Digest: Fall 2022 Issue 73
Welcome to the China Leadership Monitor's Fall 2022 Digest, which provides article summaries for those who have not yet explored the issue.
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David Dollar in Xi Jinping’s Mixed Economic Record
Jude Blanchette in The Edge of an Abyss: Xi Jinping’s Overall National Security Outlook
Xi Jinping’s Political Agenda and Leadership: What do we know from his decade in power
President Xi Jinping’s agenda during his first decade in power has consisted of three key elements: establishing personal political dominance, revitalizing the Leninist party-state, and expanding Chinese influence abroad. Xi has succeeded in amassing political authority, but his achievements in revitalizing ideological commitment within the party and asserting Chinese power abroad remain mixed.
Political dominance: Several underlying factors allowed Xi to succeed in achieving personal political dominance with relative ease. First, the rivalry between Jiang Zemin and Hu Jintao created an opportunity for Xi to exploit their mutual animosity and alter the balance of power in his favor. When launching his purge in 2013, Xi strategically prioritized the destruction of the more powerful Jiang faction, thus smoothing the path toward power consolidation. Second, the CCP’s flawed attempts to limit the power and number of terms of the party’s top leader enabled Xi to dismantle collective leadership and ultimately abolish the presidential term limit. Deng’s attempts to prevent the emergence of another Mao-like figure have proven inadequate; the constitution can be amended easily; and it is nearly impossible to enforce rules and norms in an autocracy without a third party.
Reinvigorating Leninism: Upon assuming power, Xi assessed that CCP members had become ideologically less committed to the party’s ideals, undisciplined, and politically unreliable, and it is reasonable to assume that Xi felt the party’s control over society and the economy was eroding. Xi’s strategy to reinvigorate Leninism within the party and society can be broken down into three stages: (1) Xi’s anti-corruption campaign enabled the destruction of rivals and the removal of officials who had been promoted by those rivals. (2) Xi thoroughly revamped the CCP rules to emphasize discipline, ideological loyalty, and his own personal authority, most notably through ideological campaigns and the propagation of “Xi Jinping Thought for a New Era.” (3) By cracking down on China’s private sector, weakening civil liberties, and squashing dissent in Tibet and Xinjiang, Xi has reasserted the supremacy of the party-state. Although Xi evidently achieved success in the first stage, it is hard to assess his success in the second stage; no one can tell whether national indoctrination campaigns have made CCP members more ideologically committed and politically loyal. The crackdown on civil liberties in stage three has been highly effective, but Xi’s attempts to rein in the private sector, which require great caution, have yielded mixed results.
Asserting influence abroad: Xi’s “great rejuvenation” of China’s foreign policy has been frontloaded: the Belt and Road Initiative (BRI), the Asian Infrastructure Investment Bank (AIIB), the East China Sea Air-Defense Identification Zone (ADIZ), artificial island-building, and the pivot to Russia all emerged in the first two years of his first term. Cost-benefit analysis suggests that these actions have not significantly bolstered China’s influence abroad. Strategic payoff has yet to materialize from the tens of billions of dollars invested into BRI projects. The ADIZ has driven Japan closer to the US. Costly island-building has alienated ASEAN countries. Although the pivot to Russia has improved China’s energy security, Beijing’s pro-Moscow stance vis-a-vis the war in Ukraine has angered European countries. Xi has overestimated the shift in the global balance of power and underestimated the response of the United States, resulting in a rapid deterioration of China’s external environment.
In the decade ahead, Xi’s top priorities will include the protection of his political legacy, implementation of the “common prosperity” agenda, and bolstering the Chinese economy’s self-sufficiency. However, compared to the circumstances when he began his first decade in power, Xi will have a weaker hand to play. Economic growth is on course to decelerate further, making implementation of the “common prosperity” agenda much harder. Deteriorating economic prospects will also directly test Xi’s leadership, should living standards stagnate and unemployment rise. Additionally, funding for his foreign policy initiatives and military modernization plans will shrink. On the political front, Xi will be preoccupied with grooming loyalists to succeed him. This will be challenging, as Xi’s inner circle is aged, and he has not worked closely with younger officials. His external challenges, however, loom even larger. The Sino-Russian relationship hinges on the outcome of the war in Ukraine. However, Xi’s primary focus in the next decade will be on sustaining the new cold war with the United States. He will likely seek to conserve limited resources, strengthen “holistic” national security, and avoid a potentially catastrophic conflict from a position of weakness.
