Defense & Foreign Affairs' Strategic Policy, July 2009

The PRC Does What It Has to Do

By Gregory R. Copley, Editor | SECTION: CHINA; Pg. 4 | LENGTH: 4853 words
PRC Leaders Revert to Strong Statist Responses to Emerging Crises, But Motivations Are Well-Grounded in
Readings of the Trends
IT IS NOW CLEAR THAT THE LEADERSHIP of the People's Republic of China (PRC) considers itself to be under
a rolling series of challenges and threats, which have been gaining momentum for the past three-plus years. The
leadership has begun reacting to this complex situation with decisiveness and evolving flexibility, as well as by
returning to traditional Beijing approaches to the protection of the leadership and State structures.
The threats are varied in nature, and the responses are tailored to each situation, but the overall pattern reflects a
growing sense that the PRC leadership itself feels embattled -- and feels that the cohesiveness of the state is
threatened -- by the coincidence of potentially dangerous trends.
The PRC Government's handling of the Uighur versus Han ethnic unrest in Urumqi, the capital of Xinjiang Uighur
Autonomous Region, on July 5, 2009, and its handling in July 2009 of alleged espionage by executives of AngloAustralian mining giant Rio Tinto during contract negotiations, each reflect involvement at the highest level of the
PRC Government, and also reflect a sense of embattlement by PRC leaders. Notwithstanding this, the handling of the
Urumqi unrest -- the worst in Xinjiang in 60 years by the Government's own estimate, with 184 people dead and
1,680 more injured -- demonstrated a considerable advance in sophistication in terms of perception management
operations over the handling of riots and protests in the Tibetan Autonomous Region and adjacent Tibetan-inhabited
areas of the PRC in March 2008.
It is important to understand the historical evolution of the trends and threats which preoccupy the PRC leadership at
present, within the context of global changes since the end of the Cold War in 1990-91. The interrelated current
trends which pose concern to the leadership can be summarized basically as:
1. Declining domestic economic growth, and geographically patchy economic performance, with direct and strong
impact on social stability and cohesion (ie: security) in many urban and rural areas;
2. Growing distrust and concern over the performance and reliability of trading partners responsible for the provision
of essential raw materials and the stability of currency values; and
3. Declining global economic markets for PRC exports, linked with potential currency instability or weakness among
key trading partners, particularly the United States [coupled with the perception by Beijing of corresponding strategic
opportunities which may emerge from the declining influence and capabilities of the United States].
THESE TRENDS AND threats have been manifested symptomatically in the PRC domestic arena by growing urban
unemployment; disruptive population movement to and from urban areas; ethnic and cultural unrest (which by
default challenges the authority of the state), growing -- and unachievable -- social and economic expectations by
wide swathes of PRC citizens; and logistical and infra-structural bottlenecks in being able to sustain the pace of
imports and modernization.
Internationally, the global environment has seen the rise of nationalism and protectionism in proportion to the scale
of economic threats facing societies. This has been matched, selectively, by the PRC's own expressions of
nationalism and protectionism. At the same time, the PRC sees that, just as it is under a broad range of economic and
social pressures, its trading partners have been perceived as putting it under pressure in a variety of ways, including
perceived "blackmail" over resource prices and exclusion from entry into foreign capital markets. Expressed
differently, the growing nationalism and protectionism have political and security -- as well as economic -considerations.
Overall, there has been almost a paranoia over the PRC's apparent sense of embattlement and how it must fight for
survival. This process has been developing for some time. In 2006, I wrote, in The Art of Victory: "China is the most
dramatic example of a society in an upwardly spiraling turbulence following the chaos and disaster there of the 19th
and 20th centuries. As with all thrusts toward victory, China's path is by no means certain." 1 In October 2007,
writing in Australia 2050: An Examination of Australia's Condition, Outlook, and Options for the First Half of the
21st Century, I also noted:

China's 21st Century leaders, at national level and in all the cities, are well aware of the wild river of history on
which they travel. Given that China has few alternatives, its leadership has demonstrated that it is undertaking
whatever steps are available to contain any potential upheaval over the critical period of the first half of the 21st
Century. 2
As well, that analysis, which appeared in 2007 and which was geared to an Australian policy audience (but relevant
globally), noted:
[T]he stability of the economy of the PRC is, in the first decade of the 21st Century, possibly the most critical
strategic variable in the global matrix, both for security as well as for the entire range of social and economic factors
around the world. It is likely to remain so for possibly the next two decades, by which time the PRC economy and
social fabric should be either consolidated or broken. ...
