Third term agenda

Donald Trump was one of the first world leaders to congratulate Xi Jinping on his “extraordinary elevation” after the Chinese leader tightened his grip on power in October 2017, with the Communist Party of China (CPC) even writing Xi’s name and political theory into its constitution.

The former American president was quick to offer a congratulatory message a few months later when the Chinese government eliminated the two-term limit for the country’s presidency, paving the way for Xi to hold the position for longer. “He’s now president for life. And he’s great,” Trump told supporters at a fundraiser at the time. “I think it’s great. Maybe we’ll have to give that a shot someday.”

Debate on the merits of China’s political system has been the focus of the Anglo-American world again this month. Just a few days before Britain welcomed its second prime minister in as many months, Xi was formalising his third term as Party Secretary at the CPC National Congress. In the wake of an intensifying rivalry between China and the West, the question is also what Xi might do next, now that he’s regarded as having unprecedented power to lead the world’s second biggest economy for an unlimited period.

What happened last weekend?

Proceedings at the CPC’s five-yearly congress – or at least the events in front of the camera – haven’t changed much in almost four decades. The 20th iteration of the CPC National Congress began last week with the Party boss, aka Xi, giving a lengthy report to the 2,300 or so delegates. They represented more than 96 million CPC members , Xinhua reported.

The real drama began behind closed doors after Xi gave the keynote report last week. In its pyramid-style “intra-party representative democracy”, the CPC National Congress selects a Central Committee, which comprises 205 full members and 171 alternates (in its current iteration). The Central Committee then held its first Plenum (the ruling body typically sits through six or seven plenary sessions during its five-year term) and selected the Politburo of 24 members, as well as the all-powerful Standing Committee (numbering seven this year, the same number since the 18th CPC National Congress).

Compared with the congresses of recent memory, outsiders were given few clues on the likely personnel changes at the summit of Chinese politics. In another sign that Xi is exerting an ever-growing influence, there was little discussion of the factional feuds that once dominated the jostling for positions in the hierarchy.

Most observers were expecting Xi to tighten his personal grip on power but some were still surprised when the list of Central Committee members was announced last Saturday. When Xi – as General Secretary – led the new Standing Committee out onto the stage at the Great Hall of the People, Premier Li Keqiang was no longer with him. Neither was vice premier Hu Chunhua, the youngest Politburo member at 59, and once touted as Xi’s potential successor, and someone who had been widely expected to join the Standing Committee. Lower down the power ladder, 13 members of the 24-man Politburo were new additions. And besides Xi himself, only Wang Huning, his ideology tsar and Zhao Leji, who heads the potent anti-graft agency, had kept their status as senior leaders on the Standing Committee.

Three of the newcomers Li Qiang, Cai Qi and Li Xi have been serving as Party bosses of three of the most important municipalities and provinces (Shanghai, Beijing and Guangdong respectively). Ding Xuexiang, meanwhile, has worked as Xi’s chief of staff. At 60, he is now the youngest Standing Committee member and was often spotted alongside Xi on his inspection tours in recent years.

“We shall keep in mind the Party’s nature and purpose and our own mission and responsibility and work diligently in the performance of our duty to prove worthy of the great trust of the Party and our people,” Xi said in a brief press conference after introducing his new Standing Committee, without taking further questions.

Is Xi breaking from tradition?

Many China watchers have described the outcome as unusual in a context in which the protocol is that senior officials step down when they reach the age of 68 (at the point at which the CPC National Congress convenes).

This explains some of the surprised reaction at the omission of Li Keqiang, 67, from the Standing Committee line-up. So too for Wang Yang, the 67 year-old chairman of the CPPCC, an advisory body to the government.

Xi himself, who was born in June 1953, is already 69 but has still secured another five-year term as Chinese leader, of course. And there are other exceptions to the retirement rule. Foreign Minister Wang Yi, also 69, has been elected as a Politburo member and is widely expected to take over from Yang Jiechi, who was not re-elected, as China’s top diplomat.

Obviously, another major break with recent tradition is that Xi has formalised his third term as the Party boss. Yet the previous two-term limit for the position, similar to the protocols for retirement at 68, was only an unwritten rule in place for about 20 years. Jiang Zemin (the 96 year-old former leader, who didn’t show up at the congress) served as CPC general secretary for 13 years between 1989 and 2002, for instance. And he only retired as chairman of the Central Military Commission (which controls the People’s Liberation Army) in 2004, two years after his successor Hu Jintao had taken office.

Strictly speaking, Hu Jintao is the only leader to adhere to the two-term limit. He relinquished all of his official titles (including chairmanship of the Central Military Commission) to Xi after the 18th CPC National Congress in 2012.

At a press conference 10 years ago, Xi had praised outgoing leaders including Hu for their “noble character and sterling integrity”. Similar phrases were back in vogue this week, with Xinhua reporting that some of the leadership elite had volunteered for retirement during the consultation period ahead of the congress. “Some Party and state leaders gave priority to the interests of the Party and the people, and with a highly responsible spirit to the development and rejuvenation of the country, they voluntarily asked to step down so that younger cadres could step up,” the report said. “They have shown the broad mindedness, as well as the noble character and sterling integrity of a Communist Party member.”

The report seemed to be an effort to rebuff speculation that the jostling for position had created rifts among the CPC elite – conjecture that intensified after the abrupt exit of Hu Jintao from the stage last Saturday, escorted by two cadres.

Hu was sitting beside Xi when members were casting their ballots for the new leadership and he seemed to try to draw others into a discussion about a folder of papers sitting on the desk in front of him. Foreign broadcasters then filmed the unexpected drama as a frail-looking Hu was led from the stage, largely unacknowledged by his peers as he departed.

