter jet cannot be used to deliver packages. A tank cannot be converted in something economically useful.

You need some military power to not get conquered, invaded, and pillaged. But too much and you would be better off digging a hole and refilling it, it would waste fewer resources.

And the USSR had A LOT of such “economic” activity burning more capital than the country could hope to generate, hollowing out its productive apparatus.

Why It Matters

If I am making this argument of Xi=Reagan, it is not just that the idea is amusing. It is because I think this carry a fundamental effect on how the US-China rivalry could play out.

And that the USA are walking straight into a trap that might damage severely its economic prospects.

More about that below