What Xi Jinping’s third term means for the world

Michael Schuman

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Introduction

The inner workings of high-level Chinese politics are a black box. China watchers, not unlike the Kremlinologists of yesteryear, are forced to sift through dinner-party gossip and the front pages of the People’s Daily for clues about who’s in and who’s out. Winners in the backroom brawls of China’s politics are never certain until they are revealed at Chinese Communist Party congresses every five years. It is remarkable that even today, with China a rising world power and second-largest economy, that its political process remains so opaque.

This time around, with the much-anticipated twentieth Congress scheduled for an October 16 opening, the picture is clearer than usual. It has been widely believed for some time, both inside and outside of China, that current Communist Party General Secretary Xi Jinping will break with modern precedent and extend his reign into a third, five-year term. Xi, who also serves as the country’s president, has been working toward this outcome for years. In 2018, for instance, he engineered a constitutional reform to eliminate term limits on the presidency. His propaganda machine has elevated the status of Mao Zedong, who ruled practically without challenge from the founding of the People’s Republic in 1949 to his death in 1976. Xi Jinping Thought, a compendium of his ideas, is required reading in Chinese schools. Meanwhile, Deng Xiaoping, the leader who championed a more collective form of governance, has been downgraded in the government’s public messaging. Clearly, Xi has been laying the groundwork for renewed one-man dominance of China’s political system.

Of course, the results of the upcoming Congress cannot be determined with metaphysical certitude. The world will have to wait for the latest big reveal, like always, to see if Xi still rules the roost. Perhaps more importantly, the global community will find out who else will sit on the all-powerful Standing Committee of the party’s Politburo with him,1 to gauge how much control he will command in coming years. However, barring unforeseen circumstances, world leaders should expect to see Xi at global forums for at least five more years.

The implications of Xi’s continued grip on power are tremendous for both China and the world. The decisions he makes in Beijing will reverberate well beyond China’s borders to influence the global economy, the development of technology, international governance, and war and peace. At this stage in China’s political cycle, the world would usually ask: Who will rule China? This year, the important question is: What will Xi do with his power?

Return of one-man rule

To appreciate the importance of the twentieth Congress, it is critical to understand how dramatically Xi has altered the way China is governed. Beginning in the 1980s, the Communist Party fostered a system of collective leadership, in which power was shared within the party and between the party and state apparatus. This system was developed to include regular, peaceful transitions of power from one leadership team to another at congresses held every five years. Top leaders stayed in their official posts for no more than ten years. The system was a reaction against the turmoil of the first three decades of the People’s Republic. Mao ruled as more than a dictator—he was practically a Communist demigod; his every word was gospel. However, allowing one person to wield such immense power proved catastrophic for China. Mao’s Great Leap Forward (1958-61), an ideologically motivated attempt to catapult a poverty-stricken China into the ranks of the rich by mass movements, left some 30 million Chinese dead from famine. He followed that up in 1966 with the Cultural Revolution, a campaign to uproot the stubborn vestiges of an old, corrupt China (and solidify Mao’s own political position), which resulted in a decade of widespread violence and economic paralysis. By the time of Mao’s death in 1976, China was exhausted, desperately poor, and dangerously isolated.

The reformers who eventually succeeded Mao, led by Deng Xiaoping (a victim of the Cultural Revolution himself), reacted against the trauma of one-man rule. “It is not good to have an over-concentration of power,” Deng said in a 1980 speech on this subject. “It hinders the practice of socialist democracy and of the Party’s democratic centralism, impedes the progress of socialist construction, and prevents us from taking full advantage of collective wisdom.”2

The Communist Party still dominated—that was the unfortunate lesson of the massacre in Tiananmen Square in 1989—but within the party and state, space opened for greater debate on policy. That allowed for a wider range of expertise to influence the policy process and earned the Chinese state a reputation as a “technocracy”—a finely tuned, generally pragmatic, and usually predictable policymaking machine. It is impossible to separate China’s tremendous economic success from the emergence of this collective governance system.

