Despite dissatisfaction, Xi consolidates power
THERE has been considerable speculation in the international media, after Chinese President Xi Jinping suddenly ordered dismantling of the stringent zero-Covid restrictions and followed that with an easing of the campaign against China’s tech platforms, suggesting that Xi has been weakened. They attributed this to popular protests that occurred in various cities across China and high unemployment.
A few observers even suggested that some members of the Politburo or its Standing Committee had got together to urge Xi to amend these policies. While widespread dissatisfaction exists, there are, however, no indications that point to any weakening of Xi’s power or authority. On the contrary, Xi appears to be further consolidating his position.
Undoubtedly, the worsening economic situation and steadily burgeoning unemployment are causing Xi and the Politburo considerable concern as they dent the Chinese Communist Party’s (CCP) credentials to lead the country. The economy, according to official statistics, grew by only 3 per cent, registering one of the worst performances in nearly half a century and falling short of the government’s GDP growth target of 5.5 per cent for 2022. Also worrying the Chinese leadership is that though Chinese households are sitting on a record $2,600 billion in accumulated bank deposits alone, Chinese economists anticipate that consumers may spend only about $200 billion this year despite Beijing’s best efforts.
Household incomes have also not grown since 2017 — Xi’s second term in office. A Chinese securities firm estimated that Chinese household net asset growth rates dropped between 2011 and 2019, to around 13 per cent from nearly 20 per cent before 2008 and sank further to below 10 per cent during the Covid-19 pandemic. Unemployment has soared, exacerbated by the government’s regulatory crackdown on the tech industry and the US technology ban on China. This has affected the younger people with graduate unemployment at over 30 per cent.
The adverse international environment and high negative sentiment globally about China after the outbreak of Covid have, as anticipated earlier by a leading think tank of the Chinese Ministry of State Security and the People’s Liberation Army (PLA), impacted exports. One report assesses that China’s export growth rate will decline from 6.6 per cent between 2016 and 2021 to 3.4 per cent in the period from 2021 to 2026.
Compounding difficulties is the pessimism about the future. The US-based Centre for Strategic and International Studies stated that in November 2022, China’s consumer confidence index plummeted to a record low of 85.5 points. Wealthy Chinese estimated to own assets worth well over $150 billion are exploring the feasibility of migrating abroad. According to South Africa-based firm New World Wealth, 10,800 rich Chinese migrated in 2022 — the most since 2019.
Having appointed loyalists to the Politburo Standing Committee and to head all critical party and security organisations, Xi is confident of his position. As officially reported prior to the 20th Party Congress, Xi personally vetted candidates for the Central Committee. By last month, at least 20 Chinese provinces and autonomous regions held plenary sessions of their legislatures and named the chairmen of their People’s Congresses, political advisory bodies and vice-governors. China’s Caixin reported that apparently to further consolidate Xi’s position, the majority of provincial government officials who were over 58 years of age were not re-elected during this leadership transition.
Since December, there has also been a focus on the economy. The Politburo study session on January 31 accorded priority to development with Xi emphasising, among others, the need to expand domestic consumption, improve the basic framework of the market economy such as property protection, market access and reform, and create a good environment for business entities to invest and start businesses and stimulate the business sector.
According to China’s 21st Century Business Herald, 23 provinces had by January 30 decided economic tasks for this year, including optimising the business environment. The Caixin Research Institute forecast that this year’s major local projects will play an important role in expanding domestic demand and easing downward pressure on the economy.
In addition to these steps, Xi has initiated a fresh round of ‘rectification’, or purges. Senior cadres will continue to be in the cross hairs of the anti-corruption watchdog body, the Central Commission for Discipline Inspection (CDIC), but the focus this time will be on middle-level and junior cadres.
Particularly assessed will be the loyalty of cadres to Xi. A series of prominent articles in China’s official media highlighted the goal to “resolutely achieve the ‘two safeguards’ and maintain a high degree of consistency with the party’s Central Committee with Xi at the core.” ‘Two safeguards’ is the CCP’s shorthand for protecting Xi’s positions. The phrase ‘two safeguards’ was incorporated in the CCP Constitution in October 2022.
The agenda of the Politburo’s ‘democratic life’ meeting held on December 26-27, 2022, chaired by Xi gave the clearest warning that a major rectification campaign was getting underway. Xinhua announced it was “to take the lead in achieving the ‘two safeguards’… sum up achievements, investigate and address deficiencies, conduct party analysis, and carry out criticism and self-criticism.” Xi has warned Politburo members to set an example and abide by the code of honest conduct, be strict with their family members, relatives and those around them, and fulfil the political responsibility for the governance of the party.
By vetting appointments of middle-level and junior cadres, Xi will certainly consolidate his position further. However, he will not have direct knowledge of many younger cadres because of the difference in age and many will be proteges of his loyalists. Notwithstanding this, unless Xi is able to address the economic concerns, the stability of his third term will remain uncertain.