From Strategic Reassurance to Running Over Roadblocks: A Review of Xi Jinping’s Foreign Policy Record
Although President Xi has embraced the broad national ambitions of his predecessors, the manner in which he has pursued such ambitions has shifted over the past decade. The days of China offering reassurance about its peaceful rise are over. Now, Beijing’s focus is on accelerating the country toward “national rejuvenation,” regardless of the repercussions.
Xi’s evolving statecraft: After assuming the general secretary position in late 2012, Xi was faced with a slew of domestic and international stressors. He initially sought to mitigate external risks, stating that China had no intention of challenging the existing international order. However, the advent of the BRI, AIIB, BRICS Bank, and ADIZ did little to assuage American concerns. Additionally, Xi began tying all diplomatic, economic, technological, and military advancements to China’s “great rejuvenation,” his plan to shore up China’s self-sufficiency. This was coupled with a voracious appetite for new partnerships abroad that served to counter US pressures, maintain peace along China’s borders, and accelerate China’s industrial modernization. Beijing also embarked on a mission to reform the global governance system, assuming leadership of UN agencies, funding UN development activities, and developing parallel institutions like the AIIB. Regionally, Xi has sought to foster greater pan-Asian solidarity as a means of supplanting American influence with Chinese leadership. Thus, China’s expectations of sustaining stable relations with the US have steadily faded during Xi’s tenure. Central to this is Beijing’s growing closeness with Moscow and its efforts to improve its warfighting capacity through significant military expenditure and efforts to gain naval access overseas.
Performance evaluation: Beijing believes that it is making progress toward its goal of achieving a level of comprehensive national power that will cause America to accept China as it is. Several factors inform Beijing’s growing confidence: China is closing the economic output gap with the US; it is strengthening its leadership in the developing world; Beijing has made significant advances in technology and quality of life for its populace; it believes it occupies an advantageous position in the US-China-Russia strategic triangle; its military strength is growing; and it sees trends of inequality and political polarization in the US as signs of American decay. Despite these gains, China faces many challenges: its economy is slowing; it has alienated the US and advanced economies in Asia and Europe and is losing some of its soft power in developing regions; and Beijing faces strengthened cohesion between the US and its partners. Although these challenges have led some Western analysts to suggest that China will struggle to sustain its rise, the view in Beijing remains optimistic. This difference in perception is not a new phenomenon, but the gap generally has not been as wide as it appears to be now.
The coming years: After (likely) securing a third term as general secretary, Xi will concentrate national efforts around a strategy to overcome perceived Western hostility to China’s rise. He will not be content to be reactive to external events, and he will not pursue preservation of the status quo. Rather, he will work to create an international environment more conducive to China’s continued rise. This will likely involve continued increases in China’s military capabilities, expanded use of hard power to raise the cost of challenging Chinese interest for the US and its allies, and attempts to influence voter attitudes in Taiwan. More broadly, Xi will see the coming years as an opportunity to tilt global influence toward China’s favor, particularly in the developing world. Meanwhile, it faces a United States that is teetering on the brink of recession and staring down midterm and presidential elections that could further polarize an already divided nation. In other words, the US will be experiencing strong centripetal forces while China may be unshackling itself from years of self-imposed lockdown. This could unleash pent-up economic energy and a surge of consumption inside the country.
Whereas former paramount leader Deng Xiaoping preached patience, Xi is a study in impatience. He sees a world in which China is a regional leader, a global power, a country that garners both respect and fear, and possesses a legitimate governance and economic model. Although China’s continued ascent is not assured, it is clear that Xi is determined to move China in the direction of his vision of national rejuvenation, regardless of the consequences.
Enabling “Patriots” to Be Masters of the Island: Evolution of Xi’s Policy on Taiwan Since 2013
Under Xi Jinping’s leadership, there have been four key shifts in China’s Taiwan policy: (1) China has expanded the definition of Taiwan independence; (2) Xi has established a bidirectional linkage between China’s “national rejuvenation” and unification with Taiwan; (3) Xi has pushed to develop a more specific “two systems” solution for Taiwan; (4) China has escalated its political, economic, and military coercion against Taiwan. These changes in PRC policy have not produced the desired results, indicating that Beijing is likely to continue its bolder and more coercive approach towards Taiwan.
Expanding the definition of independence and status quo: Beijing is concerned about what it perceives to be a growing number of Taiwan and US actions toward independence. As a result, Xi has embraced more expansive language to capture a broader range of activities, including: Taiwanese efforts to decrease cultural, economic, and political ties with China; US military sales to Taiwan; and Taipei’s attempts to seek external support, among other activities. Additionally, Xi has redefined the Chinese position on the status quo in the Taiwan Strait, stating that there is one China, Taiwan is part of China, and the PRC is the sole legal government representing China. This evolution has implications for PRC policy toward Taiwan and, by extension, the US: (1) Beijing can no longer accept a lack of progress on unification; (2) Xi’s definition of the status quo as consistent with the one China principle portrays Taiwan and the US as revisionist; (3) China must now take more actions to punish perceived pro-independence activities and develop capabilities for worst-case outcomes.