The valid concerns for the PRC's economic stability are singled out because China's is the only great economy which
shows the potential for truly severe dislocation over the coming two decades or so. A severe collapse in the PRC
economy -- due to domestic population reasons, or because of ecological/resource breakdown, or simply as a result
of a recession in the US economy -- could precipitate a global economic problem, and, very likely, a military/security
outcome for the PRC itself and probably for the East Asian region, on a scale which could be pivotal in global
history. At that point, it would be of critical importance as to whether India -- the other major economy in emergence
through the first half of the 21st Century -- could replace an imploded PRC economy in the global marketplace.
India, arguably, is the second most significant strategic dynamic variable in global society today, although several
other variables will also to an extent impact Australian wealth, security, and orientation:
(i) The possible decline, in terms of strategic capability, influence, and possibly even stability, of the European
Union;
(ii) The probable rise in strategic importance of Iran, either as a secular (post-clerical) state, or as a clericallydominated state;
(iii) The rise of sub-Saharan Africa as a marketplace of increasing stability and wealth.
The economies of the US, Japan, the EU, and even India, could, on their own account during the coming halfcentury, falter and move into recession (indeed cyclical peaks and troughs in economic performance are historically
guaranteed), and yet those states (or confederation, in the case of the European Union) would almost certainly remain
stable from a security standpoint, with only a temporary setback to their growth in wealth, and the wellbeing of their
citizens. The same cannot be said for the PRC.
On the other hand, a major recession in the US (and possibly Japan and the EU) would also throw the PRC economy
-- and therefore PRC stability -- into a precarious area. But neither can the US economy now be isolated or buffered
from the PRC economy, nor vice-versa: the interrelationship between global economic health and stability and the
health of the PRC are -- in the first decades of the 21st Century -- absolute, given the size and growth of the PRC
economy and its reach into global resources and markets. A major dislocation in the PRC has the potential to create
an economic pandemic.
The cause for concern over PRC economic, and therefore security, stability is rooted in the rapid changes in Chinese
society and structure, elements which are unlikely to become truly stable -- A la the major Western societies -- for
some years, possibly even decades. The two fundamental elements of this dynamic are:
(1) The movement of large portions of the population from rural to urban areas, with consequent problems in
unemployment and social dislocation; and
(2) The physical degradation of the agricultural/habitat viability of the Chinese mainland due to natural and
manmade factors.
Both elements are interrelated, and the answers to the PRC's challenges all include ensuring stable management of
urban populations (in particular), mostly in coastal cities, which are in turn dependent on stable access to petroleum
and other energy sources to ensure continued employment (mostly export-driven) and infrastructural development
(including agricultural and water-related).
Any major upturn in PRC urban unemployment (quite apart from rural unrest) could lead to major security concerns

for the PRC Government, and urban unemployment is now estimated to be in the region of 100-million. The situation
bears many of the hallmarks of, say, 1907, when the growing urban influx from rural society brought about the
growth in unemployment, gang-related activities, and the growth of the revolution which, in 1911, overthrew the
Imperial system [emphasis added]. That, in turn, led to the Chinese civil war, which is, after almost a century, still
unresolved, with the Nationalists (Kuomintang: KMT, or GMD), which initially won control of China from the
Empress, eventually losing control of the mainland to the Chinese Communist Party (CCP), forcing the KMT into
isolation on Taiwan and a number of other islands.
