China’s Strongman May Need A Rest, But He is Hardly in Need of Rescue

It is the silly news season, in China no less than elsewhere in the West. Chinese President Xi Jinping is said to be under pressure from the elders of the Chinese Communist Party (CCP), may have fallen into political danger and has had his authority at home shaken. Xi is, allegedly, looking exhausted as the CCP’s ‘secretive conclave’ of the annual Beidaihe meeting gets underway.

Although this may sound familiar, thinking of the state of British Prime Minister Theresa May and the travails of her ruling Conservative Party, the similarities stop there. The days of significant meetings in August at Beidaihe (which to the CCP is what Brighton is to the UK Conservatives) and accounting to Party elders are gone. In August 2015, the Party’s own People’s Daily carried a clear message from Xi to his predecessors: retired cadres should not ‘reheat cold tea’, or in other words, interfere. Xi is not in political danger, he remains firmly in control, and if he looks tired, this can only be expected of a 65-year-old with a schedule such as his.

None of this is to say that he is not hitting some mid-term turbulence – to be charitable, let us assume that Xi will serve three terms at the top. Trade difficulties, initiated by US President Donald Trump, are a major factor behind the dissatisfaction facing the Chinese leader. And the US attitude is being reflected in other countries, which are also pushing back against not only China’s industrial policy ‘Made in China 2025’ (with its intention of sourcing 75% of inputs domestically), but also against a lack of reciprocity in investment and against interference by China in their domestic affairs.

Meanwhile, there is disagreement within the Party on debt and financial policy. The economy is drooping, real reform is proving elusive, the environment continues to suffer, and the income gap yawns wide. These are the elements of the ‘Three Crucial Battles’, namely supply side structural reform, pollution, poverty alleviation, which Xi declares must be won. It is proving to be a difficult campaign.

But the Party will not be changing its general. Xi has his men in control of six of the seven centres of power in China: Politburo Standing Committee; Politburo, Central Secretariat; Central Committee; Central Military Commission; and Central Commission for Discipline Inspection.  His problems lie with the seventh, the 2,851 county-level Party Secretaries, who are beholden to local interests; with the state-owned enterprises; and with other ‘vested interests’.

Powerful Xi may be, there is growing unhappiness and opposition, occasionally displayed openly. Within the Party, those who have lost power, who are not of Xi’s persuasion, or who have been punished in the corruption and discipline war (around 1% of CCP members) are disgruntled. The old debate between ‘red and expert’, considering whether to prioritise political loyalty or technical expertise, has returned, with Xi making it clear that ideology is back and that the Party leads in all spheres. Freedoms (of speech, internet, publishing and media) are being curtailed. In June, intellectuals received a Party notice on patriotism, which should be understood as an attempt to corral them. Academia and the bureaucracy are unhappy, with resignations rising, particularly in the Ministry of Commerce. 

Xi Jinping’s hardline policies seem appear to be creating unnecessary discontent. A crackdown on Christianity risks alienating tens of millions. Persecution of Uyghurs and other Muslims not just in Xinjiang but in the rest of China and increasingly abroad is likely to exacerbate the split between ethnic minorities and the dominant Han ethnic group, possibly spurring extremism, ‘splittism’ (self-determination) and terrorism – an unpleasant irony, given that the Party is committed to eliminating those ‘Three Evils’.

But none of this is likely to lead to a major challenge to Xi Jinping’s leadership.  Such a challenge would require a challenger. Some top candidates for the post are already languishing in prison; the fate of Bo Xilai, Zhou Yongkang, Sun Zhengcai and others is a sharp lesson on the dangers of opposition. Moreover, Party disunity might lead to its overthrow, to the detriment of all leaders.

All that might change if things go badly wrong, leading to mass discontent and a need to head it off by taking off the head of the Party. This might happen in one of four ways:

• A serious fall in the economy leading to a rise in unemployment. The US trade war does not help: although in the short term it might boost Xi through an appeal to nationalism, in the long term, if Xi cannot quickly rebalance so that domestic consumption boosts jobs lost to falling trade, public and Party sentiment may turn against him.
• The housing and debt bubbles burst, with the consequences falling upon already long-suffering savers.
• A failure to cure environmental problems leads to further large-scale food safety scandals stemming from water and soil pollution and health problems related to air pollution as well.
• Inequality, mainly suffered by second generation ‘rural migrants’ (of whom there are approximately 150 million) born in the cities without country roots or land to fall back on, and who do not enjoy the social security benefits of registered urban residents. Less well educated, with poorer jobs and prospects, they are now coming to marriageable age, but without the means to afford it just as the gender imbalance begins to bite (at its worst there may be a 25–30 million ‘surplus’ of males between 20–40 years).

Avoiding these four problems (and there are more) is what makes reform so vital for Xi Jinping.  Standing in the way of implementing reforms are the famous ‘vested interests’ (Party fiefdoms at all levels, the military, leaders of state owned enterprises, the mafia and others). Tackling them has been Xi’s main task in his first years in power, which is why he continues to devote so much energy to Party reconstruction and discipline. It is why he and Premier Li Keqiang continually cajole or rail against a failure to implement Party policies. This is the real crucial battle, and although Xi is not winning it, he has not lost it yet either. The next few years will determine whether Xi can defeat the vested interests and ensure economic reform. He believes he can do so without reforming the political system, which others see as vital for enabling the market and for private initiative to flourish. If he fails, stagnation and instability could result. Then it might be the time to talk of his going. And worryingly, if he had to step down, by abolishing presidential term limits and not designating a successor he has made a power struggle a distinct possibility.

The views expressed in this Commentary are the author’s and do not necessarily reflect the views of RUSI or any other institution.