“National rejuvenation” and unification: Xi has assessed that China’s path toward rejuvenation is both a driver and future result of unification. China’s recent White Paper on Taiwan clarifies this mutual dependency: China can and should leverage the growing strength accompanying its rejuvenation to promote unification, as a stronger China would be more capable of defending against Taiwan separatist activities and external interference. Additionally, unification with Taiwan would enable PRC rejuvenation by eliminating the core security threat and challenge that Beijing faces. This is a shift from Xi’s predecessors’ emphasis on peaceful development of cross-Strait relations as the political basis for achieving unification. Xi has also marked the year 2049 as the timeline for rejuvenation, sparking debate as to whether Xi intends to set 2049 as the deadline for unification.
Developing a “solution”: Hu Jintao and Jiang Zemin promised that, following peaceful unification and Taipei’s acceptance of the “one China” premise, the island would enjoy a high degree of military, economic, and political autonomy. Xi has replaced this approach with calls for a 1 country, 2 system (1C2S) solution similar to the models used for Hong Kong and Maucau. Xi has doubled down on the 1C2S approach for Taiwan, despite widespread resistance across the political spectrum in Taipei. According to Beijing’s 2022 White Paper, any 1C2S solution for Taiwan must focus on “long-term stability.” It does not mention if Taiwan will have its own legislative and judicial powers, omits earlier guarantees that Taiwan can run its own internal affairs, and does not promise that the island can keep its own military. The only system that Taiwan can keep fully intact is its “social system,” which includes some protections for private property. Additionally, those in Taiwan who support reunification will become “masters of the region” under this plan.
Escalating coercion: Xi has significantly escalated its coercive approach toward Taiwan, suspending official cross-Strait communication channels in 2016, blocking Taipei from participating in the international space, blacklisting Taiwanese and American government officials, and arresting Taiwanese pro-democracy leaders in China. Although Beijing has rolled out economic policies that benefit Taiwanese firms operating in China, it has also heightened its economic coercion by pressuring Taiwan corporate leaders and firms with operations in Beijing to align with PRC views, restricting exports to Taiwan, and threatening to punish Taiwanese companies that support the DPP. Beijing’s military coercion has progressively strengthened under Xi, with near-daily entry of PLA aircraft into Taiwan’s ADIZ and frequent live-fire exercises in the waters surrounding Taiwan. Additionally, PLA reforms and reorganization have better positioned China to launch a major military operation against Taiwan.
The most important continuity between Xi and his predecessors is Beijing’s stated goal for peaceful unification. Thus, even if China’s policy toward Taiwan has become more coercive, Xi would prefer to never have to launch an amphibious invasion. Moving forward, the changes and continuities seen under Xi will likely continue during Xi’s (likely) third term. The addition of China’s August 2022 military exercises to these developments will see cross-Strait relations marked by greater tension and instability.
Killing the Difference Dreams, Keeping the Same Regime: Xi Jinping’s Ten-Year Struggle to Remake CCP Elite Politics
Since coming to power in 2012, Xi has struggled against his adversaries in powerful positions within the Communist Party. This struggle has shaped the dynamics of China’s elite politics over the past decade, as the nature of the regime requires Xi to confront adversarial cadres to achieve his policy goals.
Remaking elite politics: Xi has two strong motivations to struggle against his own comrades. The first regards power distribution: since Xi rose to power from a weak power base, he needed to concentrate power in his own hands and build up a troop of loyalists within the party-state. His ability to install loyalists is shown in the party’s numbers: 97.5% of the current standing committee members were promoted to provincial party committee positions by Xi. His second motivation is informed by his deeply held political beliefs about how the CCP regime should operate. In order to enable global capitalism to serve the needs of the CCP monopoly of power, some pluralist elements must be allowed to creep into China’s governance system. These pluralist elements are an inherent threat to the regime. Thus, Xi seeks to overcome these capitalist pitfalls by upholding CCP ideals and holding elite cadres to strict ideological principles.