China -- both the mainland PRC and the Taiwan-based Republic of China (ROC) under the KMT and, later, the DPP
[and subsequently again by the KMT] -- had, by the early 21st Century, begun to see a path toward stability and even
a possible "stable" resolution of the Chinese civil war. But major unrest on the mainland would jeopardize stability
and productivity, leading to the prospect of a return to economic decline and lack of effective central control. The
1960s, under CCP leader Mao Zedong, saw such a process of unguided near-anarchy in the Cultural Revolution
result in the death of an estimated 60-million people.
Mainland China's resumption of economic and strategic viability resumed with the death of Mao in September 1976.
The PRC Government remains, as a result of Mao's nationally destructive Cultural Revolution, highly aware of the
dangers of dislocation or fissiparous tendencies. Great unrest could lead to the break-up of the PRC as an eventual
outcome, with violence and possible civil war in the short-term, and the Chinese leadership will do whatever is
necessary to curb such unrest in its earliest stages. But the very process of economic dynamism, urban growth, and
rising wealth (albeit with an average income of only $1US,740 in 2006), coupled with energy, water, and other
resource shortages, makes the process unstable and difficult to forecast, to say the least. Exaggerated instability,
enhanced by any sign of a loss of hope and faith by the Chinese population, could lead the PRC Government to
attempt to galvanize the population by a return to militancy, both in terms of domestic control and in terms of seeking
an external "threat", the most likely being the ROC on Taiwan.
Little wonder, then, that the PRC Government, while quietly encouraging the peaceful rapprochement with the ROC
and benefitting greatly from ROC investment in the mainland, retains a publicly strident stand on Taiwan, ensuring
that the "reunification" issue is of paramount emotional importance to the PRC population. The hint of a breakdown
in PRC order would be quickly diverted by the galvanizing issue of a conflict to "re-take" Taiwan. At the same time,
other issues of galvanizing pride and unity are also being promoted: the achievement of the Beijing Olympics in
2008; the restoration of "emotional parity" with Japan after the Japanese invasion of the 1930s and 1940s; and so on.
In such a dynamic environment, control of the Chinese population rests squarely on the use of a comprehensive
psychological strategy which can manage issues (such as raising the "Taiwan question", "the Japanese invasion",
etc.) in concert with physical actions (as the street protests against Japan in 2006 showed, and as a military
engagement with the ROC [Taiwan] would show) which are a vital part of the theater.
Short-term international concerns over the PRC economy -- such as the $233US-billion (2006) PRC trade surplus
with the US, or the exchange rate of the yuan on international markets -- are therefore of little import to Chinese and
global security compared with the macro consideration: the overall stability of the PRC economy.
But if the management of theatrics are a vital part of dealing with the symptomatic human elements of urban growth
and unrest, the underlying structural issues can only be addressed with unfettered access to energy, given that energy
is at the core of productivity and employment, and in addressing the question of the PRC's growing water shortage
(and consequent impact on food production, etc.). It is easy, then, to see parallels between the PRC's energy needs of
today and into the middle of the 21st Century, and Japan's need to expand its regional control to obtain energy and
raw materials in the 1930s, leading to World War II in Asia in the 1940s. But it is equally easy to see the differences
between the 1930s approach of the Japanese Greater Asia Co-Prosperity Sphere and the PRC's global need for a
viable trading environment of the 21st Century.
The question of PRC domestic stability is not an academic one, as Phillip C. Saunders noted in his landmark paper,
China's Global Activism: Strategy, Drivers, and Tools, in October 2006, for the US National Defense University. In
that, he cited the fact that a senior PRC public security official had "recently admitted that there were more than
74,000 mass protests involving 3.7-million people in 2004". That is not to say that the PRC Government cannot
manage the situation, merely that it is a situation which bears close monitoring and management, and the
international community is integrally involved in that management, given the integration of China's resource

contracts and markets abroad.

Because of the international impact of the PRC's security and stability considerations, apart from anything else, the
world is essentially a partner in the PRC's global search for energy. The international reaction, therefore, to the PRC's
military/diplomatic thrusts in search of energy and export markets is part of a symbiotic relationship: the PRC is,
then, both competitor and integral part of the global framework. That does not mean, however, that -- as we saw with
the outbreak of the two World Wars -- a mutually-dependent framework cannot collapse because of localized or
short-term pressures, or as a result of "environmental" issues, such as the collapse of one economy or one market.
