Xi Jinping is the most powerful Chinese leader in a generation. Not since Deng Xiaoping retired more than a quarter century ago has any Chinese leader been able to centralize such control in his hands and exercise undisputed leadership over the Communist Party, the Chinese government and the People’s Liberation Army.
Yet, Chinese are deeply divided over his leadership style: many are enthusiastic, symbolized in an online pop single called I Want to Marry a Man Just Like Big Daddy Xi or massed choirs singing his praises at a $600-a-ticket event at the Great Hall of the People. But many others are uneasy, not only over his cult of personality, but also about the ideological revival that he has sponsored. To some, it has too many distasteful overtones of the cult of Chairman Mao Zedong and the Cultural Revolution, during which hundreds of millions suffered, including Xi’s own beloved father, Xi Zhongxun, a founding revolutionary.
Xi has pledged to bring about “the Chinese Dream,” in which China would emerge as a moderately prosperous country by the centenary of the Communist Party’s founding in 2021 and would find its place among fully developed countries by the centenary of the founding of the People’s Republic at mid-century. He aims to eradicate absolute poverty by the first centenary and give all a prospect of middle-class life. Still, many policies promoted by Xi are paradoxical and controversial.
Since coming to power in 2012, he has overseen an unprecedented campaign against corruption in the party’s ranks. Tens of thousands of party officials have been disciplined for offences as varied as lavish banqueting, misuse of official cars and keeping mistresses, as well as more serious crimes, such as accepting bribes, selling job promotions in public offices and even covering up murder. He has vowed to punish both “tigers” and “flies” with dozens of senior party officials, including former members of the standing committee of the Politburo (the party’s highest decision-making body) and the central military commission (the party organ that controls military command) sentenced to life in prison.
Mixed views on anti-corruption
Despite the Schadenfreude Chinese feel at the discomfiture of the arrogant and privileged, many complain that the campaign is neither comprehensive nor systematic and some even dismiss it as factional manoeuvering. Others point to the bureaucratic paralysis the campaign induced, leaving officials reluctant to take initiative for fear of offence. To be fair, the campaign has transformed the notorious bureaucratic ecosystem in a number of sectors and regions, such as the coal-mining province of Shanxi and the state-controlled oil sector, as well as disentangling and amputating the tentacles of the party’s infamous security supremo, Zhou Yongkang.
Xi came to power in the midst of a wrenching economic transition. To accomplish this transition, China’s leadership must take on some of the vested interests that hamper reform. Xi views reasserting control over the Communist Party as the key to his reform efforts. Having exhausted the advantages of catch-up industrialization, China enters a new normal of more moderate economic growth, slowed by a demographic transition that sees a smaller cohort entering the labour force and fewer people migrating out of the underemployed agricultural sector to seek jobs in the cities. At the same time, China battles headwinds in global trade caused by the economic slowdown in vital markets in Europe and the emerging economies. Added to this are the overhang of debt, overcapacity and inventory bequeathed by China’s overambitious stimulus and investment strategy to reflate the economy after the 2008 global financial crisis.
To deal with this, China must refocus growth on growing consumption, based on growing incomes. However, higher wages hobble China’s export competitiveness, exacerbating the challenges in the trade sector. For this, Xi proposes “supply side reform,” building a competitive economy based on innovation, dismantling burdensome regulation and creating a decisive role for market supply and demand in determining how things are produced and how much to produce. As enticing as these reforms sound, they run counter to the political line that Xi has pursued, centralizing control in the Communist Party and emphasizing ideological control, decreeing that the media must belong to the Communist Party and must conform to its policies, promoting “Marxism for the 21st Century.” Given these contradictions, the reform of state-owned enterprises has not been thorough and capital has not flowed freely into the more dynamic private sector. Furthermore, foreign enterprises complain about discriminatory practices and a hostile environment.
