Xi Jinping’s Uncomfortable Crown

The 20th National Congress of the Chinese Communist Party (CCP) has “victoriously concluded”—all big CCP meetings end in victory—with the party’s general secretary Xi Jinping taking a third five-year term in that role. Six acolytes will flank him in the Politburo Standing Committee, while a score of other loyalists will round out the full Politburo. Nowhere among these cadres can a successor be spotted. While this roster reflects Xi’s dominance of the party machine, precisely how these senior leadership positions were determined remains as opaque as decisions taken in a conclave of mafia dons.

Xi’s triumph culminates a decade of his and his advisory cabal’s scheming to thwart or eliminate potential rivals. Personnel shuffles across the CCP’s civilian bureaucracy and its military arm (the People’s Liberation Army) to advance Xi’s loyalists, a vengeful “anticorruption” campaign that felled 200,000 officials, relentless propaganda to build a personality cult around Xi and to promote his eponymous “Thought” on all subjects imaginable, draconian media censorship, the squashing of private entrepreneurs lest they exert undue influence on Chinese society—all these measures and more have been deployed to pave Xi’s path to his third coronation.

By taking the crown for a third time and surrounding himself with officials unlikely to question his decisions, Xi has broken the norms of collective governance and orderly succession that the CCP put in place after Mao Zedong’s death, chiefly to guard against the despotic excesses that wrought such woe during Mao’s reign. In contrast to the party elders who set those norms and sought more balanced decision-making, Xi has pulled power to himself as “chairman of everything” and paid repeated obeisance to Mao in his rhetoric and in his ritual visits to Mao shrines.

In the new Politburo Standing Committee, like small electrons orbiting “Xi Jinping as the core,” the general secretary has surrounded himself with less a team of rivals than a mediocre troupe of trusties. These six men were chosen for their loyalty and service to Xi. Several share his family roots in inland Shaanxi Province; others have worked with or for him as he ascended party ranks in China’s richer coastal areas. Like Xi, none has a substantive university education, nor any real international exposure. From these men there will be no back talking, let alone constructive criticism, no attempt to correct policies that might undercut the economy (like “dynamic zero-Covid”) or damage China’s international reputation (like “wolf-warrior diplomacy”).

Xi’s Standing Committee is composed of officials who long ago linked their fortunes to his, abetting his rise with their own penchant for CCP politics and serving as functionaries in provincial party posts. The broader 24-member Politburo holds similar apparatchiks but, in the round, is a more eclectic lot, including the current foreign minister, two generals, former aerospace and defense industry bosses, a public health specialist, an atomic scientist once posted as ambassador to France, and a lifelong domestic spy.[1]

Another norm Xi has broken: not a single woman sits in the new Politburo. Despite the party’s notorious paternalism, women had figured in all recent Politburos, even if typically given “women’s work” with health or education portfolios. Perhaps Xi’s scribes have read Mao’s dictum to mean that “women could hold up half the sky,” not that they actually do.

DECODING THE LINGO

Xi Jinping’s speech opening the Congress on October 16 prefigured his secretary-general’s report issued on October 22. The speech and report are political statements made in a liturgical setting, not policy proposals such as those made in the State Council premier’s government work reports read at the annual National People’s Congress plenaries.

Darker and more pessimistic in tone than Xi’s last such report, delivered at the 2017 Party Congress, this year’s document describes an embattled China threatened by an increasingly tense international environment. “Hegemons” and “bullies”—that is, the United States and its allies—lead the “hostile foreign forces” aiming to “contain China” and block its ascent to global leadership. How should China parry such threats? According to Xi, by building self-sufficiency in all areas, from agriculture to artificial intelligence; by “modernizing” the Chinese economy (whatever that means); by further expanding “comprehensive national security” through pervasive surveillance and tight societal controls; by engaging in constant “struggle”; and by retaining Xi himself as the “core” of the party leadership. It is fortress China with Xi in command.

STEADY AS XI GOES

Just as specific policies and programs flowing from Xi Jinping’s report will not appear until the National People’s Congress meets next March, so, too, a full roster of senior government appointments will be announced then, when the newly designated party leaders take government jobs. But the new Politburo members and the list of new Party Central Committee members—as much who’s out as who’s in—give an early guide to those top posts, and rumors will begin trickling out as “transition teams” start work in the coming weeks.[2]

The Party Congress directions are clear enough, though: Xi will run the show, will continue as chairman of everything, and will follow the course that he has set in his first two terms. No one will deflect him.

