Last update: November 29, 2022
Not long ago, following an article written by a former professor of the Central Party School involved in the ideological structuring of the Communist Party (Xia), Western media went aflame with speculation that privacy concerns related to increasingly aggressive diplomacy, Zero-Covid policy with other domestic and foreign policy concerns could lead to a reckoning and potential changes of top party leadership behind closed doors within the CCP. These speculations proved to be partially true, as Chinese leader Xi Jinping presents a new top executive body stacked with loyalists and the lack or powerlessness of internal opposition shown by the complete removal of reformists from the highest ranks of the leadership. Close analysts may note that Mr. Xi’s speeches did not go into detail about foreign affairs, yet the internal changes within the Party seeing rival factions lose great power could ultimately affect geopolitical decision-making in what is probably one of the most bureaucratic organizations on Earth.
Old Friends, New Leadership
The most noticeable change in the Party’s top governing body, the Central Standing Committee, is that all current members of the new committee are in some way connected or allied to Mr. Xi (Wong and Zhai, White and Lin). This result is contrary to the claims that a behind-the-curtains plot to erode centralized power gained momentum, which either proved to be just more false rumours about the opaque inner workings of the Party or meant that this plot was utterly crushed by Mr. Xi. Regardless of the actual factuality of the claims on internal disputes and what happened during the “closed doors” days of the meeting of the Congress the fact remains that these changes represented a consolidation of power in the highest ranks of the Party. New reformist or business-friendly candidates were not included in the renewed Standing Committee despite expectations observed by the Wall Street Journal that the discontent party members would elevate Hu Chunhua, a vice premier affiliated with the former leader and reformist Hu Jintao to signal some resistance to Mr. Xi. Instead he was even kicked out from the Politburo, the lower top executive organ of the Party (Taplin), while the leadership changes have eliminated the “liberal” status quo members such as Premier Li Keqiang, regarded as business-friendly and expected to be replaced by Li Qiang, from the Standing Committee. Li Qiang himself has business-friendly credentials built over decades, but those decades also include long periods of working under Mr. Xi who prioritizes security over economics (Mitchell). Considering that Mr. Li oversaw the infamous Shanghai lockdowns this summer despite the tremendous economic cost suggests that he is likely to put loyalty first.
Aside from signifying Mr. Xi’s consolidation of power, the new leadership also signifies doubling down on several important policies. Remember that the CCP is a deeply bureaucratic organization in which leadership reshuffles can signal regional and district leaders which policy to focus on by showing the leader’s priorities. The most blatant change was the elevation of Li Qiang, who handled this summer’s two-month-long lockdown of Shanghai as the city’s Party Secretary indicating strict continuity of the Zero-Covid Policy. Meanwhile elevating Wang Huning, set to be the top political advisor in China, who is known for his communist conservative and anti-West views indicates that China will continue or even tune up the hostility to the West within its official ideology and internal affairs. This, and other changes, means that the West should not expect any rhetorical or actual detente from the Chinese leadership, and should expect that the bureaucratic consensus on important foreign policy decisions to be made with far more influence from Mr. Xi, who would likely face minuscule opposition while promoting a more aggressive and risk-taking foreign policy trying to ensure a China-centric world order.
What About the International Markets?
Overall, there is also a consensus that the new leadership signals new crackdowns on private capital and tech giants as well as self-reliance because of the current Standing Committee members’ more conservative views of communism compounded by Mr. Xi’s continuous remarks for ‘common prosperity’ and ‘Chinese-style modernization’, common CCP watchwords equivalent to a call for the Party to control more wealth and capital in the name of distributing to the people and expanding economic growth while ensuring that China’s industries are not reliant to raw materials or subcomponents flowing from third countries into China proper.
Such changes have geopolitical consequences reaching outside China’s immediate neighbourhood. Because of its position as a major driver of global economic growth and trade, China’s economic health and stability affect markets worldwide. In particular, the reader should note that China’s own meteoric rise as a manufacturing hub was one of the drivers of globalization, a rise driven by the business and investment-friendly policies of the collective leadership era starting with Deng Xiaoping in the 1970s. The neoconservative views of the new CCP leadership, combined with increasingly isolationist and “redistributive” rhetoric mean that more crackdowns on private Chinese businesses as well as restrictions on foreign businesses similar to those observed between 2020-2022 should be expected.
This situation will have very important effects that are by themselves worthy enough to be discussed in a separate article. In the simplest terms, it will accelerate the demise of globalization as a wave of Chinese protectionism endangers the supply chains of Western nations once more. This time, not because of a pandemic but for pure political reasons. There will be great geopolitical costs, namely the erosion of commercial bonds that kept great powers more or less peaceful in military terms. The world will become a more dangerous place as the economic consequences of military action will be smaller. In addition, the economic costs for both companies and states for decoupling from China can be directly translated to further geopolitical risks caused by popular unrest. Companies will reflect the cost of Chinese protectionist measures or the expenses of not producing in China to consumers and states may decide to take measures to stabilize domestic macroeconomic indicators after the decoupling, both of which will be either translated to further inflation or tax hikes during a global cost-of-living crisis. According to the risk analysis firm Verisk Maplecroft, 101 countries out of 198 witnessed a rise of civil unrest directly linked by the firm to socioeconomic pressures with the expectation of further unrest to come in the future (Soltvedt). Therefore, the prioritization of politics over economics in China may give rise to greatly unpredictable geopolitical crises across the globe by increasing the effects of inflation. Observers should watch the effects of protectionist policies in China with great caution.