Xi’s success: As soon as he came to power, Xi began to remake CCP elite politics through a powerful anti-corruption campaign. Numerous high-ranking leaders, particularly those from the Ministry of Public Security, were purged. During the first five years of Xi’s rule, more than two million CCP cadres were disciplined by the party due to corruption, including over 280 high-ranking officials and over 8600 bureau-level cadres. The campaign maintained momentum in the second five years of Xi’s rule, with about 2 million more cadres purged, bringing the party members disciplined to over 11 million. Although no top-ranking leaders have been targeted in recent years, purges at the lower levels continue. Xi has been so successful because he has taken full advantage of the fundamental rules of the CCP regime: he has utilized the No. 1 leader’s exclusive command over the party-state’s coercive power, and he has followed the CCP principle that the entire party must be consistent with the party center.
Xi’s dilemmas: Ironically, Xi’s success in amassing personal power and installing loyalists among the party’s ranks has brought about new dilemmas and accelerated the regime’s degeneration from a neo-authoritarian oligarchy to a neo-totalitarian tyranny. At the elite level, Xi’s purges have resulted in more enemies, making him feel less secure in power, thus prompting even more purges. This is reflected in Xi’s efforts to control the public-security apparatus and by changing the targets of his purges to former political allies. Additionally, Xi’s concentration of power has a similar, self-defeating cycle: the more power that Xi amasses for himself, the more responsibilities he must give to less-responsible subordinates, thus impacting the system’s ability to govern. Another dilemma lies in the total dependence – financially, politically, socially – of the elite on the regime. Without the regime, elites are next to nothing. But with the accumulation of family fortunes, many choose to “run,” leading to the proliferation of the term “run-nology,” or the ‘study’ of how to run away from China.
With Xi’s rise to power, the consensus among the post-Tiananmen CCP elite has ruptured. A significant part of this consensus – allowing elite rent-seeking in pursuit of individual interests that resonated with regime interests – has been abandoned by Xi. He has effectively prevented cadres from attaining personal wealth through public power while strengthening the ideological and political power of the party as a whole. Additionally, Xi’s successes in concentrating power can be best understood as an institutional phenomenon within CCP politics. As long as the fundamental agreement between Xi and his party enemies to maintain the CCP’s monopoly of public power is not broken, the regime will continue to provide the dictator with the institutional advantages to actualize his goals, rather than those of his subordinates.
Xi Jinping’s Mixed Economic Record
The economic scorecard for Xi Jinping’s ten years in office is mixed. Three of his economic policies in particular have proven somewhat contradictory and have yielded mixed results: (1) greater industrial-policy intervention with the aim of increasing China’s self-sufficiency; (2) accelerated foreign trade and investment liberalization; and (3) a commitment to reduce China’s carbon emissions.
Industrial policy: Although the turn to a more interventionist industrial policy was already underway when Xi came to power, it has been accelerated under his tenure. Both the Made in China 2025 program, announced in 2015, and the Innovation-Driven Development Strategy of 2016 center technological upgrading in Chinese manufacturing as a key source of productivity growth. In 2019 alone, it is estimated that China spent 1.7% of GDP on industrial policy. State-owned enterprises (SOEs) have been the main beneficiaries of such policies, while the private sector has suffered. Xi has sought to reign in private firms by restricting the activities of firms involved in e-commerce, ride sharing, delivery services, and online tutoring. These firms are all part of the tech sector, but they are not manufacturing hardware, which is favored by China’s industrial policy. The regulatory crackdowns have had a chilling effect on China’s entrepreneurial scene. The overall output of China’s industrial policy so far remains unimpressive, with total factor productivity falling to low levels and evidence of falling capital productivity. Despite the fact that capital productivity in private firms is almost 100% higher than in SOEs, state-run firms continue to receive a disproportionate share of financing, and difficulties abound for private firms seeking to list on the stock market.
Foreign trade and investment: Xi’s rhetorical focus on self-sufficiency and the development of indigenous technology implies less reliance on the international market and some turning away from outward orientation. However, Xi’s policies have not gone in this direction. Under his leadership, China has undergone a new wave of trade liberalization, with the tariff rate falling from 4.7% in 2014 to 2.5% in 2020. Additionally, China’s free trade agreements with many of its neighbors, as well as its ascension to RCEP, have brought even further liberalization of trade. China’s FDI restrictiveness has also fallen under Xi, surpassing the US as the top destination for direct investment. Although China’s trade and investment with the US and EU have hit some political bumps, its relations with the developing world have continued to thrive, thus keeping China’s overall share of world trade at a high level. However, the sustainability of Chinese trade with developing countries that have been hit by the slowing global economy, rising dollar interest rates, and higher food and energy costs, may make such countries less attractive trading partners in the next few years. Additionally, evidence suggests that, for a developing country like China, trade with advanced economies has spillover technological benefits that trade with developing economies does not.