Unintended consequences of unforeseen trends pose the greatest risk to the PRC and its "partners".
Dr James Mulvenon, of the US Center for Intelligence Research and Analysis, noted in December 2006: "China
supplies 90 percent of its energy needs from domestic sources, primarily coal. Yet China became a net importer of oil
in 1993, and its dependence on foreign petroleum sources is expected to increase in the coming years from its current
level of 40 percent to as much as 75-80 percent in 2020." He also notes that energy security issues feature
prominently in the PRC's 11th Five-Year Plan (2006-2010), highlighting "sustainable development" through "energy
supply security, environmental protection and energy efficiency and savings".
Energy supply security will increasingly become the area of friction among major economies, and the PRC is the
latest, and most aggressive, entrant into the global search for oil and gas (although India is now also stepping up its
interest in this arena), now the third largest importer of oil after the US and Japan.
The movement of US power projection out of Europe, with the creation of US Africa Command (USAFRICOM) in
2007, will place the US squarely, in a military context, in the strategic energy competition with the PRC in Africa, for
example. US energy imports from the Gulf of Guinea region, predominantly Nigeria, will reach an estimated 25
percent of US imports by around 2015, and the question of "energy independence" is at the core of US strategic
policy. Australia, already committed to providing a substantial proportion of its natural gas output to the PRC, is
itself transforming from a position of relative energy independence to one of increasing -- and serious -- imported oil
dependence.
What, then, will the PRC do, or feel forced to do, to ensure "energy supply security" in the heightened competition
for oil and gas in the period of its greatest anticipated domestic pressure, the period up to about 2025? Even the US,
which arguably does not face the same "life and death" issues as the PRC when it comes to imported energy (or,
rather, has greater resources to deal with alternative energy approaches), finds itself faced with the need for military
power projection to support its imported energy needs. Should the PRC be expected to do less? 3
What we are seeing is the growing correlation of trends which have been evident, and predictable, for some time.
THE RETURN TO A defensive posture by PRC leaders, not surprisingly, impacts how the PRC views its strategy
and opportunities in the global arena, particularly given the significant decline in US global influence which has
emerged (again, as predicted) in 2009. In an excellent paper produced by the US-based Jamestown Foundation on
July 9, 2009, analysts Bonnie S. Glaser and Lyle Morris noted:
While Westerners debate issues like whether and how China can be "molded" into becoming a responsible
stakeholder in the international system, the Chinese have been quietly conducting a debate of their own. After more
than a decade of judging the international structure of power as characterized by "yi chao, duo qiang" (one
superpower, many great powers) -- with a substantial gap between the United States and other major powers -Chinese scholars are debating whether US power is now in decline and if multipolarity (duojihua) is becoming a
reality. A key precipitating factor is the global financial crisis, which has sown doubts in the minds of some Chinese
experts about the staying power of US hegemony in the international system. 4
That Jamestown Foundation China Brief also cited Zhang Liping, senior fellow and deputy director of Political
Studies Section at the Institute of American Studies in the Chinese Academy of Social Sciences (CASS), who pointed
to a diminution in US soft power, a decrease in its ability to influence its allies, and diminished ability to get
countries "on board" with US foreign policy initiatives after the invasion of Iraq: all signs which augured a decline in
the US' legitimacy internationally. 5
This writer, in Defense & Foreign Affairs Strategic Policy, 10-2008 edition, noted: "[W]ith the election of Sen.
Obama, and his implicit promise to revive US military/strategic isolationism, the threat felt from the US has been
dramatically removed for many societies, whether in Western Europe or in, say, Iran. The US is now an economic

power, but its power -- already in decline in real terms for the past two dozen years -- can now be ignored in many
respects. The states of the world are going their own way. They will play with the US when it suits them. They will
look Washington in the eye, and turn away when they wish. As the US ability to build security coalitions (or to retain
them in, say, Afghanistan or Iraq) declines, US diplomats will become more strident, and yet more ineffective, in
their pressures on onetime allies and foes. Their coercive powers will be seen, increasingly, as having been vacated."