Xi has thoroughly altered this system. He has sidelined other major figures in the governing order and claimed their power for himself. For instance, in the past, the premier, the number two position in the ruling hierarchy, took responsibility for economic matters. The current person in that post, Li Keqiang, was widely expected to take on this role when Xi’s leadership team first took control in 2012. However, under Xi, Li has become a marginal figure. Xi has grasped control over the policymaking process across all sectors by dominating high-level commissions of top leaders on various areas of policy and by promoting allies and loyalists into key positions throughout the party and state apparatus.3

Xi’s grip on policy has been further enhanced by the relentless promotion of his personality cult. Xi is presented to the Chinese people (and from there, the world) as a brilliant theoretician who possesses the wisdom to achieve the rejuvenation of the Chinese nation and resolve the most complex problems facing the international community. Xi’s ideas, encapsulated in Xi Jinping Thought, echo Mao’s Little Red Book in the way they have become the source of extensive study and fawning reverence. Xi’s mere utterance can send officials and bureaucrats scampering to decipher and implement his wishes.

To a great degree, what Xi wants, Xi gets. As a result, Chinese policymaking has become increasingly dependent on the decisions and desires of a single individual. That has already rendered the direction of Chinese policy less predictable.

Anticipating the course of Chinese policy has thus become a matter of identifying Xi’s priorities—whether national, ideological, or personal. In a sense, the current system of Chinese governance is exactly what Deng and his fellow reformers intended to avoid. China and its vast population have again been set adrift on the whims of a single individual.

The future of zero-COVID

Attempting to read Xi’s mind is a dangerous (and thankless) task. Yet any attempt to assess the direction of Xi’s China must give it a whirl. Fortunately, after a decade in charge, Xi has left a lengthy record of speeches, initiatives, and actions that offer a foundation from which to peer into the future of Xi’s agenda. Of course, as with the stock market, past performance cannot determine what might come with certainty. Xi could break with his own precedents and shift course in the face of new challenges and circumstances, or he could come under enough pressure internally or externally to compel him to revise his agenda. At the same time, he has expressed a slate of ideas and beliefs that can help the beleaguered China watcher more comfortably envision the course upon which he could take the country. The fact that Xi is more ideologue than pragmatist also makes it somewhat safer to assume his past practice will continue into the future.

Still, there remains some expectation (or hope) both within China and elsewhere that Xi will change aspects of his policies once he secures his coveted third term. This thinking holds that Xi will have greater flexibility in policy choices once his own authority is locked on track. This possibility is discussed most often in relation to Xi’s most prominent program: zero-COVID.

Xi’s insistence that his government keep COVID cases at or near zero has prevented a major pandemic on the scale suffered in most other countries. However, the continuation of the zero-COVID policy nearly three years since the epidemic’s initial outbreak in Wuhan has suppressed economic growth, badly damaged small businesses, and fomented widespread public frustration. Speculation has persisted for some time that Xi might be willing to ease the strict pandemic controls—which include recurring lockdowns of major cities, long quarantines for travelers, and repetitive testing—after the upcoming Congress. That expectation is based on the assumption that Xi has insisted on maintaining zero-COVID for personal political motivations. After having touted zero-COVID as a great success both at home and abroad, Xi became “boxed in” by a political narrative that ties him intimately with the approach.4 This has made it difficult for him to change course from a political perspective, especially ahead of the Congress. A major outbreak before Xi’s anointment would simply be too embarrassing for him to risk. With the Congress behind him, the argument goes, Xi will be freed to adjust or even lift zero-COVID to address pressing economic concerns.

Yet there are equally good reasons to suspect zero-COVID is here to stay, at least in some form. Five years ago, there was similar chatter that Xi would return to liberal economic reform once he claimed his second term. Instead, he moved further from that path. Xi may calculate that that political narrative in which he defeated the virus where other, mere mortal leaders failed will continue to be too useful to his stature to lift zero-COVID, even after the Congress. He also seems to believe that abandoning the policy would have negative political consequences for the Communist Party more broadly, A late July 2022 Politburo meeting concluded the policy needed to be addressed within a political perspective. After all, the party markets itself to the Chinese public as infallible; ditching zero-Covid could appear an unacceptable admission it has erred.