His exit sparked a range of suggestions on what was going on: from a personal protest by Hu to claims that Xi had ordered the ejection of his predecessor as a dramatic demonstration of his mastery of the political scene.

Another possible explanation came from Xinhua: although the 79 year-old Hu had insisted on attending the session, he was simply unwell and needed to leave suddenly (Xi was also spotted helping Hu take his seat during the opening ceremony, it was noted).

How has the Standing Committee selection process been perceived outside China?

There is a widespread impression that Xi has surrounded himself with allies and loyalists in the new set-up. The most notable of these appointments is Li Qiang, the Party boss of Shanghai and now the number two official behind Xi in the Standing Committee. Various commentators, including The Economist magazine, expect the 63 year-old to take over from Li Keqiang as Chinese premier in March – despite not having served as a deputy prime minister in the same way as some of his predecessors.

From 2004 to 2007, Li Qiang worked directly for Xi as his chief of staff when Xi was the Party boss of Zhejiang. Cai Qi and Ding Xuexiang, two other new members of the Standing Committee, have a close working history with Xi too, while Li Xi’s family “is said to have ties with Mr Xi’s that date back decades”, The Economist claims.

The appointments raise concerns that Xi has surrounded himself with “yes men” as he leads China through what he himself describes as the “choppy waters” of the future, the Guardian newspaper warned.

Conversely, some of the technocrats with political standing – “a mix that gave them global market credibility” as the Wall Street Journal put it – are no longer present at the apex of political power.

Figures such as Liu He, who was sometimes described as Xi’s chief economic advisor; Guo Shuqing, the chief banking regulator; and Yi Gang, the governor of the central bank, all lost their positions on the Central Committee.

“Gone from the new leadership are the pro-market pragmatists who for decades helped pilot the country’s integration into the global economy. Instead, Xi Jinping is starting his third term in power with a slate of senior Communist Party apparatchiks known for their loyalty to the supreme leader,” the Wall Street Journal reckoned.

Of course, leaders around the world often appoint ministers with whom they already enjoy close personal relationships. In this context, Xi’s selections are a lot less surprising. “The ‘loyalty’ explanation is no explanation at all. A better explanation is that the Anglo-American political establishment has misread Xi from beginning to end,” Uwe Parpart also scoffed in an editorial in the Asia Times.

In a lengthy article published in late 2020, the Wall Street Journal reported that diplomats and analysts in Washington were already admitting to a major misreading of Xi. Hoping for an internationally and more liberally-minded leader, they were starting to realise that they were getting more of an autocrat instead – in what the newspaper described as one of the “biggest strategic miscalculations of the post-Cold War era”.

Parpart at the Asia Times believes that similar preconceptions among the foreign policy establishment in the West have continued, leading to another chronic misreading of what is actually happening in China. The promotion of Li Qiang, he argues, was foreseeable because very few former Shanghai Party bosses (Xi Jinping included) have failed to advance to the Standing Committee.

Plenty of commentators outside China have questioned Li’s promotion, however, saying that he botched the implementation of Shanghai’s Covid lockdown earlier this year, and portraying his elevation as further proof that promotion only on merit in Chinese politics is a myth.

Of course, in overseeing the lockdown in Shanghai, Li was also enforcing a policy that Xi has prioritised across the country, despite the economic damage. And Li’s credentials as China’s premier-designate can also be presented in a very different light to the efforts of his critics, including achievements in bringing Tesla’s Gigafactory to Shanghai, the creation of the tech-focused STAR Market, as well as his work in fostering economic growth in Zhejiang province.

“His appointment affirms the leadership’s support for privately-led high-tech industry” is the Asia Times verdict. (Indeed, Li may be the first second-ranked member of the Standing Committee to hold an MBA, which he obtained part-time from Hong Kong Polytechnic University in 2005; his undergraduate degree by contrast was in agricultural mechanisation which he gained at the Zhejiang Institute of Agriculture.)

As ever, much depends on the interpretation of events. And something similar can be said of claims that the new Politburo has lost much of its formerly technocratic ethos. According to the South China Morning Post, at least six of its members boast academic or professional qualifications in science and technology fields including lunar science, nuclear power and environmental protection, for example. That signals an intent to “push back at the US tech squeeze,” the newspaper speculates.

The market is not buying into it?

On Monday, the first trading day after the conclusion of the congress, Hong Kong’s share market suffered its worst sell-off since the 2008 global financial crisis.

Battered by a meltdown in Chinese tech stocks, the Hang Seng Index plunged nearly 6.4% in a single session, closing at its lowest level in 12 years.

Analysts were quick to blame the leadership reshuffle for rattling foreign investors. “They’re worried that Xi’s tightening grip on power will lead to the continuation of Beijing’s policies and further dent the economy,” CNN decided, referencing the zero-Covid measures that have stunted growth.

Although the market seems wary of the changes at the top of Chinese politics, is there any scope for a contrarian school of thought, though? After bulldozing vested interest groups for much of the last decade, Xi seems to have a clearer runway to push through any policy he wants. Economists have argued for years that China needs a property tax to reduce some of the distorting effects of the real estate sector on the wider economy and to put local government finances on a sounder footing, for instance. Various groups have blocked this fiscal initiative over the years, in spite of pilot programmes in select cities.

Should Xi want to implement a property tax nationwide over his next term, he is now in a position to do so. But will he use his enhanced authority to push for greater changes like this or prefer to hunker down at a time when China’s economy is showing signs of slowing sharply?

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