Chinese President running up against domestic headwinds

Jayadeva Ranade
President, Centre for China Analysis and Strategy

CHINA’s domestic political situation has been unsettled since early this year. Senior cadres in the Chinese Communist Party (CCP) and the People’s Liberation Army (PLA), appointed by President Xi Jinping, have either disappeared or been placed under investigation on the charges of corruption. Articles critical of Xi’s policies have also seemingly slipped through the CCP propaganda department’s stringent censors and appeared in the official Chinese media.

At least two senior cadres — former Foreign Minister Qin Gang and former Defence Minister Li Shangfu — were promoted out of turn and inducted into the CCP’s Central Committee by Xi. Even if finally charged with corruption, their close association with Xi will undermine his authority. There are rumours of a third associate of Xi being investigated.

Articles critical of Xi and his policies have been published in the Chinese media or posted on China’s normally active social media, despite Xi appointing loyalists to key posts. Businessmen residing abroad say that unlike in the past, their Chinese interlocutors now quite openly and frequently criticise Chinese government policies. Dissatisfaction with Xi and his policies is growing.

Some articles reflecting this dissatisfaction invite specific attention. An unusually candid and critical article in China’s official Economic Observer on August 11 — titled ‘No mother can cook for her children with no rice’ — reflected the difficulties caused by the tough measures to regulate the fintech and real estate sectors. These have contributed to the economic decline and burgeoning unemployment. The real estate sector accounts for over 60 per cent of the revenues of provinces and counties. The prohibition on the sale of land by the provinces and counties has meant severe budgetary constraints and shortage of revenue for the provinces.

The Economic Observer’s reporter interviewed four finance directors of different provinces and highlighted that each had admitted to the severe paucity of funds and pruning of development projects. The directors, whose real identities were not revealed by the newspaper, said they spend most of their long working days explaining to queues of applicants why they are unable to give funds. The rest of their 14-hour workday, they said, was spent standing outside the doors of seniors, pleading for funds. In addition, they have to submit detailed explanations to inspection teams from the centre, provinces and municipalities. Meanwhile, provincial and county chiefs task them with ensuring funds for key development projects, paying salaries of staff, etc. The Economic Observer assessed it was only a short time before the real estate sector becomes bankrupt. The article was deleted within a couple of days.

More damaging was a 2,980-word article published by the pro-CCP Singapore newspaper Lianhe Zaobao on August 21. In the classic style of Chinese leaders, the article, which sharply criticised Xi without naming him, was published outside China. Titled ‘The root cause of China’s economic problems lies in political problems’, the article was authored by Lew Mon-hung, a Hong Kong businessman and former member of the 11th Chinese People’s Political Consultative Conference (CPPCC) — China’s top political advisory body. The author has taken considerable risk since outspoken critics in Hong Kong have been arrested under the national security law. Its publication points to possible factional infighting in the CCP.

Discussing the distressing economic situation, it observed that China ‘is facing a wave of private enterprise closures, evacuation of foreign companies, sharply shrinking investment, declining imports and exports, serious shortage of consumption, serial debt explosions, large-scale unemployment and losses in tax. Investment, export and consumption, all the three big economic engines, are underpowered or even stalled’. It said the joke in China is: “The three new engines of the economy are the National Bureau of Statistics, Central Propaganda Department and Xinhua News Agency and the only toolbox to save the economy is blowing the trumpet.” It pointed out that collective decision-making had been jettisoned.

It asserted that the main reason for China’s economic problems is that there has now been a “strengthening of ideology in politics, insisting that ‘Marx is right’, eliminating private ownership, emphasising the philosophy of struggle, and abusing the concepts of national security and anti-espionage”. It said foreign businessmen and tourists are hesitant to visit China. It attributed the recent economic downturn to the violation ‘by some people’ of the centre’s second historical resolution on ‘prohibiting any form of personality cult’, advocating absolute loyalty and of ‘one authority determining the final say’. It declared that the cult of personality had been raised to a new peak.

The article criticised the policy of support for Russia and said, “Sino-US relations have fallen to their lowest point since then US President Nixon’s visit to China in 1972”, as have relations with other major powers.

Very unusual was the reproduction in the CCP’s official newspaper People’s Daily on September 3 of a commentary published by it on July 4, 1980. The article, titled ‘Exaggerating the personal role of leaders to an extreme level will lead to superstitious belief in the individual’, was censored within 24 hours. The July 4, 1980, commentary said the CCP Central Committee’s 11th Plenum had ‘resolved’ major issues such as collective succession, abolition of the life-long tenure of actual cadre leadership positions and division of work.

Unless the economic situation improves and unemployment comes down, confidence in the CCP will erode and impact its legitimacy. The appearance of these articles indicates that opposition to Xi exists within the CCP and could lead to political instability. If the situation deteriorates, Xi could well be tempted to risk a military adventure.

#China #Unemployment #Xi Jinping