6

This reality has become stark within six months of Pres. Barack Obama taking office in the US, and it has given
greater urgency to PRC perceptions of the threat emerging in the economic sphere and spilling into the PRC domestic
security arena.
In its handling of the July 5, 2009, ethnic violence in Urumqi, however, Beijing demonstrated that it had been
focusing on "lessons learned" from the massive international media hit it had taken over the March 2008 unrest in
Tibet. As well, its management of the Urumqi situation benefitted from its information warfare (IW) engagement
with the Government of Iran in the follow-up management of the domestic political arena in Iran after the June 12,
2009, presidential elections there. [See Defense & Foreign Affairs Strategic Policy, 6-2009: "The Iranian Political
Battleground: A Breakout Case for Cyber, Psycho-Cyber, Warfare".] Thus, the Urumqi response by Beijing embodied
a rapid, efficient, and near-total control of electronic communications by private citizens, through the implementation
of a checklist for the suppression or limiting of cellular telephone and SMS (messaging) networks, and general
telephone networks, and through the ability to suppress incoming and outgoing internet-based communications and
websites. This substantially limited the ability of protestors to organize, and to gain momentum through external
support. Significantly, however, the externally-based anti-PRC Uighur movement, the World Uighur Congress
(WUC), claimed that it had not triggered or supported the outburst of violence, despite the fact that PRC Government
and allied sources had claimed that the Xinjiang unrest had been provoked by "the same hands behind the Xinjiang
riot were the same as those behind the Tibet riot last year [2008]".
The PRC Government did not make the same mistake it had made during the 2008 Tibetan crisis. It quickly arranged
flights to Urumqi for international journalists, and set up a briefing system which was far more open and responsive
than in the past. This certainly ensured that the crisis was reported, and passed, rapidly in the international media,
despite the fact that the results were still troubling to the PRC leaders, and, as a result, PRC official media and
responses to this coverage were more reminiscent of Cold War-era Chinese Communist Party (CCP) statements, and
detracted from the credibility which the Government had initially obtained by its rapid and seemingly open response
to the international media. In other words, the professional PRC mechanisms learned rapidly from the perception
management lessons of Tibet and Iran, and functioned smoothly. The political leadership, and the control of the
PRC's own media (reflecting heavy political engagement), responded in their traditional manner, as though the PRC
public had not evolved in its media sophistication in the two decades since the Cold War.
The matter of the PRC's handling of its iron ore supply negotiations with Anglo-Australian mining giant Rio Tinto
highlighted the ongoing reality that the State leadership saw everything as political, and that economic and business
power still "grew out of the barrel of a gun", as the late PRC leader Mao Zedong once said of political power. The
PRC Government arrested four Rio Tinto Chinese staff, including one PRC-born Australian citizen, Stern Hu, on July
5, 2009, on suspicion of having bribed Chinese officials for information on China's position on current iron ore price
negotiations. Significantly, it made the arrests while Australian Trade Minister -- and pro-PRC politician -- Simon
Crean was in Shanghai. Beijing immediately warned the Australian Government -- led by Mandarin-speaking Prime
Minister Kevin Rudd -- not to make the arrests into a political issue.
The arrests, however, were absolutely political, and were clearly the payback for a number of perceived Australian
slights of the PRC. The first was the involvement of the Rudd Government in discouraging a PRC investment of
$19.5-billion in Rio Tinto by the PRC's state-run aluminum group, Chinalco. Australian Foreign Minister Stephen
Smith was clearly disingenuous when he told the BBC that he saw no evidence to suggest any connection between
the detentions and the canceled Rio-Chinalco deal. Beijing, which had hopes of achieving a breakthrough in PRCAustralian relations because of the accession of Rudd to the Premiership in Australia, had seen relations falter when,
firstly, Rio Tinto itself -- before the Chinalco deal emerged -- unilaterally raised its prices to the PRC at the beginning
of the global economic crisis. Then, in June 2009, Rio Tinto abandoned the deal with Chinalco and did a separate
deal with rival Australian miner, BHP Billiton, which essentially created a near-monopoly position on the export of
Australian iron ore to the PRC. In the year ended June 30, 2009, BHP Billiton's revenue from the PRC was $11.7-

billion while Rio Tinto's was $10.8-billion.