There is also a possibility that Xi is committed to zero-Covid because he believes it is best for China, or his vision of what China should be. The assumption underlying much of the debate about zero-COVID is that the leadership wants to find an off-ramp but has not managed to do so. There are some members of the political and business elite who would support a loosening of the COVID strictures. However, Xi has continually reiterated that zero-COVID is the best policy for China, even as its economic and social costs mount, and the approach appears to present possible political downside as well. The two-month lockdown of Shanghai earlier this year provides a telling example. Despite these problems, Xi has shown a consistent tendency to tighten the state’s grip over society to advance his ideological agenda of a refashioned China and to solidify his personal grip on party and state. Zero-COVID has been and can continue to be a convenient tool to achieve his goals. For instance, while business leaders may be troubled by the growing isolation of China due to restrictions on travel and quarantines for travelers, Xi may see these measures as a way to limit foreign influence—a physical cordon on dangerous outside ideas and information to match the digital Great Firewall. Note that Beijing reduced the quarantine period for incoming travelers in June but has not eased restrictions on Chinese nationals’ outbound travel, introduced in May. Furthermore, Xi may find the enhanced monitoring of the populace and empowerment of local, community-level officials in the name of pandemic prevention useful to tighten state control over society. That suggests zero-COVID, or a form of it, may become a fact of life in China. It is likely that a number of its restrictions and rules will be retained to the benefit of Xi’s surveillance state but to the detriment of personal privacy.

The future of economic policy

Another element in the debate about zero-COVID is the current miserable condition of the Chinese economy. The International Monetary Fund (IMF) forecasts gross domestic product (GDP) will expand a mere 3.3 percent in 2022. Zero-COVID is a major contributing factor to this slowing growth. Its persistent lockdowns and restricted travel have suppressed consumption, supply chains, and small business, especially in the service sector. The assumption among many China experts is that at some point, Beijing will have to loosen COVID controls to alleviate the deepening economic problems.

However, Xi appears to be deviating from past practice in regard to the importance of economic growth as a policy goal. China watchers have been conditioned over the past three decades to assume the Chinese leadership will prioritize economic development over all other issues. The Communist Party has long marketed the country’s high growth rates as a mark of its competence and legitimacy. Further, the party’s obsession with social stability prompted officials to fear the joblessness and discontent caused by weak economic conditions. Amid zero-COVID, however, Xi has signaled that economic development may no longer be the party’s No. 1 priority. In recent months, even as Li, the premier, has exhorted local officials to resurrect economic growth, the party has also been willing to accept economic sacrifices in order to maintain the zero-COVID stricture.

That could be part of a much broader and critical shift in the direction of Chinese policy. Going forward, the pursuit of economic development may be balanced, or even downgraded, relative to political, security, and social concerns.5

Such a shift has major implications for China’s economic relations with the rest of the world. It explains why Xi has replaced the long-standing, guiding principle of “reform and opening up” with a new mantra of “self-sufficiency.” Xi will almost certainly continue to stress the need to reduce China’s vulnerabilities to the outside world by substituting imports with homemade alternatives. As Xi once said: “The essence of the new development dynamic is realizing a high level of self-reliance.”6 Xi will therefore persist in his efforts to develop Chinese technologies through state-led industrial policies with their heavy subsidization of local high-tech industries, despite their massive waste of resources and underwhelming results thus far.

That suggests two important trends for economic policy in Xi’s third term. First, he will continue to prioritize economic security over economic efficiency—in other words, he is willing to sacrifice growth for political objectives. Second, Xi’s economic agenda will also foment greater competition with the United States and other advanced economies in cutting-edge technologies—most of all semiconductors. Chinese policymakers will persist in pursuing tactics, such as forced technology transfer and subsidization, that are a cause of trade friction with Washington. Overall, Xi’s economic policies will have the effect of limiting the further integration of the Chinese economy into the global economy, likely increasing disputes with trading partners, encouraging foreign governments to impose restrictions on business investment and trade with China, and capping the ability of Chinese companies to go global.

