Commentary: For China's next five years, 'only Xi Jinping is indispensable'

Commentary: For China's next five years, 'only Xi Jinping is indispensable'

Having strengthened the Chinese Communist Party, the president will use the 19th Party Congress to cement his position further. But Xi Jinping's appetite for reform is uncertain, says the Financial Times' Tom Mitchell.

BEIJING: On his first trip as the Chinese Communist Party's newly installed general secretary, Xi Jinping travelled to the southern city of Shenzhen in December 2012 and laid a wreath at a larger-than-life bronze statue of Deng Xiaoping.

Mr Xi's homage to Deng, who used Shenzhen as a test-bed for his historic economic reforms, appeared to signal continuity with the policies of modern China's founding father. "The Communist Party must stick to the correct path of reform and opening up," Xi said.

We must be unwavering on the road to a prosperous country and people.

As Mr Xi prepares to preside over a Party Congress starting on Wednesday that will mark the start of his second term in office, the question is whether China's leader intends to use his power to continue the Deng legacy of "opening up" or whether he will instead pursue a narrower agenda of defending the position of the ruling party and his own allies.

The president's supporters argue that his ruthless anti-corruption campaign and more muscular defence of the country's territorial claims enjoy popular support, which has allowed him to accrue vital political capital.

For his first term, Mr Xi was largely surrounded by men and women groomed by his predecessors. But with his A-team in place after this Party Congress, the argument goes, he will finally begin to deliver on difficult economic and financial challenges.

Yet Mr Xi has also signalled that he intends to loom over a new period in China's modern history distinct from the ones defined by Deng and Mao Zedong, the party's revolutionary leader.

"Mao beat the foreign invaders and Deng ended hunger," says Li Xiguang, a professor at Beijing's Tsinghua University and a Xi admirer. "Xi talks about having confidence in our (political and economic) system ... it's a total breakthrough."

In one big departure from the Deng era, Mr Xi has deliberately blurred the division of labour Deng drew between the Communist Party and the Chinese state, while also halting or reversing a range of financial and economic reforms as soon as they encountered turbulence.

This has inspired grumbles in Beijing that Mr Xi has proved himself a master of the party's internal power dynamics, purging his rivals and cowing others. But when it comes to using his accumulated power to push through difficult reforms, as Deng did, the president's critics argue that he is a paper tiger.

"Xi knows, like Machiavelli said, that it is better to be feared than loved," says one person who advises Chinese policymakers.

"Yet as a strategist, Xi is much smaller than Mao and Deng in every respect. Deng rarely - and Mao never - took charge of everything. They only took charge of the big things. Xi Jinping takes everything, big and small, in his own hands."

A paramilitary policeman keeps watch underneath the portrait of former Chinese Chairman Mao Zedong
Xi Jinping's strongman style of leadership has attracted comparisons with former Chinese Communist party chairman Mao Zedong. (Photo: REUTERS/Thomas Peter)

"Mao and Deng paid attention to substance first," the person adds. "Xi worries about appearance. When Mao and Deng made their minds up, they would stick with it because it can take years to see the real effects of your struggle."

Mr Xi's ambitions will be laid bare at this week's 19th Party Congress, where he will be nominated for a second term as general secretary. Xi's second term as state president will not formally begin until March, when his government appointment is rubber-stamped at the annual session of parliament.

SHROUDED IN SECRECY

In a political ritual whose secrecy is rivalled only by that surrounding the selection of a new Pope, after about a week of deliberations Mr Xi and his new leadership team will walk onto a stage and stand before the world's media.

Even the number of seats on Mr Xi's new Politburo Standing Committee, the party's most powerful body, will not be known until the last minute.

Moments before the previous standing committee performed this ritual in 2012, the only clue that it had been shrunk from nine seats to seven were the seven small pieces of tape that marked where the new members were supposed to stand.

When they did emerge, six of the seven men, including Mr Xi, were dressed in dark suits and red ties. Only Wang Qishan, the powerful head of Mr Xi's anti-corruption campaign, broke the identikit uniform by wearing a blue tie.

Mr Xi's dominance is such that, as Shi Yinhong, professor of international relations at Renmin University in Beijing, says,

Guessing who will be on the next standing committee is in a sense irrelevant - everyone will be Xi's man. No one except Xi is indispensable.

The one possible exception to the widespread perception that "only Xi matters" is Wang, who is also the party's most accomplished financial technocrat.

Now 69, his reappointment to the Politburo Standing Committee - and possible elevation to premier, replacing Li Keqiang - would be widely welcomed by reformist officials and the private sector as a sign of Xi's determination to deliver economic reforms.

The CCDI is headed by Wang Qishan, widely considered to be Xi's top lieutenant
As the head of the Communist Party’s anti-corruption commission, Wang Qishan is widely seen as the second most powerful man in China after President Xi Jinping. (File photo: AFP/Wang Zhao)

"Everybody hopes Wang will stay on and it seems like he's more in than out at the moment," says one senior Chinese business executive in Beijing. "But only Xi knows."

According to an informal convention enforced since 2002, cadres aged 68 or older are ineligible for reappointment to party positions. If Xi breaks with convention by retaining Wang, the precedent could potentially allow him to serve a third term as party general secretary from 2022 to 2027.

Wang has recently met a number of international dignitaries, including Singapore Prime Minister Lee Hsien Loong and former US presidential adviser Steve Bannon, stoking speculation that he is not about to step down.

A SHOW OF STRENGTH OR WEAKNESS?

This week's Party Congress is expected to enshrine "Xi Jinping Thought" in the party's constitution, which would be only the third "named" addition alongside Mao Zedong Thought and Deng Xiaoping Theory.

The congress will also fill the party's central committee (traditionally comprising about 200 members), politburo (25 members) and its standing committee with Xi loyalists.

