Xi Jinping’s Vision and the 20th Party Congress

For Xi, the threat to the Communist Party of China is not democracy as believed in the West but hidden capital

Published: 22nd October 2022 07:05 AM  |   Last Updated: 22nd October 2022 07:05 AM   |  A+A-

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The 20th Party Congress of the Communist Party of China has brought the world’s attention to whether Xi Jinping’s third term in power is the last straw that can break the camel’s back from becoming a fully developed country. The commonly held narratives show Xi beset with a slowing economy exacerbated by Covid shutdowns, investor confidence shot down by the crackdown on fintech sectors and severe supply chain disruptions owing to the rising US-China competition, leaving him in a precarious leadership position.

These narratives, however, portray that Xi’s rule is resilient as he centralised power, decimating his political rivals. It is only a matter of time before his many failures would disrupt elite cohesion and derail China’s ascendancy. Such narratives are easy to digest due to their brevity. That Xi is a product of an authoritarian communist system and is unable to face his ineptitude on policy implementation punishes more dissenters. It does not lead to an understanding of how the Party deals with resistance and implements reforms, as seen in the 20th Party Congress.

It is well known now that Xi came to power to reorient China’s economic model towards high-end manufacturing and rein in excess capacity. Deng Xiaoping, the leader who was credited with instituting the consensus mechanism, did not base it on a set of ideals. Deng’s consensus system worked as he allowed the party officials to profiteer from the proceeds of the market reforms. He condoned it to garner their support for pushing the provinces to implement reforms in return. As a result, by the end of Hu Jintao’s tenure, massive corruption at every level of government threatened the Party’s hold on power.

But Xi’s compulsions go beyond a few corrupt officials. Deng’s excesses, which once boosted China’s economy, became an albatross around its neck, stifling innovation in high-tech manufacturing. Xi’s anti-corruption campaign thwarted consensus politics because it was the thread that held various interest groups and in turn, the factions and their power-sharing arrangements together through spoils
of corruption.

New engines of future growth are needed to replace it. In Xi’s view, the answer lies in core technologies, which require the upgradation of the manufacturing sector and promotion of emerging industries to produce high-quality goods. Xi’s first decade in power has led China to considerable momentum, with the 20th Party Congress stressing on innovation, self-reliance and industrial competitiveness. Naturally, it has created concerns for the US about sustaining its technological dominance. Further, the US attempts to stall China’s innovation through wide-ranging technology-denying legal mechanisms.

However, Xi’s dreams of technological superiority do not focus on upending the liberal order built by the West but nevertheless would have profound implications for it. Xi wants to change the lifeline of the
Chinese economic system, which got rich by participating in the economic system built by the West but nonetheless engaged in economic activity that benefits the Western populace, such as Chinese labour making cheaper goods for the European customer. Xi’s motive is to change the production cycle of its industries to turn to the domestic consumer, which would mean he has to reorient the way capital is used for economic growth.

For Xi, the threat to the Party is not democracy as believed in the West but hidden capital. The hidden and uncontrolled expansion of capital as the by-product of the neo-liberal order is posing challenges. The expansion of such capital grows through the shared interests in seeking profits, and as it grows, it becomes autonomous in its search for connecting powerful individuals and setting up cross-national networks. It threatens state power and, in Xi’s view, is often untethered from the trappings of tradition, culture, the spiritual and the political, and can unravel the very nature of the community.

Xi is apprehensive that unchecked growth would jeopardise the CPC’s hold on society and can make the Party accountable to a group of powerful individuals or organisations. His political survival also depends on making sure that powerful political families in China, who benefit from such arrangements, do not gain undue advantage to loosen his grip on power.

The question for Xi is whether he can reorient the flow of capital through crackdowns on tech, entertainment, and education, which have been helpful in GDP expansion. Shutting down the valve of easy credit to companies to expand in unproductive sectors and arresting the further expansion of capital in sectors that are seeking profit from the manipulation of their customers is easier said than done. For instance, if a Chinese parent believes that extra tuition is necessary for the child to compete for college admission successfully, does the state prioritise reducing the undue pressure on children from the parents or the GDP expansion that this additional economic activity creates? Xi’s 20th Party Congress compromises on the GDP growth story to ensure social stability.

This is why common prosperity is so important for Xi Jinping. Many of the Chinese ills can be subsumed into this concept without drawing it out in the open such as elders’ suicide, rising costs of healthcare, growing pressure on the youth who are unable to have a decent livelihood, loneliness, and growing spiritual despair among the young and old due to the brutal work culture and urban migration of the young respectively.

The nature of reform that Xi is pursuing is to raise the incomes of individual households, especially low-income earners, and increase the size of the middle-income group. This has its naysayers. Liberals who believe that a democratic system can fairly redistribute wealth, and the rationalists in the Party who believe that crackdowns would only hurt the economy rather than help it, are concerned about Xi’s policies.

Xi will be under tremendous pressure to raise China’s productivity and deliver on technological advancements and self-reliant innovation amid complex geopolitical competition with the US.
The next decade, if Xi stays in power, would be consequential for India. For instance, India is formulating its policies as an alternative choice in the battle for a resilient supply chain and disruptions caused by Xi’s zero-Covid policies. The question is not whether Xi is another Mao Zedong or Deng Xiaoping, but how far his policies, such as zero-Covid, might help him transition the Chinese economy towards high-end manufacturing. Similarly, it might help India reframe its policies to make its industries and manufacturing globally competitive to help achieve its goal of a $5 trillion economy.

Views are personal and do not reflect the views of GoI or MP-IDSA

M S Prathibha

Associate Fellow at Manohar Parikkar Institute for Defence Studies and Analyses

(prathibha.idsa@gmail.com)

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