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Xi Jinping has repeatedly made it loud and clear that Taiwan’s reunification with China remains one of his priorities. But Taiwanese security officials recently assessed that the risk of a Chinese attack remains rather low, even if the US were to be distracted by a war in Eastern Europe. They calculate that Xi, whose second tenure as president ends this year, is too busy plotting to secure a third term.
They may have a point: Xi himself has not left the country in 25 months. His last state visit was to Myanmar on January 17, 2020—five days before China locked down Wuhan because of the first Covid-19 outbreak.
The pandemic has been cited as the reason for Xi’s decision to not travel outside China, but many analysts say there is more to his physical absence in the international stage than meets the eye.
For one, Xi is preparing for the party congress, the Communist Party of China’s most important meeting held every five years to fill China’s top leadership positions. The congress is likely to convene in October-November, and Xi is betting on the delegates to elect him as China’s supreme leader for another five-year term. He also wants to pack the 25-member CPC Politburo (the second-highest rung of power in China) and the seven-member Politburo Standing Committee (the highest) with his loyal lieutenants.
In China, every party congress represents a full reconstitution of power—“a huge political risk for everyone involved and the system as a whole,” says Tristan Kenderdine, China scholar, who has taught at Australian National University, Canberra, and is research director at the international consultancy Futurerisk. Kenderdine, whose work focuses on China’s political economy, finance and industrial policy, has written for Financial Times, Nikkei Asian Review, South China Morning Post and Straits Times. In 2020, he was co-winner of The Washington Post’s Albert O. Hirschman award for best writing on political economy.
According to Kenderdine, Xi’s political risks arise from the hard limitations of the Chinese economic model. “His move towards ‘New Era’ development is a balancing act between the industrialisation process, which was only semi-completed, and establishing a techno-industrial playing field where future developments are gamed more favourable towards China’s state-market hybrid system,” he says.
Edited excerpts from the interview:
Q/ How crucial would be this year’s party congress to Xi Jinping and his long-term plan of rejuvenating China and bringing in common prosperity?
A/ The common prosperity policy narrative is a canard. Most macro-level policies in China are multifaceted; they carry some aspects of public good, party legitimacy and bureaucracy goals. The problem with common prosperity is that it seems almost entirely geared towards bolstering party legitimacy.
Common prosperity is also out of alignment with China’s current policy needs. It seems measured against the US’s economic policies of the 1980s. For all the talk of China threatening its trade partners not to fall into Cold War rhetoric, the CPC itself is terrified of the end of the Soviet Union. It constantly revises party history and policy to find ways to prolong the CPC’s legitimacy and avoid the Soviet collapse scenario. In this sense—and the US economic policy comparison sense—I think the CPC is living in the 1980s. Many of the Chinese politicians who went to study in the US did so in the eighties, and I think this directly contributes to their thinking about domestic economic policy in contemporary China: to come up with a more measured, socialist form of policy for China in the 2020s than Ronald Reagan’s America in the 1980s.
But this is a false dichotomy. Common prosperity is made against the false equivalency of an alternate history where China was the equal and opposite of the US in the 1980s. This is what they are measuring themselves against, and this is why it will ultimately fail, because it is not sophisticated enough to take into account the political and policy realities of China in the 2020s—which is an entirely new political, economic, social, institutional system. China’s reality is more like Japan’s than Russia’s, and yet the CPC seems to insist on running an alternate history simulation, putting themselves in the Soviet place against the US.
Q/ Within the CPC, what are the challenges Xi’s project is likely to face?
A/ Whatever is going to happen will likely be settled soon. The lead-up to the party congress in October or November will likely either be a quiet plod towards a hard codification of power around a third term for Xi, or the reveal of some political masterplan resembling Russia’s Putin-Medvedev arrangement, or a rapid de-structuring of the Xi political world if a viable alternative can somehow achieve enough intra-party political capital to force a radical change. I think Xi will sure up any weak spots in party loyalty and provide a smooth political-legal extension of his project into the 2020s.
Q/ A key aspect of that project is Xi’s hardline techno-economic policy, which envisages a socialist reconstruction of China’s technology sector. How different is this policy from that of his predecessors?
A/ The main difference between this and the previous techno-economic policy is that it (the tech economy) must not go international. Earlier generations of techno-industrial policymakers could simply sit back and wait for foreign capital and intellectual property to come in to China. Policy and public administration were then entirely under party control.