Anyone who has worked in a bureaucracy—whether corporate, military, or government—recognizes strong leadership, the leader who listens more than she speaks, who encourages independent thinking and well-grounded criticism, who tests options before taking a decision and takes responsibility for the decision, having tried to ensure that it is the best possible choice. Such leaders are not common in China, whose political culture prizes deference, if not obsequiousness.

Former premier Zhu Rongji was such a rare leader, however—a man who debated policies vigorously with peers and subordinates alike. Premier Li Keqiang, whom Xi marginalized and ultimately discarded, showed many of Zhu’s traits, though in a milder manner. Many of the private entrepreneurs now in Xi’s disfavor practiced similar management techniques. On that leadership template, Xi would not receive high marks.[3]

The Congress finale’s choreography was upset when Xi’s immediate predecessor, Hu Jintao, who had been seated on the rostrum to Xi’s left, was suddenly lifted from his chair and escorted from the room by plain clothes security men. Foreign media cameras in the Great Hall balcony filmed the episode. As he left the platform, Hu was seen to speak briefly to Xi and to put his hand on the shoulder of his protégé Premier Li Keqiang, as other Politburo members stared stony-faced ahead.

The incident, a rare breach of party meeting decorum, set off whirlwinds of Chinese and foreign social media speculation, some arguing that Xi had ordered Hu’s expulsion, others that Hu’s health had rendered him unfit to continue. The explanation might be some combination of the two. Hu’s health has in fact been failing—he’s nearly 80—and he has been seen to falter in previous public appearances. But Party politics might also have triggered the episode.

In foreign media videos, Hu was filmed speaking with Xi just as voting for the Politburo had begun. In some analysts’ accounts, unbeknownst to Hu, the ballot paper had been changed at the last minute to exclude Vice Premier Hu Chunhua (no relation), Hu’s nominee to succeed Xi.

Upon discovering this change, Hu complained to Xi, who then ordered his removal from the room, lest he disrupt the proceedings and trip Xi’s final step into his third term.

The tea leaves are far too murky to judge what really happened. Were Xi to have ordered Hu’s removal, it would have been a gross insult to his predecessor, a gesture unprecedented for a party obsessed with keeping its differences secret, and so shocking and offensive to Congress delegates and the Chinese public that it could come back to haunt Xi. Even though the party’s Xinhua News Agency quickly announced that Hu had left the Congress for health reasons, the full story will not become public knowledge any time soon, if ever.

BUT IF XI IS NOT SO STEADY?

Surface calm will nonetheless prevail as Xi Jinping starts his third term. But riptides and dangerous undertows will flow beneath. A gathering storm of economic woes will test the Chinese people’s satisfaction with their bargain with the party. Past months have seen increasing evidence of citizen discontent: cheated home buyers’ “mortgage strikes,” public clamor in Shanghai and other major cities over “dynamic zero-Covid” policies, and clear signs that those with assets and the means to expatriate them are doing just that. Official economic statistics quantify the slowing pace of China’s GDP growth, and the government’s withholding of the most recent numbers, as it has just done, only reinforces perceptions of China’s economic malaise. This year’s GDP growth will fall far short of the official 5.5% target and, on realistic accounting, could well be negative.

Xi’s first two terms have shown that he prefers playing Communist Party politics to resolving the all-too-real, maddeningly complex social and economic problems that China confronts. He is master of the first, unschooled and unskilled at the second. But whatever Xi’s inclinations, China’s deep structural issues are not going away. They demand expert attention, bold policy measures, and firm and clear leadership—as well as, according to many of his critics, a return to the market economy measures that Xi has reversed in his imposition of party and state controls.

The issues make a familiar litany:

• The government faces the challenge of maintaining economic growth and social stability, as China’s growth model of exports plus infrastructure investment appears to have run its course, and consumer confidence wanes.
• The key domestic component of that model has been real estate development, which has collapsed amid falling demand and developer bankruptcies, in turn adding to the debt burdens of local governments dependent on land auctions for their revenues. Overall public and private debt estimates run to 300% or more of GDP. “Middle class” households’ single most valuable asset is real estate, and its value shrinks by the day.

• Another challenge is sustaining foreign investment in the face of an unpredictable business climate aggravated by Xi’s own decisions to favor the state over the private sector, campaigns for “self-sufficiency,” and continued Chinese theft of intellectual property.

