Xi Jinping
image

Xi Jinping

China’s President Xi Jinping faces his biggest political test

He’s portrayed as most powerful leader since Mao but will he be able to cement his legacy at Communist Party congress next year?

PUBLISHED : Friday, 30 September, 2016, 10:09am
UPDATED : Friday, 21 October, 2016, 12:52pm

After taking less than four years to consolidate his image as China’s most powerful leader since Mao Zedong and emerging as a world leader as host of the recent G20 summit in Hangzhou, President Xi Jinping might be more confident about pursuing his ambitious national rejuvenation programme as he officiates at National Day celebrations marking the 67th anniversary of the founding of the People’s Republic.

But Xi still faces the most crucial test of his political career at a Communist Party Central Committee plenum in late October that will decide the agenda for next year’s 19th party congress, at which Xi, also the party’s general secretary, is expected to clearly define his political ambitions and the road map to the power succession at the party’s 20th congress five years later, in 2022.

He faces strong resistance within the establishment due to all his controversial policies and so many people are just waiting for him to make a mistake
Zhang Lifan

Xi also faces an uphill battle to reinvigorate the world’s second-biggest economy, which is in the grip of a persistent slowdown, and avoid what economists call the “middle income trap” – a failure to catch up with the per capita wealth of the world’s richest countries.

In July, the party’s decision-making Politburo announced that the sixth plenum would focus on party building, with an agenda centred on the internal political conduct of leading party institutions and cadres, especially members of the Central Committee, its Politburo and the innermost Politburo Standing Committee.

But analysts said Xi would also use the party conclave to kick-start his preparations for a revamp of the leadership at the 19th party congress next year, when a large number of top officials are expected to retire.

After 67 years in power, China’s Communist Party is striving to outdo the former Soviet Union’s 74 years of communist rule. But before it does so it will face another accession battle, a process that since the founding of the People’s Republic in 1949 has often descended into a bloody and merciless internal power struggle.

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In the past four years, Xi has used anti-graft and moral rectification campaigns to arrest declining confidence in the government and trust in the party and to consolidate his personal power base.

Analysts expect Xi to adjust his priorities at the plenary session as the 19th party congress will see five of the seven members of the Politburo Standing Committee – all except Xi and Premier Li Keqiang – step down after reaching the compulsory retirement age of 68.

Another six members of the 25-member Politburo will also step down for the same reason. That will leave the remaining 12 Politburo members, excluding Xi and Li, to compete for five vacancies on the Politburo Standing Committee, and about 250 Central Committee members to contest 11 Politburo seats, assuming the number of members in both bodies is not changed.

Steve Tsang, from the school of contemporary Chinese studies at the University of Nottingham in Britain, said Xi would use the 19th party congress to clearly define the direction of changes during his rule, with this month’s plenum paving the way for that agenda.

“Xi will also use the conclave to put in place as clearly as possible what the succession will look like at the 20th [party] congress, including whether he can put himself in the position of calling the shots after 2022,” Tsang said.

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Analysts said that while Xi’s formal titles gave him the image of China’s most powerful leader since Mao, it was questionable whether he had amassed sufficient effective power to dictate the succession arrangements and policy direction to be agreed at the 19th party congress, in contrast to late party patriarch Deng Xiaoping, who lacked the titles but was able to get his way on such matters.

Zhang Lifan, a party historian formerly with the Chinese Academy of Social Sciences, said Xi, 64, faced an undercurrent of strong resistance within the leadership and the party establishment after gaining little respect from factions across the political spectrum.

“He faces strong resistance within the establishment due to all his controversial policies and so many people are just waiting for him to make a mistake,” Zhang said.

Highlighting Xi’s controversial policies and his leftist political stance, Renmin University political scientist Zhang Ming said: “China’s political future has never been as uncertain as it is today as there is such a great mess within the party leadership.”

Tsang said that whether Xi would be able to rid the top echelon of his critics by the 19th congress remained to be seen.

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In the past few years, Xi has made progress in the promotion of China’s global status and his own image as a world leader. Hosting the leaders of the world’s wealthiest nations in Hangzhou in early September gave him a unique opportunity to project his personal image on the world stage and boost China’s status as a world leader.

Xi has also received international acclaim for diplomatic initiatives such as his One Belt, One Road development strategy and the establishment of the Asian Infrastructure Investment Bank. His formal ratification of the Paris Agreement on climate change on the eve of the G20 summit, alongside US counterpart Barack Obama, has also been hailed. China has committed to cutting carbon emissions per unit of gross domestic product by between 60 per cent and 65 per cent of 2005 levels by 2030.

But his “neighbourhood diplomacy” has suffered serious setbacks, with Beijing’s relations with the major regional players – Japan, South Korea, India and Australia – and most of the 10 members of the Association of Southeast Asian Nations deteriorating in the past year. A landmark ruling by the Permanent Court of Arbitration in The Hague on July 12 that denied China’s claim to sovereignty over most of the South China Sea – a “core national interest” according to Beijing – was the biggest diplomatic failure in more than six decades of communist rule and one whose effects will be felt for years to come. The court ruled unanimously in favour of the Philippines, against Chinese claims to huge swathes of the strategically important waterway.

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Such tensions suggest widespread suspicion and distrust among neighbouring countries over China’s rise and a reluctance to accept a Chinese leadership role.

Xi sees maintaining the party’s hold on power as his chief accomplishment, with his “Chinese dream” of national rejuvenation at the top of his political agenda. That involves the “two centenary goals” of building a moderately prosperous society by the time the party celebrates its 100th birthday in 2021, and creating a prosperous and advanced economy by the time the People’s Republic turns 100 in 2049.

But Xi faces serious challenges in achieving smooth economic and social transitions.

After decades of phenomenal, double-digit growth, the Chinese economy has slowed significantly and persistently in recent years, with all the headline data indicating that what was once the world’s fastest-growing major economy has lost momentum. All the major indicators of economic activity have weakened in the past two years.

Among the challenges have been a bearish stock market following last year’s near-panic-driven declines, falling exports due to weak external demand, continuous downward pressure on the currency and outflows of foreign exchange reserves and, worst of all, high and rising levels of debt.

If Xi cannot reverse the stubborn slowdown in economic growth, more doubts will surface about his ability to realise the first centenary goal and make progress towards the second.

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The government also faces a test of its political will to reform the country’s state-owned enterprises (SOEs), something central to any hope of transition from a state-dominated command economy to one mainly driven by market forces. That will also decide whether it can avoid what economists call the “middle income trap” – a term first coined by the World Bank 10 years ago to describe the failure of many East Asian and Latin American economies to make further progress.

Xi’s ability to steer the economy clear of such a trap will determine whether he can achieve his dream of “national rejuvenation”.

Economists say there has been no major market reform breakthrough in the past three years, even though the party launched an ambitious programme at a plenum in late 2013. In the past two years, the government has actually consolidated SOEs’ positions in the economy through mergers, expanding their size and market share in some industries, rather than meeting market expectations of further privatisation. There has also been only slow progress in the most difficult areas of financial and monetary reform: capital account openness and the marketisation of the exchange rate and interest rates.

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Analysts agree that China will only be able to realise its dream of modernisation when the leadership can overcome obstacles to market-oriented reform of state capitalism and the political restructuring of its system of one-party rule.