China’s economy is faltering. Unemployment is rising. Endless Covid lockdowns are wreaking havoc on businesses and people’s lives. The real estate sector is in crisis. Ties between Beijing and the world’s major powers are strained.
The list of problems facing the world’s second-largest economy goes on, and many of these long-term challenges have worsened during a decade of Xi Jinping’s rule. However, China’s leadership is unable to hold on to power.
Over the past decade, Xi has consolidated control to a degree not seen since the days of Communist China’s founding strongman Mao Zedong. He is the head of the Chinese Communist Party, the state, the armed forces and so many committees that he has been called the “chairman of all”. And now, he is poised to enter an unprecedented third term, with the chance to rule for life.
But absolute power can often mean absolute responsibility, and as problems mount, analysts warn Xi will have less room to avoid blame.
“I think the worst enemy of Xi Jinping’s longevity in China is Xi Jinping himself,” said Steve Tsang, director of the SOAS China Institute in London. “When he makes a major political mistake that causes disaster in China, it’s what could start the process of unleashing Xi Jinping’s power.”
Mao’s rule from 1949 to 1976 was marked by drastic political decisions that killed tens of millions and destroyed the economy. After decades of confusion, the Communist Party developed a system of collective leadership designed to prevent the rise of another dictator who could make arbitrary and dangerous decisions.
China’s next leader, Deng Xiaoping, set an unwritten rule and precedent that the General Secretary of the Communist Party – the role in which China’s leader holds real power – would step down after two terms.
When Xi took power in 2012, China’s economy was booming as it integrated more closely with the rest of the world. Four years earlier, China had stunned the world with the extraordinary Summer Olympics in Beijing. But for Xi, the party was in a state of crisis: corruption, infighting and inefficiency.
Xi’s solution was a return to dictatorship and personalism. He purged political enemies in a sweeping anti-corruption campaign, silenced internal dissent, abolished presidential term limits and enshrined “Xi Jinping Thought” in the party constitution.
According to analysts, many dictatorships fall into a pattern of abuse of power and poor decision-making when the leader lacks critical advice. They point out that Vladimir Putin’s war against Ukraine is becoming increasingly expensive because Xi’s undisputed power over the Russian president could one day lead to disastrous consequences.
Putin and Xi “suffer from the same problem of strongman syndrome, which is that they turned political advisory circles into an echo chamber, so people can’t speak their minds freely,” Tsang said. “We’re seeing big mistakes being made because that domestic policy debate has been reduced or, in fact, eliminated in terms of its scope.”
In recent history, no country has modernized as quickly as China. The Communist Party says his leadership helped lift hundreds of millions out of poverty, transforming marginal towns into stunning megacities. But that miraculous growth has slowed. And many of the longstanding challenges facing the Chinese economy have only been exacerbated by Xi’s policies.
Xi has made it his mission to strengthen the party and its control over business and society. He unleashed a crackdown on the vibrant private sector that led to mass layoffs. Beijing says tougher regulations curb overpowering corporations and protect consumers, but the measures have stifled private business, chilling the economy and stoking fears about future innovation.
Beijing began curbing easy credit for real estate companies in 2020, leading to cash crunches and defaults for many developers, including giant conglomerate Evergrande. Housing projects have stalled and desperate homebuyers across the country are refusing to pay mortgages on unfinished homes. Disruptions in the real estate sector have a significant impact on China’s wider economy, which accounts for 30% of the country’s GDP.
But under Xi’s leadership, nothing has shaken China’s economy and society as much as zero-Covid. In the third year of the pandemic, China has maintained a tough policy that relies on mass testing, extensive quarantines and closed lockdowns to stamp out infections at all costs, even as the world has learned to live with the virus.
The country continues to lock down entire cities for a few infections, while sending all positive cases and close contacts to government quarantine facilities. Queuing for Covid tests and scanning a health code to enter any public space have become the norm. Beijing has argued that the policy has prevented China from entering a health care disaster like the rest of the world, but zero-Covid comes at a huge and growing cost.
The ongoing blockades have dramatically reduced the growth rate of China’s economy. Youth unemployment has reached a record of almost 20%. Pockets are shrinking. Heavily indebted local governments are being forced to spend on massive Covid testing. Experts say resources would be better spent increasing vaccination rates than building expensive testing sites and quarantine facilities. China has not yet approved any foreign mRNA vaccines that are more effective against the highly contagious Omicron variant than the inactivated vaccines used in China.
When the pandemic began, Beijing censored, and in some cases punished, doctors, experts and citizen journalists who tried to warn of a deadly virus in Wuhan.
Nearly three years after most international experts advised China to find a way to live with the virus, Beijing has doubled down. Earlier this year, Shanghai – a metropolis with more than three times the population of New York City – was locked down for two months. People struggled to get enough food and basic necessities. Frustrated residents left their homes and clashed with enforcement officers in rare street protests. Many patients were denied life-saving healthcare.
When the World Health Organization criticized the zero-Covid policy as “unsustainable”, China censored the statement on social media.
Susan Shirk, director of the 21st Century China Center and author of “Overreach,” a book about Xi’s leadership, says China’s leaders “compete with each other to prove how loyal they are to him, because Xi promotes the loyal, not the most competent people.” It involves going and running policies to try to please Xi, he said.
Shirk said this has been played out with zero-Covid, as Xi has tied his leadership directly to strategy, so local officials have remained eager to show loyalty to the leader and protect their own careers.
“A lot of the pain in the Chinese economy is self-inflicted by China’s leadership,” Shirk said.
“So what this suggests, and it’s quite a disturbing idea, is that the Chinese Communist Party no longer brands itself as a development party, with economic development as its primary goal. But instead, Xi Jinping’s hold on power.”