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The Chinese Communist Party (CCP) is 100 years old today. In terms of membership, with 91 million, it is the world’s second largest political party, behind the Bharatiya Janata Party of India. At its founding in 1921, it had only a handful of members. Its founders were two intellectuals, Chen Duxiu and Li Dazhao, who were inspired by the ideas of Marx and Lenin, and the Bolshevik revolution. The party was actively assisted by the Communist Party of the Soviet Union, which was then engaged in the export of the Soviet socialist revolution to all parts of the world. In its first 28 years, the struggling CCP was engaged in wars against two adversaries: Japanese imperialists, who sought to colonize China, and the Kuomintang (KMT), the ruling political party founded in 1919 by Sun Yat Sen. Between 1927 and 1949, the KMT and the CCP fought an intermittent civil war for control and power to rule over all of China. In between, the two parties were also allies in their joint war against Japan’s imperialist invasion. The KMT was finally defeated in 1949, partly due to internal dissension and rampant corruption, and was driven to Taiwan. The two decades until 1949 had been quite bloody and thousands of CCP members lost their lives. At one point, the CCP and its Red Army were on the brink of annihilation during the Chinese civil war. That juncture led to the great Long March, which was actually a long military tactical retreat to the countryside during 1934-35. It was around this time that Mao Zedong rose in prominence, first as commander-in-chief of the Red Army (later christened as People’s Liberation Army or PLA), and then as the CCP’s chairman in 1945. From 1949, when the People’s Republic of China proclaimed independence, till his death in 1976, Mao was the ‘great helmsman’, a leader who, like his party, wielded absolute power.

This is not a place to recount the full details of the Mao era, but suffice to say that despite two major disastrous policies, the Great Leap Forward that left millions dead and the Cultural Revolution, Mao’s influence remains undiminished to this day. The wily Henry Kissinger of the US and his boss in the White House, Richard Nixon, both diehard anti-communists, thought it fit to pursue rapprochement with Mao as a way to counter the Soviet Union. One of Mao’s lieutenants from the civil war and fellow soldier during the Long March was Deng Xiaoping. After Mao’s death, came the Deng era, and he is rightfully called the architect of modern China. He took charge in 1978 and led a radical departure from—if not an outright reversal of—Maoist economic ideology, towards a market-based economy with flexible prices. The transformation of the Chinese economy is simply unparalleled in modern history. In just four decades, China’s per-capita income rose 70 times, and hundreds of millions of its rural poor joined the ranks of its urban and industrial middle class. The West poured in a cumulative $2.7 trillion of foreign investment into its special economic zones (SEZ) and reaped handsome rewards. The SEZs had an almost inverted regime compared to the mainland, with flexible labour laws and protection of capitalists. The West was lulled into thinking that economic reforms would lead to political reforms and the establishment of a Western-style democracy. Indeed, in the first 10 years of the Deng era, there were signs of protests from students and intellectuals. Forces clamouring for political freedoms seemed on the ascendant. But this was again misread by the West, as it was only a power struggle within the CCP’s politburo. The brutal suppression of the Tiananmen Square protest in 1989 left no doubt about the party’s supremacy. The CCP would brook no dissent on the political system. In that, there was continuity and consistency from Mao to Deng and China’s current President Xi Jinping.

The Xi era has seen some of Deng’s maxims modulated and even jettisoned. There is no longer a term limit for the supreme leader and the importance of collective leadership has been downplayed. Xi has consolidated his power, and after a long time, the top man in China holds all three key positions as head of state, the party and also the military. China is no longer “biding its time, by lying low", as a Deng maxim asked of it. It is asserting its power openly—visible in its technology and military buildup, on the high seas, in cyber warfare and in space. Its aggression against India in the Himalayas leaves very little doubt about its hegemonic intentions.

The West may cry foul over its misuse of World Trade Organization membership and its pursuit of export-led growth with a suppressed currency. But it is China that is now the global champion of free trade, as the West puts up protectionist barriers.

But China does have vulnerabilities. Its ageing society foreshadows a slowdown in growth and productivity. The debt overhang on its economy is a crushing burden. Growing friction between the state and the private sector does not bode well for future investment. Its clampdown in Hong Kong is indicative of its sustained suppression of free speech. Such repression sits uneasily with the proliferation of social media. The state or CCP cannot continue to generate more growth and employment as a source of its legitimacy. The rise of China is seen by the world not as benign, but as a major cause of anxiety. Its role in the health havoc caused by coronavirus, which originated in Wuhan, is a taint that cannot be shrugged off. As it enters its second century, the CCP has a lot to chew on.

Ajit Ranade is chief economist at Aditya Birla Group.

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