Doubling Down on “Domestic” Affairs
As noted before, the Congress was an event focused more on domestic affairs rather than international ones. However, Taiwan is a “domestic” problem in the eyes of the CCP and was treated as such during the Congress. According to the Guardian, the issue of Taiwan was mentioned far earlier compared to the leader’s former speeches in the previous congresses. According to Wen ti-Sung, a political analyst at the Australian National University, this signifies growing focus as “…putting it in the section where people still have an attention span, means putting it under the microscope.”. Other than this significant situation, Mr. Xi repeated a similar position of preferring peaceful reunification and using force when necessary for the reunification with the exception of extraordinarily aggressive language on US interference with the reunification process (Davidson and Harrison). This and the focused mention of Taiwan, likely highlights increased urgency within top Chinese officials, including Mr. Xi, to take control of Taiwan by any means necessary following a combination of weaker Chinese economic indicators, overseas geopolitical events such as the Russian invasion of Ukraine and more direct US support for Taiwan causing the leadership to feel that a brief window of opportunity for China is closing.
This is unlikely to cause a sudden, unexpected invasion of Taiwan due to greater US involvement on the subject and other military necessities related to the fact that any invasion of Taiwan would have to entail a very large amphibious operation, whose preparations would give warning signs as an operation to invade an island nation with nearly two hundred thousand active soldiers would be extremely hard to conceal. However, greater efforts to bolster sanctions resilience and increased military power could encourage an already concerned leadership to push a possible invasion date to a much earlier time and make them try to shorten the time allocated to ensure the formation of invasion conditions as much as possible rather than erring on the side of military caution.
Expect More, Not Less
In conclusion, the policy “shifts” observed during the Congress marks the continuity of current policies but with a shorter timetable, rather than new changes. However, the real change is not in policy but in politics with Mr. Xi breaking ties with the CCP’s nearly five decades-old traditions of collective leadership. Even though it didn’t directly change foreign policy, the remarks of Mr. Xi alongside political changes within the Party can affect geopolitics on a global scale thanks to the influence of China and the Chinese economy on the rest of the world.
We should expect more action, not less, from the new Chinese leadership. Mr. Xi and the CCP feel that a window of opportunity is closing, and expect Mr. Xi to act to take advantage of what he sees as an opportunity to ‘rejuvenate’ China. Now, securing top party leadership with loyalists, he faces even fewer checks and balances to deliver the results that the Party and the people expect from him in exchange for the mandate of absolute power that he was given. However, this absolute power is expected to be used to trigger a new period of isolation and conflict, likely at great cost for both China and the rest of the world by worsening the already existent geopolitical and economic crises of the world. Expect more from China, and expect even more from the rest of the world.
Davidson, Helen, and Emma Graham-Harrison. “Xi Jinping Opens Chinese Communist Party Congress With Warning for Taiwan.” The Guardian, 17 Oct. 2022, www.theguardian.com/world/2022/oct/16/xi-jinping-speech-opens-china-communist-party-congress.
Davidson, Helen, and Emma-Graham Harrison. “Xi Jinping’s Vision for China’s Next Five Years: Key Takeaways From His Speech.” The Guardian, 16 Oct. 2022, www.theguardian.com/world/2022/oct/16/xi-jinping-vision-china-next-five-years-key-takeaways-from-speech.
Mitchell, Tom. “Li Qiang, Xi’s Right-hand Man.” Financial Times, 29 Oct. 2022, www.ft.com/content/743087b1-da6f-4f89-a936-aecb977acd90.
Soltvedt, Torbjorn. “101 Countries Witness Rise in Civil Unrest in Last Quarter, Worst yet to Come as Socioeconomic Pressures Build.” Verisk Maplecroft, 1 Sept. 2022, www.maplecroft.com/insights/analysis/101-countries-witness-rise-in-civil-unrest-in-last-quarter-worst-yet-to-come-as-socioeconomic-pressures-build.
Taplin, Nathaniel. “Markets Are Right to Fear Xi’s Dream Team.” WSJ, 24 Oct. 2022, www.wsj.com/articles/markets-are-right-to-fear-xis-dream-team-11666620054?mod=series_xichina.
White, Edward, and Andy Lin. “Xi Jinping’s Men: Why China’s New Politburo Has Spooked Markets.” Financial Times, 24 Oct. 2022, www.ft.com/content/6c55b72e-25e1-4e8a-8b2c-4318ddd2cf89?emailId=a37b0b60-8f1d-455f-93b3-46a5b280947f.
Wong, Chun Han, and Keith Zhai. “China’s Leaders: Xi Jinping and His Men.” WSJ, 23 Oct. 2022, www.wsj.com/articles/chinas-leaders-xi-jinping-and-his-men-11666538145?mod=series_xichina.
Xia, Cai. “The Weakness of Xi Jinping: How Hubris and Paranoia Threaten China’s Future.” Foreign Affairs, 18 Oct. 2022, www.foreignaffairs.com/china/xi-jinping-china-weakness-hubris-paranoia-threaten-future.