Xi’s Power a Double-Edged Sword as Pressure Grows to DeliverBloomberg News
President’s ‘core’ status reflects anxiety over challenges
Investors looking for balance of reform, growth and stability
President Xi Jinping’s elevation in status within the ruling party officially makes him China’s most powerful leader in decades. Now he has to deliver.
While formally becoming the Communist Party’s “core” leader last week gave Xi a supremacy that eluded his predecessor, Hu Jintao, the status also more tightly tied his own fortunes to those of the country. More than ever, the worries of almost 1.4 billion Chinese -- including a slowing economy, severe pollution, soaring property prices and an increasingly complex international landscape -- rest on his shoulders alone.
“That’s the trade off, if you want to have power,” said Cheng Li, director of the John L. Thornton China Center at the Washington-based Brookings Institute. “With all the positions he holds, if things go wrong, he can’t blame others.”
The move gives Xi greater leeway to navigate a planned midterm reshuffle next year, whether he chooses to line up a successor or retain some power after his term expires in 2022 -- an increasingly discussed scenario. Getting the party to declare his own centrality was the latest milestone in a speedy consolidation of power under Xi, who was already party leader, head of state, commander-in-chief and the head of at least eight policy-making committees including economics, a portfolio traditionally overseen by the premier.
Yet the “core” designation also signals challenges for a ruling party that has for more than three decades stressed collective leadership to prevent a repeat of Mao Zedong’s personality cult. Since it was previously bestowed upon the little-known leader Jiang Zemin at a time of political crisis in 1989, Xi’s elevation suggests how anxious the leadership is about China’s social and economic challenges, said Alice Miller, a research fellow at Stanford University’s Hoover Institution.
The decision underscores “the precariousness of the party’s situation and the urgency of its efforts to push through ‘comprehensive reforms’ deemed critical to the party’s survival,” said Miller, who studies China succession practices and edits the “China Leadership Monitor” newsletter. “Crisis situations call for strong leadership, and so this is such a time.”
In announcing Xi’s new status, the Central Committee’s communique warned of “complex situations abroad and at home.” That sentiment was echoed by Xi in a Politburo meeting on Friday, in which he cited economy stability in the first nine months of the year while noting “many contradictions and problems during the economic operations,” according to the party’s People’s Daily newspaper. An editorial in Monday’s Global Times, a paper affiliated with the People’s Daily, argued that Xi’s elevated status would give China “backbone” and a “solid sense of security.”
While China has seen a year-on-year expansion of 6.7 percent for three consecutive quarters, many challenges loom. The country faces a shrinking workforce, a graying population, slowing private investment, deadly smog and an endemic corruption problem that Xi says threatens the party’s rule.
Corporate debt is piling up, with the window to address the problem “closing quickly,” an International Monetary Fund working paper cautioned this month. Yet efforts to cut leverage and remove excess capacity -- seen as crucial to putting the economy on a more sustainable long term path -- threaten Xi’s growth goal of an average 6.5 percent through 2020. The party is trying to downsize bloated state industries and the military while avoiding mass layoffs that could spark unrest.
Xi will likely control the pace of reform to avoid abrupt moves that may destabilize society and the party, said Iris Pang, senior economist for Greater China at Natixis Asia Ltd. in Hong Kong.
“Whether it is a strong leader or a collective leadership may not be the underlying concern of investors,” she said. “Investors would be more curious on how Xi would balance reform, growth and stability.”
Last year’s stock market collapse showed the challenges Xi faces in taking more personal responsibility for managing the world’s second-largest economy. With many investors blaming the government for talking up the market in the first place, the president personally ordered investigators to protect small and mid-level investors as they fanned out to punish short sellers and other “malicious” traders blamed for the plunge.
The 19th Party Congress, which is expected to convene about a year from now, may be Xi’s best opportunity to bring about lasting change in China. The president’s status will help him promote more like-minded officials in the reshuffle, with five of the seven members on the Politburo’s supreme Standing Committee surpassing the customary retirement age of 68.
Zhao Suisheng, director of the Center for China-U.S. Cooperation at the University of Denver, said observers will be watching to see whether Xi uses his power to bend retirement rules and retain allies, such as party disciplinary chief and financial industry veteran Wang Qishan, 68. Such a move might signal whether Xi plans to hold onto power after 2022, when his own tenure is slated to end.
“He’s more powerful, for sure, but on the other hand he’s more vulnerable to criticism about his performance and the performance of the party and the country,” Zhao said. “He’s facing much tougher international and domestic challenges, and many problems cannot be resolved by the concentration of power.”
— With assistance by Ting Shi, and Keith Zhai