Xi’s challenges before 20th Party Congress

Federico Giuliani

There is no doubt that less than six months before the crucial 20th Party Congress, which would reinstate Xi Jinping for five years, all is not smooth in China. The infighting within the party is going on and the fight between Xi Jinping, General Secretary, and the faction of Jiang Zemin, former CCP head; and another one is the fight between Xi and Li Keqiang, China’s Premier.” Xi has centralized power since he took charge a decade ago, making the party and government less flexible and pragmatic and has transformed it into “a top-down and single-leader dominant institution. The congress is an event held once every five years at the Great Hall of the People in Beijing to set major policies and select top leaders – including the roughly 370-strong Central Committee and 25-member Politburo. In backroom deliberations, senior party leaders select the Politburo’s Standing Committee, the pinnacle of party power. Xi’s call for persistence and his overarching goal to prevent social unrest and political doubts in the run-up to the crucial 20th Congress of the ruling Communist Party is intensely debated among Chinese analysts. His controversial domestic and foreign policies; strict zero-COVID-19 strategy; staunch support for Russia, and a recent crackdown on tech giants have broad popular support, but their economic price has nonetheless sparked intense debate among Chinese analysts, stakeholders, and the public. Pro-government commentators, epidemiologists, business executives, and many ordinary people have questioned the zero-COVID-19 strategy and its mounting economic and social costs.

In the meantime, China’s economic results are poor. On 26 May, Bloomberg News noted: “China’s economic slump shows no sign of bottoming out in May. The weakness in the gauge — the worst since the early months of the pandemic — reflects the lingering effects of large-scale lockdowns despite recent progress toward reopening.” It may take longer for economic activity to fully recover from abrupt halts caused by the lockdowns, and the uncertainty from China’s Zero Covid strategy has made businesses unwilling to invest and consumers reluctant to spend. This has made Chinese economy especially vulnerable to global disruptions of supply chains caused by the Russian invasion of Ukraine and the COVID-19 pandemic, but structural issues such as shadow lending, increased intervention in market affairs, dependence on imports and financial difficulties in the real estate sector have been a problem for some time… Extremely strict regulatory measures to contain the spread of omicron strain of Covid-19 have only made things worse. In fact, the Chinese Dream of Xi Jinping (and his own career) depends very much on the economic future of China.

China’s economic growth for this year – targeted at 5.5% – is now forecast by financial analysts to be about 4%. Already, growth had been slowly declining amid long-term challenges of an aging population, a shrinking workforce, heavy local debt, and an economic policy that favors less efficient state enterprises over the private sector. The Wall Street Journal observed that “For years, President Xi Jinping has sidelined China’s second most powerful political figure, Premier Li Keqiang. Now, Mr Li is re-emerging as a force in his own right, a potential counterbalance atop the Chinese government that hasn’t been seen for nearly a decade. With China mired in its worst economic funk in recent memory, Mr Li is helping press China’s authoritarian leader to dial back some measures that contributed to China’s economic slowdown.” It also commented that Li is trying to influence the selection of his successor when he steps down as premier in March 2023: “His goal is another Premier who would be a counterweight to Mr Xi as he consolidates power to rule for at least another five years.”

Apart from the strengthening of the Quad directed at China, the collapse of dream projects such as the BRI and the slow-down of the population growth are serious issues for Beijing which recently announced the outcome of the latest national census. Figures translate to a low annual growth rate of 5.38 per cent over the past decade: “Eleven out of the 31 provinces registered negative population growth in 2021, including Heilongjiang, Liaoning, Jilin, Chongqing, Mongolia, Hunan, Hubei, Shanghai, Jiangsu, Hebei and Shanxi.” Recently the publication of the ‘Xinjiang Police Files’, detailed the atrocities committed for years by the Communist Party and the police on the Uyghurs in China’s western province. Meanwhile, President Xi Jinping held a meeting (25th May, 2022) with Michelle Bachelet, UN High Commissioner for Human Rights and justified the human rights situation in his country, “in the context of China’s history and culture”. After the meeting it aroused suspicion that the situation is so bad in the capital that Xi can’t receive dignitaries, while Bachelet was in China, her encounter with the Xi was held via video link. All this does not augur well for China. The battle for the 20th Congress is certainly not over and the only certainty today is that it won’t be easy to dissipate the dark clouds over the Middle Kingdom. While Mr. Xi’s securing of a third term is virtually guaranteed, the success of those he will seek to promote is less so i.e. he will not get up around him all the folks that he wants.