Energy and climate change: China’s reliance on coal, its role as the world’s largest importer of both petroleum and natural gas, and the Chinese economy’s overall inefficient use of energy resources place China at the center of rising global emissions and temperatures. It has a strong incentive to cooperate with others in emissions reduction, as China stands to be the biggest loser from climate change. Xi’s stated timeline of peaking carbon emissions by 2030 and reaching carbon neutrality by 2060 will not be quick enough to meet global targets. Although Beijing introduced an emission trading system in 2021, the program is still in its infancy and has yet to show significant results. In the short run, a more ambitious policy to reduce emissions by shutting down coal-fired plants could likely lead to slower economic growth. However, continued global warming will also hamper economic activity, as resources are diverted to respond to natural disasters and water scarcity becomes more severe.
Under Xi, China has achieved real economic successes: extreme poverty in China declined from 6.5% in 2012 to 0.1% in 2019, and GDP growth, though slowed under Xi, has still averaged over 6%. However, Xi’s industrial policies risk wasting a lot of resources on potentially unproductive enterprises, when such capital could be better used elsewhere. And China’s net-zero emissions target is not ambitious enough to prevent the worst effects of climate change. Finally, there are other important areas of reform, such as genuine hukou reform or implementation of a property tax, that have been talked about for years, but have benefited from little action thus far.
The Edge of an Abyss: Xi Jinping’s Overall National Security Outlook
Regime security has been a central concern of the CCP since the PRC’s founding. Prior to Xi Jinping, efforts to promote “national security” were considered by Chinese policymakers to be uncoordinated and insufficiently institutionalized. Xi has overseen a profound expansion of the scope, scale, and capabilities of China’s national security apparatus. A key driver of these changes is the Overall National Security Outlook, announced in 2014.
The Overall National Security Outlook: The ONSO is a broad framework to drive both abstract and concrete actions in a number of domains, including ideological campaigns, security governance and institutional reform, new legal architecture, and an adaptive process for anticipating and responding to national security challenges. The ONSO addresses two categories of risk: traditional (territorial integrity, military threats, etc.) and untraditional risks. The latter encompasses a wide range of challenges, from climate change and pandemics to cultural security and mass migration. This expansionist conceptualization of risk leads, intentionally, to a blurring of lines, such that Beijing no longer sees meaningful distinctions between external and internal risks nor distinctions between traditional and non-traditional security.
Political and ideological security: In the ONSO, the most critical aspect of “national security” is “political security,” which can also be described as “CCP security.” Closely related to political security is “ideological security” – if ideological correctness and fortitude are lost, the entire political system will collapse. As reflected in the writings of Chinese Marxist scholars, the CCP’s ability to offensively promote and instill its own ideological narrative within Chinese society and defensively protect Chinese society from infiltration of foreign ideologies is critical for the country’s overall security. Reading between the lines, it appears as though party theorists understand the tenuous hold that orthodox ideology has in a rapidly modernizing society.
Top-level design: In response to previous failures in national security policymaking, the ONSO seeks to eradicate organizational demarcations between traditional/non-traditional and external/internal threats. One critical step was the creation of the Central National Security Commission (CNSC) in late 2013. A purely party institution, the CNSC is commanded by Xi and oversees sub-national NSCs, which are tasked with researching local conditions that impact security and stability, implementing the National Security Law and relevant legislation, and working with other security-related actors to investigate potential risks, prevent instability, and lead local campaigns on national security. Additionally, Xi has ushered in a slew of new legislation, from the 2015 National Security Law to the recent Data Security Law, under the premise of building a more complete national security system. Finally, Xi has inaugurated the “National Security Strategy Outline,” and in 2015, the Politburo passed the “National Security Strategy 2021-2025.” Although both documents remain internal, they likely serve to encapsulate national security work within a larger strategic structure.
The Global Security Initiative: Unveiled by Xi in April 2022 at the Boao Forum, the GSI is the latest manifestation of China’s desire to be a global leader and shape the global security architecture. Chinese analysts see the GSI as an extension of the ONSO and its conceptualization of national security applied to the international context. It is telling that the GSI was announced very shortly after Russia’s invasion of Ukraine.
The ONSO’s rationalization and institutionalization of CCP paranoia about threats to its hold on power will incentivize paranoia over pragmatism and force cadres to deprioritize addressing truly impactful risks. It is notable that, while outside narratives see the CCP’s ideological power on the ascendance, internal narratives position China under a constant barrage of Western-led plots to sabotage China’s political system. Additionally, the ONSO’s maximalist view of national security also has the potential to negatively affect China’s actual national security.
Quarterly digest compiled by Genevieve Collins.