Loading down the economy is debt, much of it contracted by ambitious municipalities that have planned housing for more than 3.4 billion people in China’s satellite ghost towns, as well as by underperforming state-owned steel mills and cement factories. China boasts 50 per cent of world steel-making capacity at a time of languishing demand. Overcapacity raises the threat of massive layoffs, undermining business confidence and social stability. The silver lining in this picture is in the environment. In 2014, China’s coal production seemed to have peaked, raising the possibility that its carbon emissions will also peak and that absolute reductions will begin earlier than anticipated in the 2013 bilateral agreement with the U.S. and in the Paris climate agreement negotiated last December.
Flight of capital from China
Chinese have reacted to the “new normal” by drawing down more than $1 trillion US of China’s foreign exchange reserves since the end of last year. One quarter of China’s reserves has gone abroad, ploughed into real estate throughout the world, most notably in Vancouver and Toronto. This is a reaction to slower growth at home, as well as protection against the declining exchange rate of its currency, the RMB. But it also reflects the personal insecurity of China’s new upper middle class. Skeptical of China’s rule of law, and uncertain whether the campaign against corrupt practices will prevent passing their wealth to their children, they take advantage of the rule of law and robust property rights in western countries to maintain their family wealth. The evidence was clear well before the “Panama Papers” revelations. Not surprisingly, Chinese officials complain that countries such as Canada shelter corrupt Chinese officials and their wealth. Chinese aver that all wealth in China was born in original sin and may be traced back to some shady deal, to stripping of state-owned assets or some sweetheart money-for-power exchange.
As Xi arranges his second five-year term after the 19th Party Congress in 2017 and prepares to name the heirs who will secure his legacy, he acts with supremely confident assertiveness. Abroad, he challenges Japan on China’s maritime claims in the East and challenges Southeast Asian neighbours over the nine-dash line defining China’s claims in the South China Seas. Canadians got a taste of this assertiveness when in May, China’s foreign minister, Wang Yi, dressed down a Canadian reporter in response to a question that wasn’t even directed at him at a press conference following a meeting organized to improve our relations with China. (Most Chinese academics I spoke with were dismayed by this blatant departure from the suave diplomacy exemplified by the late premier Zhou Enlai.)
Xi does not back down from challenging the U.S. in what he sees as China’s own backyard and is pursuing an ambitious plan to build a blue-water navy, able to project power beyond China’s shores. As the world’s largest trader and a major shipping power, China sees this as a logical move to protect its shipping lanes.
China’s relations with the U.S.
To this end, China is overhauling its military, not only building aircraft carriers and sophisticated submarines and surface ships, but also engaging in a far-reaching reorganization of the People’s Liberation Army, reducing the preponderance of ground forces and retiring more than 300,000 officers to build a more limber command structure capable of integrated air-land-sea operations using sophisticated information technology. While insisting on China’s core interests, Xi calls for a “new type of great power relations” with the U.S., where mutual accommodation and dialogue will replace confrontation and prevent the possibility of escalation to war between the status-quo power and its rising challenger. As much as China asserts its own interests, it contributes more peacekeepers to the UN than all the other permanent five members of the UN Security Council. In just the last few months, China has lost three peacekeepers in missions in Mali and South Sudan.
Xi’s tenure will either successfully adjust Communist Party rule to the globalized conditions of the 21st Century, or his failure will mark the last ditch effort to marry one-party rule to the needs of a modern society. Either way, the Chinese state will not likely collapse. The China that Prime Minister Justin Trudeau visited in late August faces challenges and uncertainty under an unusually powerful leader. Canadians must realize that although we differ in values and political ideology, China is more than its leader or its ruling party. The increasingly prosperous, educated and tech-savvy Chinese outnumber their helmsman and daily grow more independent of his whims, despite arrests of rights-defending lawyers and civil rights activists.
We can maintain our confidence in our own social model as the appropriate response to a globalized world while partnering positively with China. To be successful and maintain global influence in the 21st Century, Canada has no alternative but to gear our own economy to the stupendous flywheel of China’s economic growth. Trudeau can and should carry forward the legacy of his father, who recognized that a more open and prosperous China was essential to global prosperity and peace.
Jeremy Paltiel is professor of political science at Carleton University, specializing in Chinese politics and the politics of East Asia. He is currently researching Canada’s relations with China and the Asia-Pacific as principal investigator on a project funded by the Social Sciences and Humanities Research Council of Canada.