What’s next for Xi’s China?

Chinese President Xi Jinping opened the 20th National Congress of the Communist Party of China (CPC) by celebrating the destruction of Hong Kong’s autonomy, reiterating the goal of “reunification” with Taiwan, praising the zero-COVID policy, and stressing the importance of economic “self-reliance.” What he did not do was allow the scheduled release of key economic figures or emphasize a continued commitment to market-oriented reforms.

In this Big Question, Project Syndicate asks Yuen Yuen Ang, Kishore Mahbubani, Orville Schell, and Yu Jie what the CPC Congress – and Xi’s likely confirmation for a third term – means for China’s economic development and global role.

Yuen Yuen Ang

Yuen Yuen Ang, Associate Professor of Political Science at the University of Michigan, Ann Arbor, is the author of `How China Escaped the Poverty Trap’
and `China’s Gilded Age’.

Xi’s opening speech at the 20th Party Congress points to a profound reshuffling of the CPC’s priorities, with security replacing economic development at the top of the list.

As Bloomberg reports, this is the first time since the CPC took power in 1949 that the paramount leader mentioned “security” more than “economy.” Xi insisted that security is the precondition for economic development: “National security is the foundation of national rejuvenation, and social stability is the precondition for national strength.” In the event of a tradeoff between security and development, the former wins.

The case in point is Xi’s decision “absolutely” not to waver on his zero-COVID policy, despite its devastating impact on the economy.

Xi will continue to tighten his political grip. The question is whether there are pragmatic leaders who are willing and able to temper his extreme policies. As I noted in a recent paper, over the last decade, governance under Xi’s personalist rule has followed an oscillating pattern. The bureaucracy forcefully implemented Xi’s overly ambitious, ideological commands until unintended consequences triggered a frantic retreat. Will such policy oscillations persist in the coming years?

It depends on who is appointed as premier and to the Politburo standing committee. If pragmatic technocrats are appointed, the answer is yes: Xi will introduce ideologically driven, growthdampening policies, and technocrats will move in to control the damage.

If the new leadership comprises Xi loyalists, ideological policymaking will go into overdrive, with far-reaching effects. After all, the CPC has more state capacity and micro-level control today than it did under Mao Zedong.

Kishore Mahbubani

Kishore Mahbubani, a distinguished fellow at the Asia Research Institute of the National University of Singapore, is the author of `Has China Won?’ (PublicAffairs, 2020). He was selected as one of Prospect magazine’s top 50 world thinkers in 2014.

The Western media have done Xi a great favour: they have bestowed upon him low expectations. Many Western observers, including thoughtful ones, believe that the great China growth story is over, because China is now ruled by an incompetent and isolated leader. Xi will shatter their expectations. But this is not just about Xi. No one person – not even Xi – is responsible for driving China’s growth.

Larger structural forces are at play.

For starters, China’s years of investing massively in physical infrastructure and human capital are likely to pay off in the coming decades. Yes, in a few decades, China’s demographic decline will generate headwinds. But, before that happens, the country will benefit from an explosion of talent in science and technology. Since 2019, China has been producing more research than the United States and Europe overall, and a higher percentage of its research was among the top 1% of papers by citation globally. America’s decision to cut off chip supplies to China will be a short-term setback, but it won’t cripple China. In fact, U.S. efforts to contain China’s rise – such as launching a trade and technology war and “needling” the country on Taiwan – have served only to reinforce a broad consensus to achieve “national rejuvenation.” China remains as determined as ever to avoid another “century of humiliation” by the West. When Xi said in his speech at the CPC Congress that China should “be ready to withstand high winds, choppy waters, and even dangerous storms,” most Chinese would have nodded in agreement. The Regional Comprehensive Economic Partnership (RCEP) – the world’s largest freetrade agreement – will add yet more fuel to China’s economy. And the dual-circulation strategy will soon begin to pay off, not least owing to the rapid growth of China’s retail market, which has swelled from $2.3 trillion (much smaller than America’s $3.9 trillion) in 2010 to $6 trillion in 2020 (surpassing America’s $5.6 trillion).

Now extrapolate that to 2030.Short term challenges remain, including the zero-COVID policy, the real-estate bubble, and U.S. technology sanctions, and 2022 will be one of the Chinese economy’s worst years in recent history. But pragmatic and rational governance has been enabling China to overcome major public policy challenges for decades, and that is not going to change. China will bounce back from its current struggles. In short, don’t bet against China and Xi.

