Xi Jinping’s headaches multiply before reelection

Though Jinping’s “reelection” as China’s president next year is a foregone conclusion, that does not mean his job is getting any easier. If he starts to look weak, he could try to distract his dissatisfied populace with aggression against Taiwan.

Chinese President Xi Jinping appears on a large screen as performers dance during a gala marking the 100th anniversary of the Communist Party in Beijing.
Xi Jinping has solidified his position within the Chinese Communist Party, putting himself in a league with Mao Zedong and Deng Xiaoping. But as economic and foreign policy difficulties mount, his potential enemies are lying in wait for him to make a misstep. Here he is pictured on a large screen above dancers performing during a gala celebration marking the CCP’s 100th anniversary. © Getty Images
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In a nutshell

  • Xi Jinping’s “reelection” will likely go smoothly
  • The economy and foreign policy are not going his way
  • He may try to distract from the difficulties with action against Taiwan

In March 2018, Xi Jinping pushed through an amendment to China’s constitution that removed the limit holding presidents to two consecutive terms in office. The move paved the way for him to stay in the post after he is approved as general secretary of the Chinese Communist Party at its 20th congress toward the end of next year.

According to rules put in place by former Chinese leader Deng Xiaoping (1978-1989), no general secretary (the top political position) has been allowed to remain in power for longer than 10 years. His pending renomination means President Xi will break that norm as well. Yet, to ensure the unprecedented transition to a third presidential term goes off without a hitch, he needs to be certain there will be no opposition. That makes the coming year crucial for him to justify his unique position within the party.

Unwelcome developments

Over the past few months, developments in China and abroad have not gone President Xi’s way. Unlike his predecessors, China’s current leader is eager to keep all the decision-making power in his own hands. That means that when problems crop up, the blame falls on him.

On the economic front, China is facing strong structural headwinds. The increase in gross domestic product (GDP) for the third quarter of 2021 was 4.9 percent, much lower than expected. Macroeconomic data suggests that the risk of stagflation (low growth accompanied by inflation) in China is rising. Exports and real estate were the main drivers of China’s post-pandemic recovery, and now, of the country’s economic “troika” (exports, consumption and investment), two (exports and consumption) are running out of steam. The economy is likely to continue sagging through the end of 2021 and the first half of 2022.

On December 4, the prominent Chinese economist Li Daokui warned the nation that people should be prepared for a difficult time, saying that the next few years may be the most difficult period for China’s economy since reform and opening up began. President Xi has to admit that his “domestic circulation” policy is not working well.

The Belt and Road Initiative has encountered several striking setbacks.

Due to the lack of sophisticated coordination, President Xi’s energy initiatives have also fallen short. China’s goals for reaching peak carbon emissions by 2030 and carbon neutrality by 2060 have caused, at least for the time being, more harm than good. Power outages in September and October across the country have resulted from several factors, including the shutdown of many coal power plants to meet decarbonization targets. On top of that, Russia has had trouble meeting its gas supply commitments, while China’s aggressive “wolf warrior diplomacy” has led it to restrict imports of high-quality Australian coal.

In response, the central government had to backtrack on fossil fuel limits. But floods in the coal-mining Shanxi region in September have kept China from increasing coal power as much as it would have liked. Moreover, President Xi has vowed to preserve and even expand existing manufacturing. To meet that goal and make up for the power shortage, China has expanded coal production by 6 percent this year. It was no surprise that the president decided not to attend the United Nations’ COP 26 climate change summit in Glasgow in November.

President Xi’s brainchild, the Belt and Road Initiative (BRI), has also encountered several striking setbacks. Despite some big wins in the years immediately following its announcement in 2015, the past two years have seen progress nearly grind to a halt. Even the initiatives in Pakistan – which China has dubbed its “iron ally” – have sputtered. As these projects languish incomplete and countries’ economies remain hamstrung due to the Covid-19 pandemic, many are finding it difficult not to buckle under the weight of the debts they owe Beijing. Within the next two to three years, it seems likely that the “great achievements” of the BRI that President Xi has grown so accustomed to touting will be few and far between.

In foreign policy, wolf warrior diplomacy continues unabated, though it frequently backfires. China’s “vaccine diplomacy” has reached its limits. And now that Hong Kong is firmly under Beijing’s control, the next target for takeover is Taiwan.

China has made moves on several fronts to achieve that goal, causing a backlash from small countries like Lithuania and the Czech Republic, not to mention the more pronounced reactions from the United States, Japan and Australia. The European Union has made its voice heard as well. European Commission Vice President and Commissioner for Competition Margrethe Vestager said that the EU needs to strengthen cooperation with Taiwan and ensure the island’s democratic freedoms. She added that she hopes Taiwan will become an important partner in the European Chips Act.

A screen displaying the Shenzhen Stock Exchange and the Hang Seng Index figures in Shanghai, China
The Chinese economy has not performed as well as hoped, undermining President Xi Jinping’s legitimacy. Here, a screen in Shanghai displays the underwhelming performance of the Shenzhen Stock Exchange and the Hang Seng Index in August 2021. © Getty Images

In October, the People’s Daily, the CCP’s official newspaper, published an article by Chinese Foreign Minister Wang Yi in which he praised President Xi’s diplomatic thinking. He wrote that China is fully defending its sovereignty, security and development interests, “daring to show its sword” and “resolutely fighting” on issues such as Taiwan, Hong Kong, Xinjiang, Tibet, the South China Sea and human rights. All this, he said, was helping to create a favorable external environment for the country’s development. To independent analysts, the irony was clear.