If Mr Xi's name is written into the party constitution alongside Mao and Deng's, it will further strengthen his hand, just a year after he was officially designated China's "core leader". Earlier in 2016, he also added the title commander-in-chief of China's armed forces, a position that had not formally existed since 1954.

But such aggrandisement is seen by some as a sign of weakness rather than strength.

Deng made just this point in a 1980 speech on the relationship between party and state when he said:

Over-concentration of power is liable to give rise to arbitrary rule by individuals at the expense of the collective leadership.

Deng was secure enough in power that he dominated Chinese politics through the mid and late-1980s while having only one formal position - chairman of the party's Central Military Commission that oversees the People's Liberation Army.

People stand in front of a flower display featuring Chinese President Xi Jinping's "four
A flower display features Chinese President Xi Jinping's doctrine, known as the "four comprehensives" in Beijing. (Photo: REUTERS/Thomas Peter)

Deng's reign continued into the next decade without even this one formal title.

In 1992 he revived his own economic reform programme, which had stalled after he ordered the PLA to crush the Tiananmen Square student protests in 1989. The Deng statue that Mr Xi visited in December 2012 was erected in memory of the late leader's now-famous "southern tour" of cities including Shenzhen and Shanghai.

Jude Blanchette, an analyst at The Conference Board who is writing a book on modern Chinese politics, argues that Xi's eagerness to blur clear boundaries between the Communist Party and Chinese state is "a direct rebuke to (Deng's) idea of political reform".

Xi has, for example, reduced his premier and the State Council's traditional authority over the economy by taking charge of "party leading groups" that have been micro-managing economic and financial policy since 2015, when Li, the premier, ordered a chaotic rescue of China's crashing stock markets.

According to two people close to the internal policy debate at the time, officials in Xi's leading groups believed the State Council's market intervention would ultimately backfire and allow them to assert more power.

One government official says he now worries that Li is widely regarded as "the weakest premier in the history of the People's Republic of China".

XI'S REFORM RECORD

In contrast to the risky but ultimately successful reforms unleashed by Deng, since 2013, Mr Xi has reversed a number of hard-won financial liberalisations at the first sign of instability, notably after the 2015 market crash and a run on China's currency in early 2016.

More recently, his administration has cracked down on overseas direct investments by large state-owned enterprises (SOEs) and private-sector groups, which had been encouraged to "go out" by Beijing.

This has disappointed some officials who feel that Mr Xi has not followed through on the pro-reform rhetoric of both a landmark party policy document in November 2013, which declared that the market should play a "decisive role" in the economy, and his defence of an open global trading regime at the Davos World Economic Forum in January this year.

FILE PHOTO - A general view shows delegates raising their hands as they take a vote at the closing
Delegates raising their hands to vote at the closing session of the 18th Party Congress of the Communist Party of China on Nov 14, 2012. (File Photo: REUTERS/Carlos Barria)

In its most recent assessment of China, the International Monetary Fund reviewed the Xi administration's record on 14 challenges related to reducing corporate debt and financial risk, relaxing foreign exchange controls and reforming China's state-owned enterprises.

The IMF concluded that Mr Xi had achieved only "some" or "limited" progress in 12 of these areas.

Xi has focused on merging big SOEs into even bigger ones, further consolidating their grip on the world's second-largest economy. Rather than truly opening state-dominated sectors, private companies have instead been encouraged to take only minority stakes in a handful of SOEs and state-led infrastructure projects.

"The critical questions are whether Xi will be able or willing to use (his) accumulated power effectively and to what purpose," Tony Saich, an expert on the Chinese leadership at Harvard University, wrote in a recent paper.

As an indication of Mr Xi's determination to see through reforms, his defenders point to a series of key appointments at China's banking and securities regulators as well as the National Development and Reform Commission.

Some are men the president previously worked with in provincial postings. Others are well-respected proteges of Zhu Rongji, the former premier who negotiated China's 2001 entry into the World Trade Organisation and oversaw an overhaul of SOEs and banks.

Chinese President Xi Jinping called for 'global security governance' as he addressed
New appointments and announcements at the 19th Party Congress would be analysed to evaluate Xi Jinping's commitment to economic reform. (Photo: AFP/Lintao Zhang)

"It is not easy to establish yourself as 'the core' of the party," says one senior government official, arguing that Mr Xi had to consolidate power and restore confidence in the strength of China's party-state system before tackling potentially destabilising reforms.

"We draw lessons from our own reference points," the official adds:

China does best under a strong central government, a strong leader and a unifying ideology. Then the country prospers.

Reflecting this, Mr Xi has embraced a "confidence doctrine" that takes pride in the Chinese party-state's unique political economy. US President Donald Trump's chaotic start in office and the ructions from Britain's decision to leave the European Union have both given Beijing unprecedented faith in its political system and economic development model.

"Xi has problems to deal with but look at the US," says Prof Shi at Renmin University.

"Their president is crazy, Congress divisive and people divided, (while) Europe has a solvency problem. Xi believes China will continue to be vigorous, strong and rising. He has great hope that by the end of his tenure, China's national resurgence can be fundamentally realised."

© 2017 The Financial Times Ltd 2017. All rights reserved. Not to be redistributed, copied or modified in any way.

Read past commentaries on the Chinese Communist Party's 19th Party Congress about:

1. What Xi Jinping is likely to say about Taiwan.

2. The changing meaning of political legitimacy for the CCP. 

3. The slew of changes in the PLA leadership in 2017.

4. The drastic political reforms Xi Jinping may make.

5. The crackdown on Chinese businesses.

6. The role Wang Qishan plays.

7. The new leaders in Beijing.

8. Reforms in the PLA over recent years.

Source: Financial Times/sl

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