100 Years in Power: Challenges Before Xi & China's Communist Party

The trajectory of China under Xi Jinping could lead it to world power status, or place it in a middle-income trap.

The Communist Party of China (CPC) is 100 years old. This is quite an achievement for any political party especially one that has wielded supreme power continuously for 70 years. It has overcome many near-death experiences—Mao’s Great Famine, his Cultural Revolution, the Tiananmen uprising as well as what should have been a destabilising development— the most explosive economic growth in history.

This ruthlessly authoritarian party led by Xi Jinping, today runs a nation with well-run cities, vibrant economy, a huge academic and science & technology establishment in a market where more than a million foreign companies operate. It commands vast resources and with its rapidly modernising military, and is recognised as a global power second only to the United States.

The trajectory of the country under Xi could lead it to world power status, or place it in a middle-income trap. The CPC’s standing in China is related to its ability to deliver economic growth decade after decade, economic stagnation of the kind that hit Japan in the 1990s, could destabilise its rule with consequences for the rest of the world.

From Deng to Xi: The Changing Worldview of the Chinese Communist Party

And, instead of loosening its hold as China has grown as a middle-class urbanised nation, the CPC has tightened its hold on power and seeks to regulate every aspect of the life of the country, aided by advanced communications and surveillance technologies.China owes its current standing to one man, Deng Xiaoping, who reoriented the self-destructive and factious CPC towards a market-led economy. More important, he sought to check the power of national leaders by introducing term limits and collective leadership. Vitally, he also provided a framework for China’s world view, wherein he advised his CPC colleagues to “hide our capacities and bide our time and be good in maintaining a low profile.”

But the man who is presiding over the 100^th anniversary celebrations, Xi, has upended the Deng dictums. He has crowned himself the leader-for-life in the style of Mao. He has also upended China’s strategy of engagement with the West for unbridled strategic competition.

And, instead of loosening its hold as China has grown as a middle-class urbanised nation, the CPC has tightened its hold on power and seeks to regulate every aspect of the life of the country, aided by advanced communications and surveillance technologies.

What Xi Jinping has Accomplished & His Plans for the Future

The big question is whether Xi’s way will prevail and China will attain greater heights of material achievement by the time in 2049 when the CPC celebrates the centennial of the state it created—the People’s Republic of China. Or whether his mistakes, especially that of disregarding Deng Xiaoping’s dictums will prove to be his and his party’s undoing.

Xi’s economic plans for the future are ambitious. Indeed, as J Stewart Black and Allen J Morrison have pointed out that “decoupling” is not something the Americans thought up to deny China technology, it is something central to the CPC’s long term plans for China.

It was the CPC that walled off the Chinese internet developing an extensive system of censorship and control, even in the seemingly free-for-all that prevailed in Weibo (equivalent of Twitter). It kept out Amazon, Facebook and Twitter, freeing Chinese companies to develop their own alternatives resulting in the rise of giant companies like Alibaba, Tencent, Huawei and TikTok.

Xi has doubled down on the strategy. His Made in China 2025 and Internet Plus strategies are geared to a massive aatmanirbharta plan. Through a range of strategies like strategic acquisitions, subsidies and funding, forced transfer of technology, theft, China is seeking to eliminate its dependence on foreign countries for critical technologies and products, promote domestic dominance for indigenous firms, and using that to offer globally competitive products.

Xi's Challenges: From Corruption to the Army

Yet, there is a crisis like situation confronting Xi arising from strong demographic headwinds and a structural economic slowdown. Added to this is the emergence of a high-tech denial regime that has emerged in the West.

But in China’s mastery of the new digital technologies and the relative decline of US power, Xi senses opportunity. As is well known, the Chinese ideogram for the word “crisis” is a compound one which emphasises “danger” as well as an “incipient moment”. That moment could be the time when things could go awry, or, move in your favour. Xi, the great risk taker, has bet all to move forward and grasp what he thinks is China’s moment.

Xi has earlier proved to be the man of the moment for the CPC when he assumed power in 2012. Even though China had a huge wind in its sails as a result of the 2008 Global Financial Crisis that laid the West low, by the time XI came to power, the CPC was drifting.

First and foremost, there was a huge problem of unchecked corruption in the country which had even infected the People’s Liberation Army, where ranks were being bought and sold. Factionalism had become almost routine in the Party, which looked confused and directionless under the colourless Hu Jintao.

Xi initiated an anti-corruption campaign that spared none. From Zhou Youngkang, an erstwhile member of the all-powerful CPC Politburo Standing Committee and the security chief of the country, to Generals Guo Boxiong and Xu Caihou, who had occupied the topmost rungs of the PLA, all were brought low.

Unlike other militaries, the PLA is unique in that it is the armed wing of the CPC and, in that sense, its ultimate weapon. Xi’s second major effort was a comprehensive overhaul of the PLA. The reforms initiated in 2013 have restructured the way it is run by the Central Military Commission, as well as the way it is deployed in theatre commands. Xi’s constant exhortation to the PLA has been, first, the need for it to be loyal to the CPC, and second, to transform itself into a war-winning force.

China's Worrying Shift Towards Becoming an Aged Country

Xi is a man in a hurry because despite its huge achievements, the Chinese per capita income is still a quarter of that of the high-income countries and there are sharp regional variations within the country. There may be many Black Swans ahead, but the obvious Grey Rhino is China’s rapid demographic shift towards becoming an older country.

The most recent census of China says that in 2020 just 12 million babies were born, compared to 14.65 million in 2019. China’s fertility rate— the average number of babies a woman will have in her lifetime—now stands at 1.3. While the replacement rate, through which the population will remain stable is 2.1. Japan’s fertility rate was 1.36 last year, while that of the EU is around 1.5.

The demographic shift will mean a smaller workforce, as well as a much bigger social welfare and pension bill. As it is, the rise in China’s wage rate is pushing many global companies to shift their plants abroad to Vietnam or Malaysia.

China has ambitions of emerging as a high-tech manufacturing country, but as of now it seems to have major road blocks because the census reveals that the average age of schooling of people aged 15 remains less than 10 years. So, Chinese universities may churn out highly educated and competent engineers and researchers, but the industrial workforce could be found wanting.

The Undeniable Centrality of CPC to the Chinese People

The CPC has been central to the lives of the people and now, as China pushes forward towards a high-tech future, you can be sure, that they expect it to remain at the vanguard.

For most Chinese, it is the all-powerful and authoritarian CPC that had uplifted hundreds of millions of citizens from poverty, undertaken large-scale infrastructure construction, and made China the manufacturing centre of the world. For a moment last year, when COVID struck, the CPC was a bit shaken. But it quickly shrugged it off and undertook an aggressive strategy helped bringing it under control, even as it rampaged uncontrolled elsewhere in the world.

Contrary to what many expected, the CPC remains central to Chinese life and intends to stay that way. As Rana Mitter and Elspeth Johnson have recently put it, is not an authoritarian state wanting to become liberal, but an authoritarian state wanting to be successful politically and economically.

(The writer is Distinguished Fellow, Observer Research Foundation, New Delhi. This is an opinion piece. The views expressed above are the author’s own. The Quint neither endorses nor is responsible for them.)