Xi’s penchant for political control will influence the course of economic policy in other ways as well. He has partially reversed domestic economic liberalization, and instead, he is reasserting a level of state influence over the private sector. The most visible manifestation of that trend has been the imposition of greater regulation on many sectors of the economy over the past two years. That campaign constrained the ability of some companies, especially in technology, to expand, or, in the case of private education services, even survive. Global investors wonder if the harsh crackdown has finally run its course. But that is the wrong question to ask. Xi has displayed a wariness of private enterprise distinct from his recent predecessors. He has spoken of the need to “prevent the disorderly expansion and unchecked growth of capital,”7 and he appears to fear that the growing wealth and influence of private companies and entrepreneurs could present a threat to the Communist Party’s dominance. Xi may intend to subordinate the private sector to the interests of the state and party. Under Xi, the Communist Party adopted a policy to enhance its control over the management of private companies. Xi has also elevated the narrowing of income disparities, between both income groups and regions of the country, to priority status in Beijing’s economic agenda with his campaign for “common prosperity.” Although the policy platform to achieve “common prosperity,” remains a vague work-in-progress, the prominence placed on this idea is a signal that Xi disapproves of the unfettered expansion of personal wealth generated through entrepreneurship and private enterprise. Such an attitude is detrimental to economic development since it discourages entrepreneurial activity and innovation. As in all countries, however, pressuring the rich makes for good politics, and Xi seems to revel in such populist exploits. Though Chinese officials have stressed that “common prosperity” is not a code for soaking the wealthy, its main achievement thus far has been arm-twisting major private firms to divert more profits into charitable causes. Expect Xi to persist in these populist causes as a method of bolstering his credentials as a “man of the people.”

Xi and Taiwan

All the factors discussed above add up to slower growth, and a problem for the Communist Party. The leadership will no longer be able to justify their repression with the promise of economic benefit. The party’s implicit social contract with the public—let us rule and we will make you rich—could break down. Xi must instead find other sources of “performance legitimacy,” or other measures of the party’s right to rule, and new endeavors to rally support for and redirect frustration away from the Communist regime.

It has become fairly obvious over the course of Xi’s term that he is attempting to capitalize on nationalist causes as a substitute for economic development and the new source of party legitimacy. Much of Xi’s public discourse focuses on achieving national rejuvenation. This goal goes beyond simply gaining wealth to restoring China’s greatness on the world stage. Inevitably, such appeals to nationalism lead to the issue of Taiwan. Claiming Taiwan has long been a top priority for the People’s Republic, but Xi appears to be elevating the issue even higher on Beijing’s to-do list. Further, he is doing so in potentially dangerous and destabilizing ways. Beijing has not held any serious dialogue with Taipei since the current Taiwanese President, Tsai Ing-wen, took office in 2016. Instead, Xi has chosen to increase diplomatic and military pressure on Taiwan in an attempt to prevent Tsai from extending her government’s international stature and ties to other countries, especially the United States. Since mid-2020, Xi has launched a concerted campaign of military intimidation by routinely sending squads of jets buzzing near the island and holding drills in the surrounding waters. Beijing has intensified efforts to isolate Taiwan’s government on the international stage. For example, China employed economic coercion against Lithuania after the Baltic nation strengthened ties with Taipei. China’s protests reached a fever pitch in response to US House Speaker Nancy Pelosi’s visit to Taiwan in early August 2022. Accusing Washington of undermining the idea of “one China,” Beijing threatened the United States with unspecified countermeasures and staged extensive military exercises surrounding Taiwan, creating the effect of a blockade for the first time.

All parties are blaming one another for this escalation. Yet it is undeniable that the Xi administration has purposely chosen a more hostile, militant approach to the Taiwan question. Xi’s posture could be driven by a fear that the island is being drawn ever more tightly into the United States’ orbit and away from China’s. A debate has erupted among foreign policy analysts over whether Washington is fanning those fears, inadvertently or otherwise, by its persistent displays of support for Taiwan’s democratic government. As is the case with much of Xi’s foreign policy, however, his assertive approach has created the very situation he intends to prevent. Rather than convincing Tsai to submit, Xi reinforced Taiwan’s determination to gain greater international support, and prodded other governments, including the United States, to express and provide that support. In August 2022, for instance, the administration of US President Joseph R. Biden opened formal trade negotiations with Taiwan.

It does not appear that Xi perceives or accepts the counterproductive nature of his Taiwan policy. He seems committed to coercion, viewing this as his best method of preventing Taiwan’s drift toward Washington. One reason could be that appearing “tough” on Taiwan bolsters his domestic political stature. Another could be that other options are unappealing. If he is unwilling to make compromises with the Tsai administration, he may see dialogue as a dead end.

