From Dictatorship to Gamesmanship in China
In attempting to maintain a "zero-Covid" policy, 5.5 percent economic growth, and his own stranglehold on power, Chinese president Xi Jinping is turning from a leader to a political gambler.
On April 29, at a meeting of the Chinese Communist Party’s (CCP) Central Committee Politburo, Chinese president Xi Jinping stressed—once again—the country’s need to maintain its “zero-Covid” policy while continuing to pursue its 5.5 percent annual economic growth target. There would be no compromise.
Xi’s top political priorities are to maintain both his present power and his prospects for achieving permanent rule, the latter anticipated at the 20th CCP National Congress in October. On the basis of any objective standard, the two goals appear to be in sharp conflict. Moreover, Xi has recently shown not just obstinacy but paranoia, two further obstacles to achieving his simultaneous goals. This does not mean he has abandoned either one; it just means that Xi is becoming less a dictator than a political gambler.
No CCP leader since Mao Zedong has singlehandedly created so much turmoil and so many crises as Xi Jinping—including the continued deterioration of relations between China and the West, the humanitarian catastrophe spawned by the CCP’s draconian Covid-19 control measures, and the country’s severe economic stagnation. Unsurprisingly, Xi’s international reputation is in decline. Although independent public opinion polls are not feasible in China, it appears that Xi’s support is also declining within the CCP and the Chinese public.
The outlook for Xi is not favorable. In 2018, he eliminated China’s two-term presidential limit; he is now expected to seek a third term. Over the past several years of Xi’s self-aggrandizement and his Party-backed campaign of personal worship, however, the situation has become more difficult: In virtually every field, from economic and financial indicators to science and technology to the fight against the pandemic, the performance indicators are tightly coupled to Xi’s purported “wisdom, greatness, and correctness;” to the legitimacy of his rule and the stability of his power; and even to the superiority of the state’s system of “socialism with Chinese characteristics.”
That is why Xi has been left with no option but to gamble.
Xi has placed his bets on two goals for 2022: eradicating the pandemic and achieving robust economic growth. The success of the former has already been celebrated in China’s state-produced textbooks. As for the latter, the target, “around 5.5 percent,” is set forth in a central government work report released in March. Xi has directed sources cited in The Wall Street Journal to ensure that China’s economic growth “outpaces the U.S.’ this year.” If these targets are met in the face of obstacles, the achievement would be extremely good for Xi’s political reputation at home and abroad—and his aspiration to life-long supreme authority over the CCP.
However, China’s “zero-Covid” campaign—that is, achieving and sustaining no new SARS-CoV-2 infections nationwide—is up against a highly transmissible, extremely dynamic, and generally relentless virus. The notion that new infections can be reduced essentially to nothing in a country of 1.4 billion people contradicts science, common sense, and practical experience.
Shanghai, China’s most populous and affluent municipality, has been locked down for over a month. As of mid-April, after yet another surge, Nomura International (Hong Kong) Ltd. reported that up to 45 cities in China were in full or partial lockdowns; they comprised some 370 million people, or more than a quarter of the country’s population. Even in cities where the reported infection rate fell to zero at some point, new infections have reappeared, spurring lockdowns that have been numerous and prolonged.
The upshot is that the Xi-sponsored, CCP-backed campaign to challenge the gain-of-function–enhanced virus known as SARS‑CoV‑2 (including the most recent Omicron variant) has taken more than a billion Chinese people hostage, at the cost of their freedom, dignity and survival. It has triggered a massive humanitarian disaster that has startled the world. Whether Xi’s gamble has any chance of success is becoming increasingly irrelevant: The Chinese people are physically and mentally exhausted. They are worried not about when or if the virus can be completely purged but about how China’s policy can be adjusted to give people a “way out.”
But for Xi, this is a one-man war (just as Russia’s invasion of Ukraine is Putin’s one-man war), a war that he cannot afford to lose.
Short of cooking the books, it will be extremely difficult for China to achieve its stated economic growth target this year. At the annual Central Economic Work Conference in late 2021, it was suggested that China’s economy would face “threefold pressure” in 2022: “demand contraction, supply-side shock, and weakening growth expectations.” Even this seemingly harsh forecast, however, is an understatement. China faces additional pressure from Xi’s purge of several domestic industries and capital markets; a recurrence of guojin-mintui (the “advancement of the state” and the “retreat of the private sector”); and external pressure produced by China’s ongoing confrontation with the United States.
China’s uncertain political climate, coupled with pessimistic economic expectations, will significantly reduce the willingness of businesses to invest and consumers to spend. Moreover, when Xi set this year’s economic growth target in March, he apparently failed to give adequate consideration to the collateral effects of the Russo-Ukrainian war on China or to anticipate the impact that the prolonged lockdown of Shanghai would have on China’s economy and its discretionary consumption.
Behind Xi’s two high-stakes bets lie the insatiable ambition of a dictator and his resulting sense of insecurity. Before the pandemic, Xi’s policies had some limited success. Ending the pandemic and achieving robust economic growth would give him renewed credibility and, more important, go a long way towards deterring potential political opponents from challenging him at the CCP’s National Congress this autumn when he seeks his third consecutive term in office. Still, despite Xi’s rise from ruler to de facto emperor, the political arena is never calm—especially for totalitarian regimes, in which power struggles lack constraints and contests over rules are fought to the death. Therefore, Xi needs to be ready to use both offensive and defensive techniques.