Third resolution

Certainly, President Xi is relieved that preparations for his “reelection” appear to be proceeding smoothly and that factions within the party no longer have the strength to prevent his precedent-breaking continuation in office. Thanks to his relentless purging of political enemies through anti-corruption campaigns, opposition within the party is unlikely for now. Yet his potential enemies are not sleeping – they are lying in wait for him to make a misstep.

In the face of the current malaise, President Xi refrained from grandiose statements about his economic and foreign policy achievements during the 19th Central Committee’s Sixth Plenary Session in November. Prior to the meeting however, he ensured that allies were being installed in key positions. On October 19 alone, seven provinces and regions – Guangxi, Heilongjiang, Hunan, Jiangsu, Jiangxi, Tibet and Yunnan – received new party secretaries.

At the meeting, officials adopted the “Resolution of the Central Committee of the Communist Party of China on the Major Achievements and Historical Experience of the Party over the Past Century.” This document is particularly important, at least for President Xi. Before November, the CPC had only ever adopted two historical resolutions. In 1945, the Central Committee adopted the “Resolution on Certain Questions in the History of Our Party.” In 1981, it adopted the “Resolution on Certain Questions in the History of Our Party since the Founding of the People’s Republic of China.” Both established the centrality of Mao Zedong and Deng Xiaoping, respectively, heralding the beginning of the Mao and Deng eras. The latest historical resolution cemented Xi Jinping’s position as the party’s absolute leader as it begins its second century.

Even if President Xi’s reelection goes smoothly, his approach poses a new challenge for orderly succession.

All this has important implications for the president. Since becoming China’s leader in 2012, he has vowed that the Chinese Communist Party would not grow soft, as its now-defunct Soviet counterpart did. What he means is that the CPC’s control over all aspects of the country and its citizens’ lives will continue to grow more comprehensive and sophisticated.

But even if President Xi’s “reelection” in 2022 goes smoothly, his approach poses a new challenge for orderly succession within the CCP going forward. With the 10-year limit abolished, it is unclear how the leaders that follow him will be selected.

Hu Chunhua, who under President Xi’s predecessor, Hu Jintao, was considered a potential future leader, has yet to enter the Politburo. Another politician who some thought could head the country, Sun Zhengcai, was swept completely off the political stage in 2017. Since then, there has been no mention of a successor.

‘Common prosperity’

In another preparation for his reelection, President Xi proposed a new campaign under the buzzword “common prosperity.” In September he announced that by 2032, “the common prosperity of all people will have made more tangible and substantial progress,” and that by the middle of the century “the common prosperity of all the people will be basically realized.”

This is Xi Jinping’s modification of Deng Xiaoping’s thinking. The latter propagated a “let a part of the population get rich first” policy. According to the Chinese State Council, China has already built a well-off society, so Deng’s mission has been accomplished. Though President Xi has emphasized the need to promote common prosperity, neither he nor the Chinese government has offered concrete details about how to achieve it.

Crucially it is worth recalling that in the speech cited above, the Chinese leader promised that progress toward the new goals would only become apparent in 2032 – a full five years after his third term as president would end. It seems that he is already laying the groundwork for ensuring himself a fourth term and beyond.

The Chinese government’s recent spate of highly publicized economic and financial moves – anti-monopoly crackdowns and its involvement in the Evergrande case, for example – show how a “common prosperity” policy will work. It will strengthen the government’s control over corporations and ensure that rich, successful entrepreneurs do not pose a threat to the CCP.

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Scenarios

In the most likely scenario, the relationship between China and other major industrial countries will continue to deteriorate. As the West becomes less and less willing to allow transfers of technology – especially sensitive technology – to China, Beijing will continue to lose trust that the West is willing to treat it as a political equal.

President Xi knows that China is still a big, attractive market. It also has the largest manufacturing base in the world. Beijing will use this to its advantage, slowly opening up certain areas of the economy to try and lure in Western firms. The companies that take the bait could remain in China and lobby for Beijing with their own governments back home. However, that will not win President Xi the prize that he wants most of all: highly sophisticated technology.

While China has been able to make great technological strides of its own in recent years, what has really helped its advancement is its access to Western innovations. During President Xi’s next two terms, that access is likely to be significantly restricted. Once China can no longer easily use and copy American, European and Japanese tech to boost its own industries, the government will need to find ways other than increasing productivity to raise revenue – for example by increasing taxes. The tax burden in China is already hefty, and adding to the weight will likely hurt the poor more than benefit them.

Unlike his predecessor Hu Jintao, President Xi is an ambitious man who constantly feels the need to demonstrate his infallibility. This desire is not only in his nature, but is dictated by the immense pressure he is under – and the more he centralizes power in his own hands, the greater that pressure becomes.

Once President Xi is “reelected,” the uncertainties regarding China’s economy and foreign policy will multiply. If the economy falters, he will want to draw the country’s attention to other issues – Taiwan is the low-hanging fruit here. For at least the next three years, however, retaking Taiwan by force will prove too costly for China.

On the other hand, Beijing could achieve two goals by taking Pratas Island first, which is currently occupied by Taiwan. That type of operation would allow China to flex its military muscle vis-a-vis Taiwan, while potentially deterring neighbors or Western nations from pushing too hard against its claims in the South China Sea. At the same time, Beijing will further intensify its pressure on Taipei by blacklisting prominent figures and institutions it sees as favoring Taiwanese independence, hoping to strong-arm the island into compliance.

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