Xi’s Grip Loosens Amid Trade War Policy Paralysis

A spate of unusual reports in Hong Kong and overseas Chinese-language media lend credence to the idea that, while Xi Jinping remains China’s undisputed paramount, his authority seems somewhat diminished. A moratorium of sorts appears to have been called on the relentless personality cult constructed around Xi, while signs have emerged that China’s economic policymaking apparatus has been hamstrung by disagreements between Xi and his top economic policymaker over how to handle a deepening trade war with the United States. While the trade war appears to have applied enough pressure to China’s political system to open space for criticism of Xi’s leadership style and tactics, it is unlikely that Xi’s position atop China’s political hierarchy is in any serious danger.

Signs of Dissent

Beginning in July, various cities throughout China have mothballed portraits and display photos of Xi (such public displays of fealty are key elements of the gathering cult of personality). The Shaanxi Academy of Social Sciences suddenly ended its research into “The Great Wisdom of Liang Jiahe,” (梁家河大学问), a reference to Xi’s innovative ideas and exploits while serving as a student in the village of Liangjiahe in Shaanxi during the Cultural Revolution. Most inexplicably, Xinhua News Agency on July 11 ran an article criticizing Hua Guofeng—Mao’s designated successor, who was eventually outmaneuvered and removed from power by Deng Xiaoping—for cultivating a cult of personality. This could, potentially, be seen as an indirect attack on Xi, whose personality cult has begun to resemble that constructed around Mao Zedong (Voice of America, July 16; Ming Pao (Hong Kong), July 16; Radio Free Asia, July 12).

Reports have also surfaced that two of Xi’s closest advisers, Wang Huning and Liu He, have at least temporarily been sidelined. Wang, who is Politburo Standing Committee (PBSC) member in charge of ideology and propaganda, has apparently taken the rap for the personality cult around Xi. Liu, the Politburo member in charge of economics and commercial relations with the US, has been widely criticized for Beijing’s failure to negotiate a trade war ceasefire with the US (Ming Pao, July 23; Apple Daily (Hong Kong), July 20).

Stories about political troubles befalling Xi could be exaggerated. Xi recently completed a 10-day trip to Africa and the Middle East; it is unlikely he would have left the country for so long if his position were in imminent danger. Further mitigating against the idea of political instability, coup d’etats within the CCP—such as the arrest of the ultra-leftist Gang of Four in 1976, or the failed coup against Mao led by Marshal Lin Biao in 1971—were carried out by figures who commanded the allegiance of at least a faction of the People’s Liberation Army (PLA). The PLA is unlikely to move against Xi after a massive reshuffle of its command-and-control apparatus in late 2015 and early 2016 that saw Xi install protégés in most of the PLA’s senior roles. (China Brief, October 20, 2017).

Moreover, prior to Xi’s departure for the United Arab Emirates on July 19, National People’s Congress Chairman Li Zhanshu, a long-standing Xi confidante, coined a new way to eulogize Xi, referring to him as the “eternal core” of the party leadership. Li, also a PBSC member, urged all cadres and party members to do their utmost to “ensure that party central authorities, with comrade Xi Jinping as their core, will have the power to yichuidingyin [call the final shots] and to dingyuyizun [settle differences with utmost authority].” Four months ago, Li was also instrumental in firming up Xi’s Mao-like status by eulogizing him as “leadership core of the party, military commander, the people’s leader, the country’s helmsman and the pathfinder of the people” (Xinhua July 17; China.com.cn, March 21).

Casualties of a Trade War?

While Xi’s status as top leader likely remains unchallenged, his authority—including his ability to make decisions on major political, economic and foreign-policy issues—seems impaired in recent weeks. Xi is widely seen as failing to thwart what the Chinese Foreign Ministry calls Trump’s “hegemonic” and lingba (“bullying”) tactics. The paramount leader has, for the most part, struck back only with rhetoric, warning the Trump administration of the dire consequences of challenging China. In a meeting with CEOs of multinational corporations in late June, Xi noted that China followed the ethos of “a tooth for a tooth”, and that it would certainly “punch back” against unreasonable American demands (Radio French International, June 27; CNBC.com, June 25). And while touring South Africa in late July, Xi even invoked Mao’s famous line about China’s enemies—in this case the US—“lifting a boulder only to smash their own feet” (Xinhua July 26, Ming Pao, July 26).

Yet since Trump made it known that he might slap tariffs on all $550 billion worth of Chinese imports to the US, the response by CCP senior cadres and official mouthpieces has largely been one of paralysis (South China Morning Post, July 22). Indeed, from June onwards, the response of the party-state apparatus has been cautious to a fault. First Beijing ordered a halt to all media references to “Made in China 2025”, a central government plan to nurture national champions in cutting-edge technologies that has been seized upon by American officials as evidence of heavy state interference in the Chinese marketplace (Radio Free Asia, June 27; New York Times Chinese Edition, June 27). And in mid-July, the CCP Propaganda Department banned media use of the phrase “trade war”, in an apparent effort to divert the public’s attention from the fact that Beijing lacks the wherewithal to respond in kind to Trump’s threats (South China Morning Post, July 14).

