Beset With Crises, China’s Xi Looks to the Masses

Nationalism and ‘common prosperity’ belie intense challenges—from power shortages to political struggles—facing the communist regime and its leader

Chinese leader Xi Jinping sings the national anthem during a reception at the Great Hall of the People on the eve of the 72nd anniversary of the Chinese Communist Party's takeover of China in Beijing on Sept. 30, 2021. (Greg Baker/AFP via Getty Images)
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By Leo Timm

News Analysis

In August, the Chinese state-run paper Economic Information Daily ran a scathing 6,000-word article that condemned the country’s online gaming industry as promoting “spiritual opium,” raking in billions while creating a “new drug” addiction among the people, especially the youth. The article was republished in dozens of outlets and was followed by similar commentaries in state media and official social media posts.

Within days, Chinese gaming giants such as Tencent and NetEase saw their stocks plummet by 300 billion yuan. On Aug. 30, Beijing imposed strict regulations on online gaming, limiting minors to three hours of playtime per week.

The onslaught by the press and authorities against the gaming industry came on the heels of significant incidents involving other major players in China’s massive tech sector. On June 30, rideshare app Didi Chuxing debuted on the New York Stock Exchange without Beijing’s approval, earning it a swift punishment.

And starting in 2020, the Chinese Communist Party has been steadily dialing up pressure on Jack Ma, founder of e-commerce giant Alibaba and one of China’s richest men. What would have been a record-breaking $30 billion initial public offering (IPO) by Ma’s Ant Group was canceled abruptly in November 2020. According to The Wall Street Journal, the IPO would have presented serious financial risks for the Chinese Communist Party (CCP). Ma disappeared for months and now keeps a low profile.

The CCP crackdown on the tech sector is just one aspect of Chinese leader Xi Jinping’s ambitious project to reshape society, which, in addition to increasingly invasive forms of surveillance and censorship, has recently included a blanket ban on extracurricular tutoring and a crusade in China’s pop culture business that saw billionaire actress Zhao Wei scrubbed from the internet and male stars accused of promoting an effeminate “sissy boy” aesthetic.

On Aug. 17, Xi chaired a meeting of a CCP economic commission that focused on the promotion of “common prosperity” across the Chinese population. The program called for a “universal” system of socialist redistribution to ensure the “people’s livelihood.”

The logo of DiDi Chuxing in Hangzhou, China. (STR/AFP via Getty Images)

Control Versus Chaos

It’s often said that Xi’s heavyhanded approach to governance—summed up by his frequent declarations that “the Party leads everything”—takes direct inspiration from Mao Zedong, the founding leader of communist China. Many of Xi’s moves, and especially the recent clampdowns, have been likened to Mao’s infamous Cultural Revolution, which plunged China into a traumatic decade of deadly political fanaticism between 1966 and 1976.

Where Mao had the “Little Red Book,” today’s Communist Party mandates the “Study Xi Strong Country” app for Chinese citizens to gain proficiency in “Xi Jinping Thought.” The “wolf warrior” diplomacy of Chinese officials under Xi is reminiscent of the Cold War-era flashpoints between the CCP and its rivals. And despite Xi’s assurances that economic reform is still on the agenda, both Western and Chinese observers blame him for throwing out the policies of previous Party leaders that stressed growth and profit over outward displays of ideology—often featuring a lot of red.

Similarities between Xi and Mao run deep, but so do differences.

Mao had launched the Cultural Revolution in a bid to retake power after being sidelined for his role in the disastrous Great Leap Forward campaign that resulted in the starvation deaths of an estimated 45 million people. One of Mao’s short essays, “Bombard the Headquarters,” captured the spirit of reckless violence and rebellion that soon gripped the country and swept him back to primacy.

By contrast, Xi’s rhetoric and policies contain little of the call to grassroots iconoclasm and destruction that gripped China under Mao. While millions of Party officials have been disciplined in Xi’s anti-corruption campaign, the purges are carried out exclusively by the Party’s disciplinary agency and Chinese courts.

Instead of condemning China’s ancient past, as was the theme of the Cultural Revolution’s slogan of “smashing the four olds,” the CCP under Xi has rolled Chinese culture and history into a narrative of national greatness. Private businesses and financial services are to be brought under official management rather than attacked outright.

The political shifts under Xi have a strong social and ideological motivation, particularly as crises such as the COVID-19 pandemic, food shortages, and overheated real estate markets threaten instability and perhaps even endanger the CCP itself.

A man wears a mask while walking through the Evergrande Changqing community on Sept. 24, 2021, in Wuhan, China. Evergrande, China’s largest property developer, is facing a liquidity crisis with total debts of around $300 billion. The problems faced by the company could impact China’s economy and the global economy at large. (Getty Images)

‘Common Prosperity’

The Aug. 17 meeting of the CCP Central Financial and Economic Affairs Commission produced 10 key points reported by state media, with most of the points focused on the goal of achieving “common prosperity.”

The meeting summary calls for wealthy Chinese individuals and enterprises to “give back to society more.” The Party also plans to “clean up and standardize unreasonable incomes, rectify the order of income distribution, and resolutely ban illegal income.”

According to Ming Chu-cheng, emeritus professor of political science at National Taiwan University (NTU), “common prosperity” may succeed in parting the rich from their wealth, but ordinary Chinese citizens are unlikely to benefit substantially.

