Photo: Angelika Warmuth/DPA/PA Images

Returning to Beijing recently, I carried in my head images of the city I left in January 1979, when the Reform Era was just dawning. But that city has gone. The hand of God has swept it away, and dropped in its place a gleaming megalopolis of steel and glass, whose dimensions stretch the mind to its limits. This new city speaks to me of prosperity and stability—but are China’s rulers as strong as it suggests?

SUVs choke avenues that run to the horizon, and shining office towers soar to the sky. Physically, Beijing speaks of impeccable order: streets intersect at right angles, and square-shouldered apartment blocks, hardly varying in height, march across the city like regiments on a vast parade ground. Mile after mile of roses bloom with perfect discipline down the centre of highways. Detachments of uniformed hygiene workers keep the streets free of litter, and the toilets free of germs. Your handbag is safe on your arm and no office workers throw up in the gutter after Friday evening binge-drinking.

In the city centre, Cartier, Gucci and Prada compete to cover store fronts with massive signs as nowhere else in the world. Didi has defeated upstart Uber, and produces taxis at the digital click of my finger. To hire a bicycle I unlock one with a smartphone app; at the end of my ride I can leave it anywhere. I can buy almost anything online, and take delivery of simple goods in just one hour. WeChat offers more services than any other online business in the world. Online retail sales in China in 2016 were 90% higher than in the US. The Communist Party keeps a low profile. Smart policemen stand stiff as mannequins at every subway entrance, or patrol in pairs like clockwork dolls, but the harsher forces of repression are invisible. Beijing proclaims that society is stable, economic growth will never end, and the one-party dictatorship is invincible.

So why does Xi Jinping believe that the Party is fighting for its life? Because he knows that behind this gleaming facade lies another reality. He knows that the people who live and work in the soaring buildings dare not drink tap water, their life expectancy has been cut by five years by polluted air, and cancer is growing in their babies’ lungs due to levels of PM_2.5 invisible to the eye but clearly shown by an app on my iPhone. The Maserati and Ferrari show rooms outside my hotel tell me what the Gini index says in a more prosaic way: that Xi’s “socialist” nation has great and growing social inequality. He has ordered a crackdown on some of the biggest, best-connected companies, because they have concocted plans for outward investment that go far beyond prudent diversification: they are the most ambitious attempts at capital flight ever devised.

It is not only their savings that the rich are trying to move abroad; China is suffering from the greatest brain drain in the history of the world (by 2006, 750,000 students who had studied abroad had failed to return to China.) Every intellectual I meet tells me how strongly they object to Xi’s policies, so their views cannot be a secret to him. More fundamentally, he knows there is a moral crisis in China. If he did not, then scholars like He Huaihong of the Peking University would tell him so.

In the 53 meetings that I have in 30 days, with people ranging from economists to publishers, to dramatists, to financial analysts, and a hip-hop dancer, Chinese use that phrase “moral crisis” time and again, with no prompting from me. They tell me freely what they mean. The Communist Party no longer believes in Socialism, let alone Communism, and it destroyed its own moral authority by the military massacre of June 1989. So, lacking any creed or moral authority it had to buy the loyalty of its officials through opportunities for predation. It created a walled garden of corruption within which its officials and their cronies could plunder the assets of the people, and now defends it with all the instruments of Leninist dictatorship. Crony capitalism has corroded every institution in the land, at every level, and Xi’s anti-corruption campaign is attacking the symptoms, not the underlying causes. It is not only the people’s property that the rulers are stealing: as the novelist Yan Lianke has written in his latest book, “Power and money have colluded to steal people’s souls.” It is not only their rulers whom the common people distrust: they tell me their distrust runs horizontally as well as vertically. They shake their heads and say: “In China there is no trust, and no truth.”

“China is suffering from the greatest brain drain in the history of the world”

This society which once was ruled by morals rather than laws knows that it has lost its moral compass.

The evidence is not only anecdotal. If the rulers believed that they enjoy the trust of those whom they rule, why would they spend more on defending themselves against internal enemies than against external ones? The budget for their vast, far-reaching domestic security apparatus has for years exceeded that for the military. If they trusted their subjects, why would they deny them access to the true history of their nation, or limit their knowledge of the world with a Great Firewall? If they have fear of the truth, why, when I visit the National Museum—the most visited museum in the world—do I find a version of China’s history since 1840 that is deeply distorted and hideously amputated?

Coming out of the Museum, my eyes sweep around the vast expanse of Tiananmen Square, and I recall another afternoon, 41 years and one month before, when I brought my infant daughters here so that they could say, in years to come, that they had been present at a turning point in Chinese history. That Sunday afternoon, the square was filled by half a million people who had come, spontaneously and against the orders of the Party, to pledge loyalty to the pragmatic nationalist vision for China left them by the recently deceased Premier Zhou Enlai, and to oppose the  revolutionary communism of the still-living Mao and his cronies. Within twenty-four hours, the blood of some of them was spilt on the steps of the Monument to Revolutionary Heroes in the centre of the Square. Their courage had opened the way to the Reform and Opening of China, but I do not find their names engraved upon the Monument. Instead I find the embalmed corpse of Mao lying in a mausoleum nearby, despite the fact that his Great Leap Forward caused the premature deaths of 46 million people through starvation and disease.