While Xi has arrogated decision making authority on all major economic questions, the supreme leader seems to lack the professional knowledge and expertise to function as economic czar. Reports have had him clashing with his principal economics adviser, Vice-Premier Liu He, about how to deal with the Americans. While speaking at a conference in the US, White House chief economist Larry Kudlow claimed that the hawkish Xi was preventing doves such as Liu He and other State Council bureaucrats from engaging in give-and-take with the Americans. “I think Xi is holding the game up,” Kudlow said. “I think Liu He and others would like to move but haven’t” (Voice of America Chinese, July 18; Businessinsider.com, July 18). Since Liu returned from two rounds of talks in Washington in May empty-handed, his status as “Chinese leader in Sino-US comprehensive economic dialogue” (中美全面经济对话中方牵头人) has effectively come to an end. Liu did not accompany Xi on his tour of Africa and the Middle East, and has apparently been given the new responsibility of looking after China’s unwieldy state-owned business conglomerates (Caixingglobal.com, July 27; South China Morning Post, July 26).

Perhaps due to Xi’s truncated authority—and the temporary sidelining of his economic point man—there seems to be no authority forceful enough to stop internecine bickering among government departments overseeing the economy. Both Hong Kong and Western media have reported on open warfare among State Council debating how to manage an incipient economic downturn, including how to lend a hand to companies affected by the trade war (Reuters, July 18; Sinoinsider.com, July 17). A particular bone of contention is whether monetary and fiscal policies should be further loosened to avert an economic slowdown. On July 13, Xu Zhong, the Director of the Research Bureau of the People’s Bank of China, published an article slamming the Finance Ministry for its apparent “dearth of effective fiscal policies” to help sectors hurt by the on-going Sino-US dispute. Xu even complained that the Finance Ministry had “low transparency” and that it was “behaving like a hoodlum” (Finance.sina.com, July 16; Wallstreetcn.com, July 13). Such open conflict among departments or officials is rare in the traditionally button-down party-state apparatus.  

Official Silence, Intellectual Dissent

A dearth of provincial and municipal leaders openly singing Xi’s praises also gives cause to doubt his once-overwhelming grip over the loyalty of regional cadres. Biaotai (表态)—or ritualistic declarations of loyalty by prominent regional supporters—is a well-worn party tradition employed when a top leader wants more power or requires additional support. In the past 12 months, most regional party secretaries, governors or mayors enthusiastically took part in biaotai activities as Xi moved to assume the status of hexin (核心) or “core of the leadership”, and enthusiastically signaled their approval when Xi changed the PRC Constitution in March to remove term limits for the post of state president. This time, however, almost no regional heavyweights have come to Xi’s support. After Li Zhanshu raised the banners of yichuidingyin and dingyuyizun, provincial or mayoral leaders have seemed reluctant to demonstrate their support through biaotai. Even well-known Xi sycophants Li Hongzhong, Chen Min’er and Cai Qi, the party secretaries of Tianjin, Chongqing, and Beijing, respectively, have not said anything to burnish Xi’s authority. The only exception is Jiangxi Party Secretary Liu Qi, who vowed to uphold Xi’s authority to yichuidingyin and dingyuyizun. Liu’s biaotai, however, came after a five-day visit to Jiangxi by none other than PBSC member Li Zhanshu (Jiangxi Daily, July 24).

While Xi’s regional protégés have surprisingly kept mum, a bevy of liberal intellectuals have taken a big risk by laying into Xi for turning back the clock on political reform. In a late July article entitled “Imminent Fears, Imminent Hopes,” Tsinghua University law professor Xu Zhangrun accused Xi—without directly naming him—of dismantling Deng Xiaoping’s reforms and reviving Mao-style dictatorship. Xu cited this popular sentiment among fellow intellectuals: “After forty years of reform, overnight we’re back to the ancien régime.” Xu added that “the comprehensive resuscitation of totalitarian politics” had aroused fears and indignations among academics and intellectuals (Apple Daily, July 30; Theinitium.com, July 24), calling outright for the restoration of presidential term limits and the political rehabilitation of those affected by the crackdown following the 1989 Tiananmen Square Massacre, both stunningly bold repudiations of Xi’s retrogressive political agenda by an intellectual employed at one of China’s top universities. Similarly, Zi Zhongyun, a veteran scholar of international politics, blamed the impasse in trade negotiations on the Xi administration’s failure to reform. Zi attributed the weakness of the Chinese economy to the party elite’s “monopoly over resources”, even expressing the hope that Chinese officials should follow Trump’s advice in institute market-oriented reforms (Chinainperspective.com, June 21).

Meanwhile, the economic contention between China and the US has metamorphosed into a full scale showdown between Western liberal capitalistic values and Xi’s hard-authoritarian China model. White House economist Kudlow expressed his hope that, “the US and EU will be allied in the fight against China, which has broken the world trading system, in effect.” The White House advisor also indicated that other countries fearful of the “China threat,” which range from India and Japan to Australia and New Zealand, were forming an anti-China alliance (Reuters, July 27; Fox News, July 16). Whether Xi can come up with effective measures to handle the multi-pronged fusillades coming from the White House depends partly on whether he can shore up his threatened authority within the party. For the moment, however, it is difficult not to credit speculation that the so-called “leader for life” is facing his most severe challenge since coming to office less than six years ago.

Dr. Willy Wo-Lap Lam is a Senior Fellow at The Jamestown Foundation. He is an Adjunct Professor at the Center for China Studies, the History Department and the Program of Master’s in Global Political Economy at the Chinese University of Hong Kong. He is the author of five books on China, including “Chinese Politics in the Era of Xi Jinping (Routledge 2015).”