Robert Ward
The coronavirus crisis in China is the biggest threat yet to the leadership of President Xi Jinping, argues Robert Ward. Despite the initial failures that aggravated the situation, Xi is unlikely to change his course and will use the crisis to reinforce his political position.
The economic impact on China of the coronavirus crisis is already severe. Mass population quarantine and extended business shutdowns pushed China’s manufacturing and services purchasing managers’ indexes − important gauges of economic activity − down to record lows in February. China’s first-quarter GDP could even contract year-on-year. At well under 6%, China’s GDP growth in 2020 is also likely to be the slowest for some 30 years. But the economic downturn will be temporary, even if, as looks likely, recovery is slower than it was after the country’s 2002−03 severe acute respiratory syndrome (SARS) outbreak. More important is the political and institutional impact, as it is here that the main legacies of the crisis will be felt.
Xi’s most serious crisis yet
China’s President Xi Jinping has been beset by crises since consolidating power in March 2018 when the National People’s Congress (NPC) − China’s rubber-stamp parliament − approved the abolition of presidential term limits. These crises include the trade war with the United States, which started in mid-2018 with the imposition of the first tariffs on Chinese exports to the US; the outbreak of African swine fever in late 2018, which forced the culling of millions of the country’s pigs and pushed up the price of pork; the outbreak of prolonged protests in Hong Kong in early 2019, which overshadowed the 100th anniversary celebrations of the founding of the People’s Republic later in the year; and the decisive victory in Taiwan’s early 2020 presidential election of incumbent Tsai Ing-wen, who opposes Taiwan’s unification with China.
However, the coronavirus emergency is the biggest threat to Xi’s leadership yet. He could argue that the other threats were external and, therefore, not of China’s making. Coronavirus, by contrast, is most probably homegrown, throwing a harsher light on the flaws in the government’s response. Apparent official cover-up in the early stages of the outbreak, the slowness of the government to act, shortages of food, medicines and masks in stricken Hubei Province and other initial failures dented the regime’s reputation for technocratic competence, which has been important in underpinning its political legitimacy. The postponement in late February of the annual March session of the NPC reinforced the sense that the government was on the back foot. This was the first such NPC delay since the Cultural Revolution; the session was held during the SARS outbreak.
More spending, more repression
In the short term, Xi will seek to reinforce his political position by prioritising the domestic economy. Fiscal and monetary stimulus will be deployed to support economic activity, despite the already high rates of indebtedness in the economy and some opposition to higher spending within the regime. Liquidity-starved small and medium-sized enterprises (SMEs) are already a focus of policy. This is wise given the risk of political damage to the government from rising unemployment. Given the fiscal constraints, stimulus is also likely to be more targeted than it was in 2009, with a focus on existing policy priorities such as technology-related infrastructure.
So far, there is no sign that the government is ready explicitly to jettison its politically-driven economic targets. Fulfilling its pledge to double the size of the economy between 2010 and 2020 is one such target. But achieving this would, even before the crisis, have required China’s GDP to grow by 5.6% this year. Absent large-scale stimulus, this now looks unachievable. But even coming close will require significant government financial resources and support for the economy.
Since taking power in 2012, Xi has centralised power, personalised his authority and suppressed dissent. His political instinct will, therefore, be to use the crisis to bolster his control. This is also the logic of the system that he has created, in which he holds all the main levers of power. The purging in mid-February of officials blamed for mismanaging the coronavirus crisis response, including the Hubei and Wuhan party heads, should, therefore, be understood in part as a choreographed assertion of central authority by Xi. He will also have drawn important lessons from the government’s success − after a wobbly start − in enforcing large-scale social control through mass extended curfews and high-tech surveillance. Xi will claim the encouraging signs in mid-March that the worst of the outbreak was now over in China as further vindication of his approach. A return to the consensus-driven ‘collective leadership’ of Xi’s two predecessors, Hu Jintao and Jiang Zemin, is therefore unlikely.
Today’s China is not the fin de régime Soviet Union of the late 1980s. Xi retains sufficient economic tools and the political will to ensure that, despite initial mismanagement, the health emergency does not become a regime-threatening ‘Chernobyl moment'. Despite the initial failures that aggravated the crisis, he is unlikely to change course. Short-term political stability, a quick reboot of the economy and a smoothing of the glide path to the 100th anniversary of the founding of the Chinese Communist Party in July 2021 will be his priorities. These will, however, be bought at the expense of the loosening of the system that is needed to navigate China’s long-term structural transition from a developing to a maturing economy. In so doing, Xi will ultimately also be sowing the seeds of future problems.
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