• Policies to mitigate the growing demographic challenge posed by a fast-aging society, falling birth rates, and a shrinking labor force—e.g., raising the retirement age and introducing robotics—have not yet proved effective or have been politically unpalatable.

• In foreign affairs, Xi’s alignment with Russia and other autocracies has further distanced China from the liberal democracies that are its most valuable markets and main foreign investors.

• And there remains the question of Taiwan, and whether Xi seeks “reunification” as his legacy, with unpredictable but surely dire consequences for China.

Xi’s panopticon of social controls, using both high-tech surveillance and traditional labor-intensive village snitches, has so far kept public discontent subdued. But history shows that a single, stochastic event could trigger unrest. The death of a party elder: Zhu Rongji, Wen Jiabao, even Jiang Zemin? An economic shock that obliterates “middle class” wealth? A catastrophic natural or human-made disaster? The future is anyone’s guess, but Chinese history tells many stories of rulers who lost their “mandates of heaven” to such unexpected events.

At the 20th Party Congress, Xi crowned himself and filled his court with pliant courtiers. As his reign unfolds, China’s myriad problems will compound and increase and weigh ever more heavily upon this latter-day Chinese emperor. How will Xi handle such pressure? Will he correct course? Will he accept responsibility? If he does not, will others in the party—retired leaders, altruistic officials—coalesce against Xi? Will the CCP’s collective survival instinct, its “hang together lest we hang separately” genetic code, assert itself and pull the party through a Xi-caused crisis as it has seen the party through previous crises?

Both Xi Jinping and Joe Biden have forecast a decisive decade ahead. They are right.

---

William C. McCahill Jr. is a member of NBR’s Board of Advisors. Before joining NBR, he worked in Hong Kong and China as the senior advisor for China at Mirabaud & Cie, and earlier in a similar capacity for Religare Capital Markets. A 25-year Foreign Service career preceded his business activities. He began his diplomatic service in Hong Kong, Taiwan, and Beijing; subsequently held senior posts at U.S. missions in Western Europe, Scandinavia, and Canada; and in 2000 retired from his last posting as chargé d’affaires at the U.S. embassy in Beijing.

Endnotes

[1] The Politburo Standing Committee runs the party-state day in and day out. It is the most powerful decision-making body in China, the only one that really counts, whatever the colorful organization charts say about the National People’s Congress, government ministries, and the like. Historically, the Standing Committee has numbered between five and nine members, including the general secretary. The new committee revealed Sunday morning numbers seven, including Xi Jinping. Two of its members had served with Xi in the previous Standing Committee: Wang Huning and Zhao Leji. Four of the members are new to their posts: Li Qiang, Ding Xuexiang, Cai Qi, and Li Xi.

[2] State Councilor and Foreign Minister Wang Yi has advanced to the Politburo, replacing Yang Jiechi as the party’s senior foreign affairs spokesperson. Likely to replace Wang as foreign minister at next spring’s National People’s Congress will be Qin Gang, currently ambassador in Washington. The Party Congress vaulted Qin into the new Central Committee. As for the military piece of national power, the Party Congress appointments forecast continuity under commanders whom Xi trusts. Remaining in the Politburo will be Zhang Youxia, the 72-year-old general, and son of a PLA general, who shares a Shaanxi ancestral home with Xi. He will be Xi’s number two in the party’s Central Military Commission, effectively China’s defense minister and senior uniformed officer. Seven years Zhang’s junior and the new number three in the Central Military Commission will be He Weidong, whom the Congress named to the Politburo (despite his not having been a delegate). He has led the Eastern Theatre Command, arguably the army’s most important command as it faces Taiwan.

[3] Now out of the Politburo and Central Committee, and ipso facto excluded from senior government posts, is Vice Premier Liu He, a childhood chum who enjoyed Xi’s trust and served as “economic czar” in his first two terms. Also leaving the Central Committee are Guo Shuqing, an experienced financial services regulator and party secretary of the central bank, as well as central bank governor Yi Gang. With Liu, Guo, and Yi retiring, the top ranks of Chinese economic and financial policymakers now stand open. Who replaces these three experienced operators will be known by next spring, but the large lacunae they leave should give pause to foreign investors. Other senior figures leaving the Politburo Standing Committee are Premier Li Keqiang, whom Xi marginalized as he pulled power from the State Council agencies, and Vice Premier Hu Chunhua, often seen as an ideological soul mate of Li and a potential successor, if not to Li then to Xi himself.