Published daily by the Lowy Institute

China cabinet: black swans, grey rhinos, an elephant in the room

A rare acknowledgement of economic risk, the detention of Yang Hengjun, and the changing air around Xi Jinping.

President Xi Jinping warned hundreds of top Communist Party officials that China must be on the alert against black swans and grey rhinos. (Photo: Geran de Klerk/ unsplash)
President Xi Jinping warned hundreds of top Communist Party officials that China must be on the alert against black swans and grey rhinos. (Photo: Geran de Klerk/ unsplash)
Published 24 Jan 2019   Follow @KelseyMunro

Mind the wildlife

In a widely publicised speech interpreted as a rare acknowledgement of the serious risks facing the Chinese economy, President Xi Jinping warned hundreds of top Communist Party officials that China must be on the alert against black swans and grey rhinos. Presumably, they don’t need fiscal reform or credit restrictions, they need a park ranger.

Australia had strong vested interests actively encouraging a warm and fuzzy take on China, in the business and economic community in particular.

A grey rhino is a “highly probable, high impact yet neglected threat … grey rhinos are not random surprises, but occur after a series of warnings and visible evidence,” according to the US author who popularised the term. Its increasing use in Party media, and now by Xi this week, has been interpreted as a warning to officials to seriously confront the ballooning risks in the Chinese economy like hidden provincial government debt, referred to elsewhere as an “iceberg of debt with titanic credit risks”.

A gift for unexpected metaphor is a common heritage among Chinese officials – see tigers and flies, or more trivially, this assurance to Australia late last year that China had no intention of “touching the cheese” of any other country by making strategic advances into the Pacific.

But it does seem odd that this term newly-favoured at the top of China’s party-state apparatus is not a coinage of Marx or Stalin but of Michelle Wucker, a US author and thinker who introduced the term at Davos a few years back. Wucker and the Politburo must share an unusual level of intestinal fortitude if they are accustomed to ignoring a rhinoceros in their vicinity.

Bully to the bully

Across the Straits, the President of Taiwan, Tsai Ing-wen, someone more used than most to operating with a grey rhino on the horizon, enjoyed a welcome rebound in the polls after firmly rejecting Xi’s 1 January speech insisting Taiwan must unify with the mainland.

“I want to reiterate that Taiwan will never accept ‘one country, two systems,’ [like Hong Kong],” Tsai said, hours after Xi’s speech. “The vast majority of Taiwanese public opinion also resolutely opposes ‘one country, two systems’, and this is also the Taiwan consensus.”

This speech saw the Taiwanese president, who had been struggling after her party was decimated in recent local elections, gain 10% points in two different polls. What is not clear is the role that Beijing’s covert interference campaigns against Tsai’s independence-leaning party had in that election.

Standing up to Beijing bullying clearly doesn’t hurt in Taiwan. But other countries have been more reticent, leaving the heavy lifting to retired senior diplomats and the academic community. A letter calling for the release of the Canadians detained in retaliation for Canada’s arrest of Meng Wanzhou of Huawei earned a sharp rebuke from the Chinese foreign ministry. News broke soon after of the disappearance of a Chinese-Australian writer often critical of the Party, Yang Hengjun. He was later confirmed to be in detention.

Which leads us to the elephant in the room.

How did we get Xi wrong?

The “how did we get Xi wrong?” run of commentary in the Anglosphere has been coming in thicker and faster of late, spurred by the drumbeat of bad news out of Beijing: bellicose foreign policy, hostage diplomacy, the mass internment of Muslims and other non-Han minorities in Xinjiang, broken promises to open up sectors of the economy, the development of an AI-empowered total surveillance state and its export to other authoritarian regimes. There is a good outline of the shift here by Angus Grigg at the Australian Financial Review.

How did we get Xi wrong? First, not everyone did. Second, no one wants conflict with China, so there was a lot of sympathy for papering over the cracks. Third, China has been through cycles of tightening and liberalisation before, a good many hoped or believed this one might turn out to be a temporary constriction.

President Xi Jinping (Photo:

And finally, though little said: Australia had strong vested interests actively encouraging a warm and fuzzy take on China; in the business and economic community in particular. There were self-interested Australian business identities (and, notoriously, at least one politician), who found, by coincidence and sometimes by design, an alignment of interests with Party-approved storylines. The dominant narrative about China, until a year or two ago, in Australia was that it was going to make us all rich, so we should keep quiet about things China didn’t like us to talk about. This strategy, it turns out, did not help.

The changing air

It’s always suited big business and investor interests if we all believed trade and investment would lead to China’s liberalisation, and as long as everyone was making money off the China boom, a dissident’s disappearance here or there was easy to dismiss as unfortunate, not standard operating procedure. The militarisation of the South China Sea soon after Xi’s promise never to do it was a wake-up call in the security establishment. But pundits, policy-makers, punters – all of us – wanted to believe that China would become, in the old formulation, “a responsible stakeholder” in the rules-based international system.

Now, as many have pointed out, like Foreign Policy’s Asia Editor James Palmer this week: Xi’s removal of his term limits, the Xinjiang camps, and the Kovrig kidnapping have “pulled a lot of folk to where they should be”.

One of the people who did not get Xi wrong, who has been patiently, forensically, laying out this warning all along is John Garnaut, former Fairfax correspondent in China for many years and later adviser to PM Malcolm Turnbull.

If you read anything about China this month, it should be this extraordinary transcript of a speech Garnaut gave to a closed room of public servants from what he slyly notes as both Canberra tribes – the security wonks and the economists – in August 2017, just released on the Sinocism blog. It delves into the deep roots of Xi’s ideology, spares you personally reading Stalin’s primer on the Bolsheviks or the Chinese classical texts, but explains why it matters so much. Perpetual struggle, against enemies without and within.

At the risk of stretching a metaphor beyond breaking point, Australia, the home of the black swan, the impossible bird, has been the canary in the coal mine for the big shift on China.

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