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Yale 62

How Secure is China’s Leadership? Part Three
By Bill Stork

This fall’s 20th National Party Congress will be the most significant in forty years. While I expect that Xi Jinping will again be elected president for a third term, I also expect it will be with drastic and perhaps dramatic limitations.

China is exceedingly history-conscious, and precedents are important. No one since Mao Tse-tung has served for more than two terms as president1, and all members of the Politburo Standing Committee, of which Xi is now the leading figure, are expected to retire at age 68. Xi, at 69, is intending to also sidestep that convention. Eleven other members of the Politburo are expected to retire and then, with replacements, it will then become apparent which of the cliques described in Part Two will become ascendant, and whether a possible successor to Xi will emerge.

Is it time to say good-bye to Xi’s powerful leadership?

It is my assertion that one of those cliques has already asserted its ascendancy, and it will be this clique that will limit Xi’s once powerful leadership and diminish his authority. This is the clique that was once powerful and will now regain that position – the Shanghai clique. It is very significant that of all the retirement-age members of the Politburo Standing Committee, one other of them will not now retire, having had his retirement given a guaranteed postponement until March 2023, and this is Premier Li Keqiang. Li is the acknowledged leader of that clique; it is my view that he is extending his time in the Standing Committee to assure that newly appointed members to the Politburo are from his camp.

It is further not insignificant that Li is leading the effort to get China back on the path to the once economically prosperous China that has been so badly suffering since Xi Jinping deprioritized economics in his strident efforts to assert his ‘dynamic zero-Covid’ policy with its harsh enforcement of strict lockdown supply chain disruptions. At the time of this being written (mid-August ’22), Li has made an unexpected appearance in Shenzhen, China’s technology hub to meet with leading economic officials from the six major economic provinces. “At present, we are at the most difficult point of economic stabilization,” Li said at the meeting, according to a Xinhua article posted on the central government’s website. “We must cement the economic recovery with a sense of urgency as time waits for no man,” perhaps alluding to Xi Jinping. Calling the six the “pillars” of China’s economic growth needing to “bravely take the lead and play a key role in stabilizing the economy,” Li told them to open up to foreign investment and trade.

“I am trusting in you” – Li Keqiang Aug, 16, 2022

Premier Li has been quite vocal this year about China’s sputtering economy, and has repeatedly stressed the need to stabilize the “complex and grave” job situation: one in five is unemployed. You know about the results of the disruptive Covid-lockdowns and that China will drastically miss its declared GDP growth rate of 5.5%. Now China is experiencing a huge real estate crisis as hundreds of thousands across China have banded together to refuse to pay monthly mortgage payments on unfinished residences.

Unfinished and unoccupied residential housing complexes

And now extreme weather threatens recovery with severe drought conditions and high heat in China’s agricultural basin.

Drought leads to record low levels of the Yangtse River Aug. 18, 2022

Concurrently, as Li continues to make headlines with his calls for reform, there has been an unexplained absence of two weeks for Xi Jinping… which may be longer by the time you read this. Some China-watchers are suggesting that Xi might be in negotiations with other cliques, trying to forestall a takeover by the Shanghai clique. There can be no doubt that Xi has gained support from the People’s Liberation Army (PLA) clique after their employment in Xi’s response to the Pelosi visit to Taiwan. But I do not think it will be sufficient, even with the recent announcement by China that the Taiwan Strait is no longer open to transit by foreign vessels, a challenge that they know will get a US response in kind. Xi has conveniently tried to replace Chinese pride in economic growth with more aggressive nationalism to distract from the Covid and other issues.

I will not dwell on the 40-year low ebb in US-China relations nor on the comprehensive competition in geopolitics, technology, military, ideology and the economy.

In closing, let me return to my earlier statement about China being so history-conscious. In understanding the rise and fall of various past dynasties in China – the dynastic cycle – there are historical omens that signal that the rulers have lost the Mandate of Heaven to justify their rule. These omens include pestilence and plague (pandemic?), economic distress and unemployment, severe weather conditions (drought?), pressures from nations outside the Middle Kingdom (China vs US), plus social discontent and uprisings (lockdowns, mortgage boycott?) and many of these are visibly on the current surface in China, perhaps historically pointing to the impending rise of a new and powerful leadership. Keep your eyes on the constituency of the new Politburo and its all-powerful Standing Committee to see if and what new leadership has emerged.

1. After Mao, China’s economic rise was due to “paramount leader” Deng Xiaoping and his efforts with ‘socialism with Chinese characteristics’. It was he who created the special economic zone that is now so significant, Shenzhen, and it was he who orchestrated a return of Hong Kong to Chinese sovereignty under the banner ‘one country, two systems’. Deng never held a specific title such as chairman, president or premier.

Sources: Reuters, NYTimes, The Diplomat, WashingtonPost, Foreign Affairs, SCMP, The Nikei Times, Council on Foreign Relations – Richard Haass, CNN.

Links to Bill’s earlier essays on China’s leadership: Part One     Part Two

 
We welcome your comments below.

3 comments to How Secure is China’s Leadership? Part Three

  • Larry Price

    Here are three facts about China:

    1. The Chinese labor force peaked in 2014. (one child policy)

    2. Productivity in the last decade has been at best 1%.

    3. The Chinese government announced 6-8% growth every year for the last decade.

    It is impossible for all three to be true. Somebody is lying. The prime suspect is the 6-8% growth. The last decade was Xi’s decade, and the Chinese people probably grew poorer during that period. Xi shunned the private sector where all of the innovation and growth is and favored the state sector which is a sinkhole for money.

    What is the problem with this? The understanding with the Chinese people was that the government would curtail their freedoms but would make them rich. When it curtails their freedoms and makes them poorer in the bargain, the government loses all moral standing. A third term for Xi would be a disaster for both.

    I find Bill’s article particularly insightful in one regard. I figured Xi would either win or lose this fall. I never contemplated the Chinese solution: give him the third term but so hamstring him that he can do no harm.

  • Neal Freeman

    Valuable insight, Bill. I’m curious: the “expectation” that CCP leaders step down at age 68. Is that custom or bylaw or something else? And how big a deal is it that Xi is ignoring it, or waiving it, in his own case?

    • William Stork

      This has been known as the rule of qi-shang, ba-xia (lit. “seven up, eight down”), referring to the fact that if a Politburo Standing Committee member is 68 or older at the time of a party congress, he must retire, but if he is 67 or younger, he may still enter the committee. Chinese President Xi Jinping turned 68 in June and most believe he will buck tradition and stay on. The unwritten rule is generally considered a way to prevent any one figure from remaining in power too long and undermining the principle of collective leadership. But some in the party say it was really only introduced by former President Jiang Zheming, in office from 1993 to 2003, to push out his older rivals.

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