Xi Jinping, the leader of the Chinese Community Party (CCP) and the People’s Republic of China (PRC), is facing a variety of challenges to his leadership. The Chinese economy is staring down its greatest crisis in decades, including a housing market overburdened by excess capacity, unprecedented debt levels causing a decline in overseas investment, and a banking sector shaken by the public’s uncertainty to protect its capital. Xi’s vertical consolidation of political power across all levels of the party and the state has drummed up discontent among the elite class, especially in the run-up to the 20th Party Congress. Senior party cadres have been strategically leaking their disapproval of Xi’s leadership in recent months and many are worried about Xi diminishing the already flailing concept of collective leadership. Security concerns also abound, as China is facing pushback from Western nations on its military’s encroachment in the South China Sea and Pacific nations. Export restrictions on China’s semiconductor sector and the gutting of collaborative relationships with Chinese defense industries have temporarily struck a blow to China’s desire to carry out its civil-military fusion policy. In spite of these challenges, however, there is no realistic elite power struggle nor any semblance of an organized political group within China that can seriously counter Xi’s consolidated rule.
Xi is laser-focused on moving forward with his ambitious economic agenda. Despite public discontent with the rollout of the CCP’s “common prosperity” campaign, Xi and senior cadres have quietly signaled a shift to scale back some of the drastic redistribution aspects of the party’s initiative. Covid-19 lockdowns have also caused great disruptions to business operations and the housing sector. In turn, the People’s Bank of China (PBOC) recently announced rate cuts to spur growth while the rest of the world grapples with increasing rate hikes to counter inflation. As sanctions pummel the Russian economy and complicate trade deals across Eurasia, China’s yuan is becoming an attractive alternative for nations seeking to minimize their use of the U.S. dollar. Since the yuan does not operate on a free-floating currency system, the PBOC sets a central parity rate which allows the Chinese government to manipulate its value at will. China’s confidence in its currency is strong and recent reports have highlighted Russia and China’s decision to use local currencies for their energy trade. Although the yuan is still far behind the U.S. dollar in its global use, its lack of adoption as the premier reserve currency affords Beijing great flexibility to devalue the yuan in accordance with global economic challenges and any negative geopolitical developments.
China’s Belt and Road Initiative (BRI) and related ventures such as the Global Development Initiative (GDI) and the Global Security Initiative (GSI) have received scrutiny due to Western nations’ public messaging of China’s debt-driven foreign investment model, lack of transparency mechanisms, and revisionist security goals. However, if we are to take what the CCP states publicly at face value, these woes are not a high concern for Xi. He continues to utilize the whole-of-society initiatives to extend PRC influence and investment abroad, particularly in developing nations ripe with political and economic insecurities. The case of Sri Lanka shows the extent to which the PRC can continue to leverage its hard power to secure its BRI investments abroad. Following the ouster of President Gotabaya Rajapaksa, many foreign policy analysts predicted the new Sri Lankan government might reconsider elements of its relationship with China. Yet, after much diplomatic wrangling with India and others, Sri Lanka decided to allow the Chinese military surveillance vessel Yuan Wang 5 to dock at the Hambantota port, the same port that China lauded as a great success for its BRI. Additionally, the fact that Beijing announced the GDI and GSI following a public backlash against the BRI signals that Xi believes in his vision for the grand project.
CCP political intrigue is always guaranteed to entice a few speculative headlines about behind-the-scenes elite leadership struggles. The upcoming 20th Party Congress is fueling rumors of elite discontent regarding Xi’s personalization of party and state institutions. Xi has centered himself as the core of the CCP and China’s constitution. However, there is a reality that scholars and China watchers must come to grips with: there is no structured, cohesive opposition base that can reasonably challenge the paramount leader. Xi has been wise to keep members of rival CCP factions in party institutions of significance, such as the Politburo Standing Committee and the Central Committee, while diluting their prospective political powers by promoting his preferred candidates to the same bodies. Xi wants to keep the veneer of unity and collective leadership within the party to the extent that they cannot pose an existential threat to him. Xi ultimately understands that he needs a competent bureaucracy to rule and the compromise of leadership at low and mid-level positions benefits his own capacity for effective governance. Even more so, Xi’s first overseas trip since the outbreak of Covid-19 to the Shanghai Cooperation Organization (SCO) summit in Uzbekistan signals confidence in his political standing at home. Power struggles tend to happen just before the Party Congress convenes and this trip served as a reminder that Xi is not seriously concerned about an intra-party coup.
Finally, China’s sprawling technological and security apparatus also provides Xi with the ultimate last resort option to safeguard any opposition to his standing. The pervasive “Sharp Eyes” surveillance system aims to completely control the Chinese population under the purview of its police and intelligence services. The party also surveils its own members domestically and overseas, providing Xi and his loyalists with a timely warning system about any recorded inkling of dissent. As soon as Xi came into office, he carried out the controversial anti-corruption campaigns of “Fox Hunt” and “Skynet,” which purged over 5 million party members for alleged state crimes. Xi was keenly aware of the Chinese bureaucracy’s long-time practice of dabbling in corruption to supplement low salaries and he achieved a true “win-win” outcome: rooting out graft and jailing prospective political opponents. The anti-corruption campaigns were also a valuable tool to enhance Xi’s ideological control over the party and the population, as Xi Jinping Thought permeates school curricula, the business sector, and even smartphone applications. As we enter an era of global instability and varying crises, vis-à-vis the potential Taiwan contingency and the risk of a broader war with Russia, the CCP might endure greater backlash at home if it does not attempt to alleviate the population’s economic and political concerns. With that said, one thing will remain clear in the short to mid-term: Xi is not going anywhere and he is not afraid to use the full power of the security state to ensure his place at the top of the CCP and all of Chinese society.
Brian W. Cag is an intelligence professional for the U.S. Government focused on East Asian affairs.