BEIJING – President Xi Jinping, battling a persistent downturn in China’s economy, is trying to gird his rule by demanding absolute loyalty from the Communist Party and attacking officials who stifle his policies.
In recent weeks, Xi has put members of the ruling party on notice. He summoned senior officials from across China to warn them about “major risks” to the world’s No. 2 economy, reminding them to shoulder responsibility for solving problems.
His administration issued a slew of new party directives demanding “unity and concerted action.” Last week, state media publicized that the rest of the party leadership submitted self-evaluations for Xi’s review, in a recently revived ritual designed to portray him as the ultimate authority.
While Xi remains undisputedly in charge, party watchers say his maneuvers point to simmering disquiet within the government and political elite. Critics say the president’s policies have failed to shore up the slowing economy, unnecessarily aggravated tensions with the United States and alienated many other foreign governments.
Meanwhile, they say, his insistence on control and threats to punish wayward officials are creating a policy muddle on the economy and sowing confusion in the bureaucracy.
“Xi does feel a sense of crisis” as he grapples with China’s economic woes and bureaucratic resistance within the party, says Deng Yuwen, a former deputy editor of the Study Times, a newspaper published by Beijing’s elite Central Party School. “From Xi’s perspective, he believes his policies are correct but the problem is they aren’t being implemented properly.”
A test of Xi’s authority will unfold over the next two weeks, when roughly 3,000 lawmakers gather in Beijing to review the government’s economic blueprint for a year full of politically challenging anniversaries. While some, like the 70th anniversary of the People’s Republic, are auspicious, several others are not, like the 30-year mark since the deadly suppression of the Tiananmen Square protests.
The annual sessions of the National People’s Congress and a related government advisory body are largely set pieces of political theater, intended to show that the party is in control. Behind closed doors, the delegates, composed mostly of political notables from around the country, at times vent over government policy. Trade talks with the US, now set to stretch well into March, could also complicate matters as Xi seeks to curb dissent at the congress, which kicks off on Tuesday.
The atmosphere is a measure of how Xi’s aura of dominance, if not his power, has receded over the past year.
Last spring, he appeared unassailable as China’s leader, having emerged from a party conclave with unrivaled authority and cleared a path toward lifetime rule by scrapping term limits on his presidency. Concerns that he had concentrated too much power, fueled by fulsome state-media praise for his leadership, soon stirred criticism, exacerbated by slowing growth and trade tensions with the US.
A standoff of sorts has developed between Xi and some within the party’s senior ranks. He hasn’t convened the Central Committee – the party’s nearly 380 most-influential members – for a meeting in a year, a delay that allows him to dictate policies without consulting the broader elite. In recent decades, the committee has regularly met in the fall to approve overall policy goals.
Instead Xi summoned the party elite together in late January for a seminar at the Central Party School, where he inveighed against “slackness in spirit” and “lack of ability” among officials. He warned them that allowing economic risks to go unaddressed could lead to social unrest and ultimately affect the party’s standing.
“The going is getting tougher” for China to marshal its economic challenges, “which explains why Xi Jinping is focusing more on politics than economics,” says Andrew Collier, managing director at Orient Capital Research, an independent research firm in Hong Kong. “China, as with most countries, is avoiding hard policy decisions and letting political infighting dictate who gets money in a time of scarcity.”
The current economic downturn was partly brought on by Xi’s policies. For the past two years, Beijing has prioritized curbing risks in the financial sector to stop the pileup of corporate and local government debt that threatens long-term growth. The clampdown on lending, however, rippled through the economy, driving up costs for many businesses at a time the growth cycle was already ebbing.
Now, Beijing wants to turn on the credit taps to boost growth. Xi’s government has approved more infrastructure projects and urged bank lending to small and midsize private businesses. But doing so risks reigniting the risky borrowing and debt buildup Beijing has tried to control.
Tensions over the competing priorities surfaced at a February cabinet meeting, where Premier Li Keqiang, the titular No. 2 leader who has lost influence over economic policy to Xi, warned that recent stimulus measures could “bring new potential risks,” citing a surge in short-term lending that led to record bank-loan growth in January.
His comments drew a rebuttal from China’s central bank, whose official newspaper published an interview with an anonymous official who said the government wasn’t engaging in “flood-irrigation” style stimulus and that seasonal factors contributed to the growth in short-term loans, which has helped small businesses.
Xi himself weighed in a day later, telling the Politburo – the party’s top 25 officials – that officials should “pay attention to preventing risks on the foundation of stable growth.” State media said he is signaling that Beijing can’t allow the economy to decelerate as a result of de-risking – objectives that economists say are at odds.
“You can’t deleverage or de-risk the economic and financial system and sustain elevated growth,” said George Magnus, an economist and research associate at Oxford University’s China Center. “This incoherence is a major problem and certainly an important contributor to the lack of confidence.”
Xi has sought to cut through the bureaucratic inertia with new party strictures that boost his control. New regulations released last week require officials to keep their superiors informed and seek approval on “major matters,” including the implementation of party edicts.