The trick with the 2020s is that China has to do what Japan and Germany did at a similar stage of capital accumulation, but with a party that wants to maintain stronger control over virtually all aspects of the economic system. There are so many aspects of China’s development model that are either part-complete or in conflict with itself. Its economy now seems to be like a very broken Linux machine—it’s full of dependency issues; there are some legacy architectural structures on the machine; the more powerful features remain inactive, while the core is functional and usable; and any new improvements pushed onto the system break something older. It must be a very frustrating system for the policymakers within it.
This analogy also fits the wider Chinese neo-mercantilist model, where people who believe in open source and free competition create systems that improve the world, and a state-corporate entity then absorbs the intellectual property, redefines the rules of the game ,and releases a closed-source or otherwise monopolised system. Look at Android, the core of which was developed as open source and which is now hardwired into Google. China’s techno-industrial model is much the same, an absorb-and-deploy model. And this techno-industrial policy always carries the threat of militarisation—and this threat will be a persistent concern through the 2020s.
Q/ How is this policy going to impact China in the long run?
A/ China in the 2020s is in a unique position. It has much more economic clout and resources than the Soviet Union ever did, but it is also expending this stocked capital by transferring it into political capital, and then spending it negligently. So, from a higher starting point, China is now going backwards in terms of economic resource-marshalling power. We can see that with the fuel and food shortage there.
If China’s offshore production networks which were supposed to be established by the Belt and Road Initiative were ready to come online and provide the mainland with fuel, food, commodities and semi-manufactured goods, then we might have been in a different world. But, as it stands, the BRI has not really achieved its system goals. And the economic system that China is using now to take a hard nationalist approach is going to face bottlenecks and institutional limitations, which might not have been a reality if China had had another five or ten years of growth.
Q/ A notable beneficiary Xi’s techno-economic policy has been Guizhou, one of China’s most impoverished provinces that Beijing is fast developing into its own Silicon Valley. You have written about how Guizhou’s rapid economic growth in the past few years has contributed to the formation of the ‘Guizhou connect’ grouping within the CPC. Is this group likely to become more influential in the run-up to the party congress?
A/ Guizhou is two things—a manifestation of the national techno-industrial policy, and a representation of the paranoid strongman governance model. Techno-economically, the Guizhou model is the frontispiece of the whole-of-nation approach to bridging the gap between China and OECD economies while simultaneously transitioning from old industry to techno industry.
Politically, the Guizhou Connect faction is a manifestation of how Beijing governance has worked over the past decade—moves towards greater central control, less focus on regional economic autonomy, and more grand national planning. The Guizhou Connect cadres generally fall into three groups: core Xi loyalists holding crucial lieutenant positions, such as [former Guizhou party boss and current Chongqing party secretary] Chen Min’er [former Guizhou acting governor and China’s current public security minister] and Zhao Kezhi. Holding power in Beijing necessitates having strong lieutenants hold the key regional garrisons. That is the reason behind the rise of the Guizhou faction, and the personal rise of politicians involved in Tibet, Xinjiang and Inner Mongolia.
Q/ If Xi is forced into a situation where he has choose his Medvedev, who would be the leaders he is likely to consider?
A/ It seems much more likely that Xi will not even bother with the pretence of the Medvedev move, although that is an intriguing scenario which not many analysts are considering. The CPC is more like a loose collection of factions and clans. Russia is much more closely aligned with the idea of using legal pretence as a path to legitimacy, because at its core is still the concept of legitimacy centred on Third Rome. China can afford to be even more brutal than the Soviet Union in terms of party politics, because China’s modern history has been so much more brutal.
If Xi survives, though, the natural successor in a Medvedev-type scenario is Wang Huning. Chen Min’er has a strong claim, too, but Chen is more a party functionary, whereas Wang is the CPC’s ideological heart. Wang is so close to the top now, it makes sense for him to start asserting more overt political control.
Q/ What are the chances of the party congress forcing the top leadership to abandon the nationalist approach and return to a more liberal and internationalist approach?
A/ Things in China do change very quickly. But a reinvigorated right, internationalist, liberal China seems a world away right now. Even if those domestic changes were to occur, there is a huge trust deficit which has developed over the past four years which will be incredibly difficult to overcome. Whatever the future of the Chinese leadership, the halcyon days of throwing money into China’s development economy are gone.