“This is not a program to aid the poor, but to aid the CCP,” Ming said on “Era Money,” a Taiwanese talk show.

A variety of factors have severely impacted the Chinese economy, from the U.S.–China trade war to the global economic downturn caused by COVID-19 lockdowns.

“Foreign trade has shrunk. The unemployment rate is high. All this weighs on the national budget,” Ming said.

Evergrande, China’s largest real estate developer, missed two offshore bond payments in September, raising fears that the company could collapse, popping China’s real estate bubble and leading to a “Lehman moment” for the country.

China also currently faces a massive power shortage affecting more than 20 provinces in what are normally the wealthiest and most productive regions. According to state-run media, electricity limits are being imposed due to rapidly rising coal prices.

The lack of electricity will prove highly arduous—and perhaps deadly—as China enters winter, especially in areas such as the northeast, where subzero temperatures and heavy snowfall are common.

Ming said the turn to “common prosperity” by the CCP reflects Xi’s inability to push through the economic reforms needed to foster healthy free-market growth.

In the beginning, Xi didn’t want to impose socialist-style redistribution policies, the academic said, “but after being in power, he found that China had gotten to the point where it was basically impossible to enact reforms.”

SinoInsider, a New York-based risk consultancy firm that specializes in Chinese political analysis, wrote in an Aug. 19 newsletter that common prosperity is a convenient “feel-good” catchphrase that the CCP hopes will help it weather the economic crisis.

The newsletter noted that Xi had previously championed a strategy of “dual circulation,” which called for the country to spend less on foreign exchanges without giving up profitable exports. However, global economic shocks, plus the regime’s alienating behavior, have cooled foreign trade. Now the regime is desperate to shore up its coffers—and direct public outrage to the ultra-rich.

“Should financial risks explode, the CCP has laid the groundwork to sacrifice the wealthy elite and emerge as the ‘people’s savior,’” the analysis reads.

“But ‘redistribution’ runs the risk of further stifling economic activity and engendering fierce elite pushback against Xi.”

Logo of the Ant Group headquarters in Hangzhou, Zhejiang Province, China, on Oct. 13, 2020. (STR/AFP via Getty Images)

Political Showdown

Beyond bringing society more firmly under CCP control and bracing for hard times ahead, much of Xi’s recent activity reflects a longstanding struggle between him and political rivals within the Party itself.

While communist regimes tend to present a monolithic “united front” to the public, they’re given to complex infighting among different factions, a dynamic often overlooked in Western mainstream media reporting. These intra-regime struggles can play a crucial role in driving policy and rhetoric.

In February, Lingling Wei of The Wall Street Journal wrote that according to more than a dozen Chinese regime insiders, a key reason the CCP canceled Ant Group’s November 2020 IPO in Shanghai was “growing unease in Beijing over Ant’s complex ownership structure—and the people who stood to gain most from what would have been the world’s largest IPO.”

According to Wei, would-be stakeholders who “stood to gain” included those with ties to Jiang Zemin, the former CCP leader who was general secretary from 1989 to 2002, but who “remains a force behind the scenes.”

Many of the officials purged in Xi’s anti-corruption campaign have been connected to Jiang’s faction, including scores of high-ranking Party cadres and top generals in the People’s Liberation Army.

Ming said even the clampdowns in the entertainment industry have played a role in the Xi–Jiang feud, given the influence of Zeng Qinghong—former Chinese vice president and a close ally of Jiang—over the government offices that manage the entertainment industry.

Factional struggle in the CCP has come to a head as Xi prepares for the 20th Party Congress scheduled to be held in late 2022. While Xi is expected to take a norm-breaking third term as general secretary, the SinoInsider analysts believe he faces challenges in this endeavor.

“Xi has added many new enemies over the past nine years with his anti-corruption campaign and other uncompromising policies,” SinoInsider wrote in a Sept. 15 piece.

The article notes that the leader’s nine years in power have seen many setbacks for the regime—such as the COVID-19 pandemic and the rallying of democratic nations to oppose Beijing and support Taiwan—and few victories that Xi could claim as “legitimate political achievements.”

Without taking stronger measures, Xi could see his bid for a third term jeopardized, according to the article.

Recent moves by the CCP’s Central Commission for Discipline Inspection (CCDI) have targeted more Jiang affiliates in the regime’s security apparatus.

On Oct. 2, the CCDI announced a probe into Fu Zhenghua, retired minister of justice and former vice chief of the Ministry of Public Security (MPS), China’s police force. The state-run Xinhua accused Fu of “overweening political ambition and very poor political integrity,” saying that he had spread groundless criticism of Party policy, as well as political rumors.

Just two days earlier, the CCP expelled Sun Lijun, also a former deputy MPS head, from the Party, with authorities accusing him of “holding improper discussions about the central government” as well as “forming gangs to take control of key departments,” in addition to the same accusations leveled against Fu.

Radio Free Asia (RFA) noted in its report on Fu that the purges build on the sentencing of Bo Xilai and Zhou Yongkang, two powerful Politburo members with connections to the security state. All four of the disgraced officials are allies of Jiang.

While most officials have been officially charged with corruption, the Party has occasionally hinted at more serious offenses. For instance, the RFA piece notes that Liu Shiyu, Chinese securities regulator, said in 2017 that senior figures in the regime had “conspired openly to usurp party leadership.”

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