Hong Kong is defiant, the Chinese economy is slowing. But Xi’s long game is for certain

The most certain thing in 2020 is uncertainty, but one thing is for sure: China’s political stability will endure with Xi to remain in power for life
China and the US are likely to compromise on issues like trade and investment but clash on technology and geopolitics

Wang Xiangwei

Published: 9:30am, 4 Jan, 2020

Why you can trust SCMP

As we ring in 2020 and the start of a new decade, it is hard to be optimistic after a tumultuous 2019 which was plagued by global uncertainties and worsened by the trade war between the United States and China and mounting unrest everywhere from Chile to Hong Kong.

Making predictions about China’s future trajectory would therefore be foolhardy as the only certainty for 2020 and beyond is that uncertainty is set to intensify.

For instance, the rivalry between the world’s largest and second-largest economies will become more complicated and intense, despite the tantalising prospect that Beijing and Washington will sign the Phase One agreement to ease trade tensions in mid January. How both sides manage their volatile relationship will be heavily influenced by the political developments in the run-up to the US presidential election in November and its outcome.

Protesters raise their hands to symbolise the five demands of the pro-democracy movement in Hong Kong during a rally on New Year’s Day 2020. Photo: AP

Meanwhile, the Chinese government will have to contend with a defiant Hong Kong, where the anti-government and anti-Beijing protests which started in April have shown little sign of easing and are set to continue in the foreseeable future. Beijing’s headache will get bigger if the upcoming presidential election in Taiwan next Saturday returns incumbent pro-independence leader Tsai Ing-wen, whose chances have increased over the past six months, thanks to the Hong Kong and Central Government’s clumsy handling of the Hong Kong protests.

At home, Beijing will have an even harder job of wrestling with a slowing economy, underlined by the central bank’s New Year’s Day announcement that it was cutting commercial banks’ reserve ratio to release 800 billion yuan (US$115 billion) in funds to spur the economy.

With political and economic uncertainties set to roil markets worldwide, there are still a few notable certainties which have far-reaching implications for China and the rest of the world.

For one thing, China’s political stability appears assured for much of the new decade as President Xi Jinping has built up unchallenged authority to stay in power for life.

The first sign emerged in March 2018 when the National People’s Congress approved the removal of the two-term limit on the presidency, which was introduced in the 1990s. The move was largely symbolic as Xi’s two other more powerful titles, party chief and chairman of the Central Military Commission, have no term limits. But the removal has sent a powerful signal about Xi’s future intentions and triggered a strong backlash from the international community.

Chinese President Xi Jinping delivers his New Year message. Photo: Xinhua

Since then, there have been persistent rumours that Xi has faced internal challenges from the Communist Party’s other factions but most of those rumours have proven off the mark. It is now hard to see Xi being challenged in any serious manner, more than seven years after he came to power in November 2012. The consensus is that he has consolidated power on a scale bigger than Mao Zedong, who ruled the People’s Republic with an iron fist from 1949 to 1976.

In the latest demonstration of his stature, Xi presided over a criticism and self-criticism session of the party’s Politburo of 25 members late last month. During the two-day meeting, each of the other 24 members of the party’s inner sanctum had to engage in criticism and self-criticism speeches to pledge their loyalty to Xi and promise to uphold Xi’s position as the core of the party leadership and the whole party, the official Xinhua news agency reported.

Beijing braces for a 2020 of managing risks as Xi’s warnings play out

While the international community has valid concerns about the implications of Xi’s intention to rule for life, his supporters have argued that a strong leader is needed to steer the country forward and the ensuing political stability would provide a stable environment for China’s economic development at this critical juncture of profound changes in the world.

To rally support, Xi has set clear benchmarks in the next two decades, including the eradication of absolute poverty by the end of this year and building China into a “basically modern socialist country” by 2035.

US President Donald Trump shakes hands with China’s President Xi Jinping. Photo: AFP

One of Xi’s biggest challenges is how to shore up a slowing economy in an increasingly hostile international environment as the United States leads the charge among Western countries to push back against China’s rise. Despite the sometimes-fiery nationalistic tone in the state media, the Chinese government will have little choice but to seek various ways to compromise with the US, particularly on the trade and investment fronts – not to mention that further trade liberalisation and opening up to American and other foreign investment are in China’s own best interests.

Taiwan President Tsai Ing-wen says talks with Beijing could resume

The shape of bilateral relations this year and beyond could be gleaned from how the unrest in Hong Kong and the political situation in Taiwan play out following the presidential election next week.

In Hong Kong, the protests look set to continue as Beijing is most likely to maintain its policy of waiting out the protesters since there is no way it will accede to their demands for more political freedom. Washington has already made its position quite clear through various official statements and the bipartisan legislation on Hong Kong. It is hard to imagine what more Washington can do, given Beijing’s current policy.

Taiwanese President Tsai Ing-wen speaks during a campaign event in Taipei, ahead of presidential elections. Photo: EPA-EFE

Meanwhile in Taiwan, a win by Tsai next Saturday would definitely further embolden the pro-independence movement on the island, which would in turn invite more vitriol from the Chinese state media. But Beijing would most likely confine its actions to rhetoric, with occasional displays of naval power across the Taiwan Strait. Washington would respond to this but the sparring would be limited to a war of words.

Following the signing of the Phase One agreement later this month and the subsequent discussions to pursue a comprehensive trade deal, the pattern of both countries seeking to compromise on certain issues such as trade and investment but engaging in more intense confrontation over other issues including technology and geopolitical influences, will become further entrenched this year and beyond.

Given China’s perceived long-term political stability, it is prepared to play the long game. ■ ■

Wang Xiangwei is the former editor-in-chief of the South China Morning Post. He is now based in Beijing as editorial adviser to the paper

Purchase the China AI Report 2020 brought to you by SCMP Research and enjoy a 20% discount (original price US$400). This 60-page all new intelligence report gives you first-hand insights and analysis into the latest industry developments and intelligence about China AI. Get exclusive access to our webinars for continuous learning, and interact with China AI executives in live Q&A. Offer valid until 31 March 2020.

Post