His two goals—zero Covid and 5.5 percent growth are not just mutually constraining but likely conflicting. Xi’s ruthless and unrealistic “zero-Covid” target has added to the woes of China’s already-battered economy. If this target cannot be achieved in the short term, then, unless the CCP changes its Covid-19 strategy from pandemic eradication to pandemic containment, economic recovery will simply be unattainable. When Xi chaired a meeting of the Central Financial and Economic Affairs Commission on April 26, he stressed the importance of state-backed infrastructure projects in ensuring domestic economic development. According to a recent Bloomberg summary, local governments, at the behest of central leadership, have drawn up lists of thousands of “major projects” with planned investments of at least 14.8 trillion yuan (roughly $2.2 trillion USD) this year. In other words, the regime, after significantly curbing the growth rate of infrastructure investment over the past decade, will now launch a new round of “major projects” in a bid to help Xi meet this year’s economic growth target.
At the Politburo meeting on April 29, Xi, in addition to re-emphasizing the importance of achieving both the “zero-Covid” target and the annual economic growth goal, also said that China needs to make macro-policy adjustments to promote the stable and healthy growth of the real estate market, keep capital markets running smoothly, and promote the healthy development of the platform economy (economic activity facilitated by platforms like Taobao, JD.com, and Meituan). Such signals of a moderate loosening of private sector rules may help restore Chinese people’s confidence in the domestic economy. The Politburo even issued a press release about the meeting when it was yet to adjourn, reflecting Xi’s sense of urgency about reviving economic activity.
But Xi has also hedged his bets by restraining, often via extralegal means, economic elites who could pose a political threat through their capital power or social influence.
Thus, at the Politburo study session held just a few hours after the meeting at which Xi expressed his support for the development of China’s real estate market, capital markets, and platform economy, he emphasized the importance of regulating the flow and distribution of capital and even linked it to “national security” and “social stability." In one paragraph of his speech, Xi used the word “regulation” twenty-six times. Such language conveys Xi’s mistrust of the power of capital, and more important, of those who possess it.
This mistrust has been clearly expressed in other ways. On May 3, CCTV, China’s top state propaganda broadcaster, reported that “someone surnamed Ma in Hangzhou” was suspected of using the internet to “engage in activities that endanger national security,” leading to a frenzy of search activity on the microblogging platform Weibo. There was speculation that the person “surnamed Ma” was a thinly veiled reference to Alibaba founder and multi-billionaire Jack Ma. When trading opened the next day, the share price of Alibaba declined by 9 percent.
The share price recovered after CCTV “clarified” that it was not necessarily referring to Jack Ma.
The lesson is not the sloppiness of state media’s coverage of the story but the public’s widespread perception that the Xi regime is willing, and certainly able, to target private entrepreneurs and, indeed, even the country’s most successful business magnates. This perception formed and grew in recent years as Xi cracked down on elites in the commercial and capital sectors.
If Xi wins his “bet” on his two political goals, he can basically rest assured that any would-be opposition within the CCP will be successfully deterred; indeed, such opposition would be deprived of any chance to resist Xi’s political ambitions. However, the power of capital represents a complex threat. Xi needs the likes of Tencent and Alibaba (tech giants with market caps of hundreds of billions of yuan, depending on the day) to maintain his economic growth goals and, thus, maintain the legitimacy of his leadership; so, he cannot indiscriminately suppress the private sector. At the same time, the vast economic resources and social influence held by private entrepreneurs are a source of constant psychological unease for Xi. Such unease existed prior to the Party’s 20th National Congress and will endure afterwards. That is precisely why, during the Politburo’s morning meeting and its afternoon “study session” of April 29, Xi expressed two contradictory stances toward private capital.
Observers are divided about whether Xi will win his high-stakes gamble. The final outcome of his bet will be known only after the CCP’s National Congress this fall. But to judge from current trends, the magnitude of Xi’s wager will only grow over time. Even if, as a last resort, Xi’s two aforesaid political goals are fictionalized through the blurred lens of state propaganda, in which facts are concealed and data concocted to create his anticipated victory, that would still fail to deliver a sustained boost to his political prestige. As the years of Xi’s dictatorial rule stretch on, and as he ages, his fears over the stability of his power and suspicions of potential rivals will only intensify. At the same time, more and more of China’s performance indicators will be tied to Xi’s “greatness, wisdom and correctness;” the legitimacy and permanency of his rule; and the perceived institutional superiority of China (over the United States, in particular) under his rule. These connections, in turn, will form a political tinderbox that could ignite at any moment, permanently sealing his fate.
Jianli Yang is president and founder of Citizen Power Initiatives for China and author of For Us, The Living: A Journey to Shine the Light on Truth (2021).
Yan Yu (pseudonym) is a public intellectual in China.
American Purpose newsletters
Sign up to get our essays and updates—you pick which ones—right in your inbox.Subscribe