Once Xi secures his third term, the big question is how much pressure he will bring to bear on Taiwan. Beijing’s reaction to the Pelosi visit offers contradictory clues. On the one hand, Beijing’s military exercises crossed red lines, most of all in the People’s Liberation Army’s decision to blockade the island. This move suggests Xi may be aiming to create a “new normal” in the Taiwan Strait, in which the Chinese military exerts greater control in the waterway and intensifies its harassment of Taipei’s government. On the other hand, Beijing restrained its military from taking certain risks during those exercises. For instance, no planes entered Taiwan’s airspace. That indicates that Xi, fearing actual conflict, may place limits on how drastically he wishes to alter the status quo.

Either way, the emerging cycle of reaction and counterreaction is potentially creating a downward spiral into heightened tensions in the Taiwan Strait. Barring some unforeseen and tectonic shift in policy in Washington and Taipei, Beijing’s more assertive attitude to the Taiwan issue will likely continue in Xi’s third term. This raises the frightening prospect of conflict over Taiwan, either accidentally—such chances increase with the intensity of Beijing’s military harassment—or by design. The centralization of power in Xi Jinping raises the possibility that he could decide a military solution to the Taiwan problem is necessary perhaps to bolster his own political position. With the highest ranks of the Chinese government stacked with loyalists, he could encounter little internal opposition to such a drastic course of action.

That is speculation, of course, but the direction of Xi’s Taiwan policy is transforming the risk of war over the fate of the island from an outside possibility to a more urgent danger to the security and stability of East Asia.

Xi and the world

The more aggressive position on Taiwan is part of a much wider shift in China’s foreign policy under Xi’s guidance. When Xi took power a decade ago, the United States was still China’s partner. Since then, Xi has transformed Washington into China’s chief adversary. The finger-pointing goes both ways as to which side is to blame. Xi’s government admits to no responsibility for soured relations, but it is indisputable that Xi’s policies have played an outsized role in causing the US-China rift. His predatory industrial programs, aggressive pursuit of contested territorial claims in the South China Sea, and his friendship with Russian President Vladimir Putin, which persists despite Russia’s invasion of Ukraine, have all contributed to strained relations.

Xi is not likely to become any friendlier. He appears to believe the United States is determined to suppress China’s rightful ascent into a global power. The Chinese political and academic elite seem to be convinced that the US is in inexorable decline, and Washington is trying to “keep China down” in order to cling to its wobbly hegemony. This thinking permeates many of Xi’s foreign and economic policies. His “self-sufficiency” drive is meant to protect China from what he sees as Washington’s nefarious designs to use the United States’ economic heft and technological advantages to restrain China’s economic advance. His partnership with Putin is designed to decrease his economic reliance on the West and enlist Moscow as a partner in his quest to undermine the US-led world order. Xi’s latest diplomatic projects, the Global Security Initiative and Global Development Initiative, aim to replace the norms and rules of the current liberal order with a system more favorable to autocratic regimes and the expansion of Chinese power. Barring a dramatic turn in US policy to capitulate and align with Beijing’s interests, none of these efforts to overthrow Pax Americana are likely to change in Xi’s next term. The more powerful Xi becomes, the more they may intensify.

To many inside and outside of China, Xi’s anti-US sentiments have set the stage for a dangerous gamble. Still relatively poor and far behind in technological development, China needs friendly relations with the United States and its allies and partners in Europe and the Asia-Pacific to continue to achieve economic progress. However, Xi probably does not see it that way. An adversarial relationship with the United States is, in many respects, beneficial to Xi’s political standing, especially at home. The narrative of Xi’s personality cult is that he is the man with the will and the wisdom to attain the “Chinese dream” of national rejuvenation. Too long a victim of the West, China will now seize its moment to overcome its enemies and restore its greatness. This epic drama requires a villain and the United States (along with its allies, especially Japan) can play that role nicely. It is clear that Xi wants the Chinese public to despise and distrust the United States. Chinese media has become a constant anti-US propaganda machine, painting Washington as resolutely hostile, and US society as violent, racist, and unjust. By pushing such messaging, while raising the Great Firewall ever higher to constrain the flow of outside information into the country, the Chinese state is attempting to reshape and control Chinese public opinion about the United States. Xi, as the star of this show, is often portrayed as standing firm against the big, bad Americans, finger-wagging the US president, for example, on Taiwan. Around the world, too, Xi can portray China as a better alternative to the (supposedly) decaying and irresponsible United States, and himself as the statesman to usher in a new era. By pursuing this course, Xi aims to rally other nations already hostile to Washington and transform himself into the leader of a new global order, with China at its apex.