Beijing saw the obvious hand of the Australian Government in moving Rio Tinto from a partnership with Chinalco to
one with BHP Billiton. Despite the commercial logic for the Rio-BHP deal -- long promoted by BHP Billiton -- there
was indeed an Australian political involvement in the move away from Chinalco.
The PRC Government, however, had other matters of annoyance with Australia. It had been cementing closer ties
across the board with the Government when a scandal erupted resulting in Australian Minister of Defence Joel
Fitzgibbon resigning on June 4, 2009, over (among other issues, such as conflict of interest issues) the fact that he
had failed -- contrary to the prevailing law -- to declare gifts from a Chinese businesswoman. Helen Liu, who had
sponsored the Minister's private travel to the People's Republic of China (PRC). The information emerged following
allegations about the matter in the media, ostensibly leaked from sources within the Defence Department. There were
suggestions that Defence had initiated an investigation on its own against its Minister. A subsequent Defence
Security Authority (DSA) investigation into the matter found that the information had not been leaked from any
Defence Dept. source. The damage had been done, however, to the Minister's credibility, and the fact of the
relationship between the Minister and Ms Liu was sufficient to force the Minister to resign. It was subsequently also
alleged that the woman concerned had been acting under the direction of the PRC's intelligence services, or was
possibly a member of a PRC intelligence service.
This had emerged at the same time that Australia issued its 2009 Defence White Paper, which cast the PRC in the
light of the single most significant potential security concern for Australia. At least, that was the way in which the
PRC Government interpreted the document. In reality, the document did indeed defer to the PRC as the most
significant military factor in Australia's area of concern, but stressed the need for greater Australian engagement with
the PRC, rather than highlighting the PRC as a potential threat to Australia. Indeed, the Defence White Paper -arguably the most sophisticated Australian defense policy document for some decades -- could equally have been
interpreted as an opportunity by Beijing. The fact that some in Beijing chose not to interpret it in that fashion
highlighted the defensiveness which now appears to be growing in Beijing.
Where, then, is all this leading?
It seems likely that the PRC leadership has, to a greater degree than most Western leaderships and international
analysts realized, sensed the urgency and magnitude of the threats which exist to the PRC's economic, social, and
political stability, and to the stability of many areas of the world. The PRC responses, although they may in some
instances be reflective of Cold War modalities, cannot be dismissed as paranoia, given the evidence which the PRC is
facing first-hand. How the rest of the world responds to the PRC's perceptions, however, may help determine some of
the outcomes.
FOOTNOTES
1 Copley, Gregory R.: The Art of Victory: Strategies for Personal Success and Global Survival in a Changing World. New York, 2006:
Simon & Schuster's Threshold Editions. p.45.2 Copley, Gregory R., with Pickford, Andrew: Australia 2050: An Examination of Australia's
Condition, Outlook, and Options for the First Half of the 21st Century. Melbourne and Perth, 2007: SidHarta Publishers for Future
Directions International. p.17.3 Op Cit. pp. 22-27.4 China Brief, Volume 9, Issue 14; July 9, 2009. Jamestown Foundation. The article itself
footnotes that the first mention of "yi chao duo qiang" that the authors were able to find was by Liao Yonghe, "The Right and Wrong of the
'America in Decline' Theory," Dangdai Shijie, 1995, Vol. 3. See also Michael Pillsbury's China Debates the Future Security Environment,
National Defense University Press, January 2000.5 The China Brief cited a Chinese-language article by Zhang Liping, "Is America in
Decline after 9/11?" Shijie Zhishi, July 2007, Vol. 21, which was translated into English by the China Brief authors.6 Copley, Gregory R.:
"Continental Drift: Heartland Power Revives", in Defense & Foreign Affairs Strategic Policy, 10-2008, p.2.