I stare at his mausoleum, and ask myself, how does the Communist Party still hold China in submission? Terror, first and foremost. The people I met reminded me with a force and frequency I had not expected that the massacre of June 1989 still casts its shadow in their minds. Our news media did not know it at the time, but that massacre did not just crush a few thousand students in Beijing: it crushed a nationwide democracy movement bigger than any the world has ever known. To prevent any recurrence of that, the regime has developed its system of thought control to a degree of sophistication and effectiveness without precedent. For example, the education system does not aim to educate: its goal is to produce unquestioning minds, blind to The System. State-controlled television and films (China has the world’s second largest film industry) fill the leisure time of the masses with slickly produced “pap.” Every book, every news report, every learned article that is published online or in print must be vetted before publication.

I was reminded daily that repression of independent thought and expression and of civil society, and the persecution of human rights lawyers have all intensified under Xi. I met numerous bloggers, economists, public intellectuals and professors whose accounts on Weibo (a microblogging website) and other public activities have recently been closed. Xi has dealt the rule of law a massive blow by conducting the anti-corruption campaign through Party internal organs and not the courts. In the words of the outstanding novelist, Yan Lianke: “The law is nothing more than an overcoat that may be worn when it is needed and removed when it is not.”[i] Yan describes “a process of literary enslavement and degeneration that is driven by politics and ideology.”I came away convinced that China is not an authoritarian society: it is neo-totalitarian. Denied access to political rights, to justice and to truth, the people are enslaved to the Communist Party. In China, the slaves may drive BMWs, wear Ralph Lauren, and tell the time by Rolex, but they are slaves nonetheless.

“Until the 19^th National Congress of the Communist Party in the autumn only minor measures to guard against systemic crisis will be taken”

The people are permitted certain areas of freedom, always conditional, never absolute, and I saw them making good use of them in the dynamic private sector.  Two visits in a 24-hour period to a state-owned bank and a privately owned company Bilibili provided a dramatic contrast. The dead hand of bureaucracy manifest in the bank was a caricature of all that is worst in the state sector. Bilibili is an example of creative entrepreneurship that would be stunning in any country. It is a video sharing website themed around Japanese-style anime and manga. In the few years since its launch it has attracted a community of 150m young users, a virtual youth club, unique in the world.

I met highly talented theatre directors and dramatists, but the combination of censorship and anti-market economics drastically limits creative endeavour in this field. Encountering the work of people like the prolific Nicky Yu (author of 70 plays, some on highly sensitive subjects like public amnesia), makes one realise what a contribution China could make to world theatre under a different system. And that is true of every area of human activity.

While the Party-State cannot provide a new moral compass to replace the one it has destroyed, Christianity, in contrast, is growing very fast. A network of increasingly self-confident and open, but unregistered, churches is spreading through the land.

Although the prosperity and efficiency of Beijing and Shanghai insist that economic growth and the one-party dictatorship will continue forever, the most serious, and best-informed economists, and financial experts I met are convinced that behind the gleaming facades ineluctable economic, financial and social forces are at work which will soon test the cohesion and stability of this society. The regime faces economic problems that today are the stuff of arguments among economists but could before long prompt street protests: the soaring mountain of debt, the flood of credit that it has relied upon to fuel growth, and the perils of a massive shadow banking system.

China’s highly educated technocrats understand the challenges very well, and they have had four years in which to educate Xi as to their gravity. Until the 19^th National Congress of the Communist Party in the autumn only minor measures to guard against systemic crisis will be taken. Thereafter, we can expect more serious action.  No nation has ever grown its way out of a debt mountain of the dimensions that China has built, so a recession, either sharp and deep or prolonged and gradual (such as Japan’s) is inevitable. Every attempt will be made to minimise the pain, but recession will cause large-scale unemployment, falls in property and share prices will destroy the life savings of many, and there will be a risk of loss of confidence in some financial institutions. This will happen in a society that does not have adequate unemployment benefits, where people are ill-prepared for such adversity: no one has ever experienced a nation-wide recession. It will happen in a context of moral crisis, environmental catastrophe, great social inequality, and political distrust; and the Party’s success or failure in coping with the economic challenges will be determined as much by these non-economic factors as by its skill in economic management.

I left China convinced that its problems are insoluble without political change, but knowing that today’s leadership is implacably opposed to that. Between the dynamism of the private sector and the growth of Christianity, on the one hand, and the value-destroying state sector and dead hand of dictatorship on the other, a new China is struggling to be born. But the chances of an orderly birth are slim. The intellectuals I met wait with acute anxiety. One venerable authority said to me: “The crisis is already there: it will present itself through some random incident, impossible to predict. How it will play out is hard to say, but a financial crisis would certainly lead to a social crisis.”