This narrative may serve Xi’s political interests, but it does not bode well for his relations with Washington since it makes serious dialogue or compromise almost impossible. The main goal of Beijing’s current diplomacy appears to be gaining compliance from other governments to align with Xi’s goals, and it often degenerates into threats, warnings, and demands. Much of the fiery rhetoric may, again, be directed at a domestic audience to bolster Xi’s credentials as a diehard defender of the nation. It may also be motivated by Beijing’s growing conviction of the inevitability of its rise and belief that eventually, even the most recalcitrant nations will have to submit. Whatever the cause, five more years of Xi’s foreign policy almost certainly means five more years of increasing conflict with many of the world’s major economic and military powers. This includes not only the United States and its allies, but also emerging nations that feel threatened by Beijing’s aggressiveness, such as India and Vietnam.

Conclusion

In his decade at China’s helm, Xi Jinping has brought about drastic changes in Beijing’s governance, economic agenda, and foreign policy. There is little evidence at this point that he intends to alter course. Instead, there is more reason to believe that the more entrenched Xi becomes in his position, the more aggressively he will pursue his agenda at home and abroad. The only caveat is whether current poor conditions in China—a slowing economy, the strains of zero-COVID, and greater tensions with the international community—have weakened him enough to allow other factions with the Communist Party to place officials into senior positions who can check his power and alter his policy program. That will not be known until the upcoming Congress. Such an outcome is certainly possible. Yet policymakers around the world would be wise to approach the twentieth Party Congress with the assumption that Xi stays in charge and in control.

Working under this assumption means the world’s China watchers will need to adjust the way in which they understand the process of policymaking in Beijing. To an increasing degree, Beijing’s decisions will be Xi’s decisions. Determining what the Communist government will or will not do is becoming a process of figuring out what fits with Xi’s personal political calculations and ideology. As shown by zero-COVID or “wolf warrior” diplomacy, Xi will make policy choices that may be beneficial to his own political standing, or helpful for his vision for China’s future, but harmful to the country in many other respects. In a system heavily dominated by Xi loyalists, the degree of policy debate may narrow, creating “echo chamber” conditions that shield Xi from the real impact of his choices and the information he requires to make sound decisions.

It is also likely that Xi’s third term will see a continuation, and possibly an intensification, of the trends already underway in Chinese policy. In foreign affairs, that means greater hostility to the United States and its global allies, closer relations with Russia and other autocratic regimes, more aggressive pursuit of regional territorial claims and other interests, and heightened tensions over Taiwan. With the economy, Xi will almost certainly remain cool to liberalization and persist with state-led industrial programs, the fixation on self-reliance, and heavier control of the private sector. In general, Xi’s third term will likely see rising nationalism and continued decoupling from the world in business, information, culture, education, and even personal exchanges.

Perhaps the biggest unanswered question about Xi’s third term is: what happens five years from now, when China is again due for another leadership shuffle? Having flushed the party’s collective governance system down the political toilet, Xi has created uncertainty over how leaders will be selected and how the country will be governed in the future. Can the system of collective rule be reestablished? Or will Chinese politics become a contest of competing strongmen?

A case can be made that Xi, by holding onto power, has merely restored China to its usual norm. The era of collective leadership can be seen as a brief aberration in a political environment more often dominated by an individual. At the same time, many in the political and business elite in China likely remain wary of a reversion to the days of Mao, when the fate of the nation rested in the unreliable hands of a single leader. Perhaps pressure will mount in coming years to restore greater balance within Chinese governance. Or perhaps Xi will manage to quash any further resistance and rule for life. After four decades of walking a fairly predictable path, Xi is sending China into the unknown.