The great Chinese growth story will continue.

Orville Schell

Orville Schell, Director of the Center on US-China Relations at the Asia Society, is a co-editor (with Larry Diamond) of `Chinese Influence and American Interests: Promoting Constructive Engagement’.

Just as there was not a hair out of place on Xi’s head as he delivered his “report” to the CPC’s 20th National Congress, there was not an utterance in his speech that did not accord with his already tirelessly annunciated “Xi Jinping Thought for a New Era.”

The way the delegates, in their dark suits and red ties, took studious notes and clapped in robotic unison were all apt expressions of the degree to which Xi has now regimented Chinese society and politics. Having experienced a period of just such regimentation during Mao’s Cultural Revolution, and then having lived through Deng Xiaoping’s reforms in the 1980s, I wondered what was
going on inside the heads of all those seemingly obedient delegates as they listened to his speech. With history apparently doubling back on itself, did any of them sense something dark now threatening their country, but feel powerless to respond?

China’s development success is so impressive that we outsiders can be forgiven for being bewildered by Xi’s reign as it enters a third term. His bellicosity toward the outside world has antagonised country after country, and his extreme techno-autocratic control at home has alienated many in China’s professional classes. How does any of this advance China’s national interest? In fact, many of Xi’s actions now threaten to turn his vaunted “China Dream” into a pipe dream. He has clearly done terrible damage to China’s relations with onetime close partners – Australia, Canada, the
European Union, India, Japan, South Korea, Sweden, and the U.S., among others. But this has been matched only by the damage he has done to China’s own economy through his zero-COVID
policy, mismanagement of the property crisis, attacks on private entrepreneurs, derailment of foreign IPOs, and support of Russian President Vladimir Putin. Xi’s speech at the 20th Party Congress could have been a coronation for a leader who presided over a spectacular “peaceful rise” that truly justified a third term as CPC General Secretary. Instead, it was a veiled declaration of ideological contention that puts China at risk of becoming so decoupled from global markets that its boom goes bust. And, because Xi fears that compromise signals weakness, he has not prepared any diplomatic offramps. He is obsessed with saving face, and expects the world to respect him. But he is unwilling to act respectably, and takes umbrage when criticised for being an autocrat. And, lest we forget, it was Xi who put a stake through the heart of America’s once-workable policy of engagement and precipitated the very “neo-containment” Chinese leaders have long feared. Yet there was nothing in his speech suggesting that he recognizes how poorly his “big leader” behavior serves his country.

Instead, he has eschewed all agency by blaming China’s problems on “hostile foreign forces.” In his speech, Xi warned of “dangerous storms” to come. If he’s not careful, he may end up being the one who brings those storms to China, unintentionally leading the country’s success story toward a tragic ending.

Yu Jie

Yu Jie is a senior research fellow on China in the Asia-Pacific Program at Chatham House.

The undented ambition of Xi and the CPC is to make China a “modern socialist society” – that is, a middleincome country – by 2035. But this is easier said than done. A new phrase that Xi introduced while delivering his political report – “modernisation with China way” – may offer insight into how he plans to pursue this goal during his third term. The phrase may be understood as an expression of the “Chinese exceptionalism” that Xi has advocated, and mirrors his commitment to economic and political “self-reliance.” Xi’s top priorities are enhancing national security and
promoting equitable growth. Xi’s definition of security extends far beyond military matters and includes food, digital, energy, and labour skills.

This reflects China’s deep anxieties about constraints on its access to high-tech supply chains and food and energy shortages, as geopolitical tensions with the West deepen. On growth, Xi seeks to define success not by headline growth figures, but by progress in tackling scarcity faced by certain segments of society, thereby meeting “people’s ever-growing needs for a better life.” To this end, the Party must devise a detailed strategy for managing the financial risks associated with the downsizing of China’s property sector, without damaging the personal wealth of millions of people.

The urgent pursuit of greater security must be combined with measures that promote jobs and qualitative growth as Chinese cities emerge from long and severe pandemic lockdowns.

Against this backdrop, the 20th CPC National Congress should be focused not on celebrating Xi’s “victory” in being confirmed for a third term, but on crafting a narrative that helps to cement the Party’s legitimacy and ensure continued prosperity.

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Source: Project Syndicate

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