In China, Xi Jinping wants to have it both ways.
China’s leader is determined to make his country “the most powerful player in world history.” Is he capable of doing so without colliding with America?
What does Xi Jinping, China’s president, want? Xi became China’s leader four years before Donald Trump was elected president, and he announced an epic vision to “make China great again,” calling for “the great rejuvenation of the Chinese nation.”
Xi Jinping is so confident that he will succeed in this endeavour that he has broken a cardinal rule of political survival: Never state a target objective and a specific date in the same sentence. Xi set deadlines for each of his “Two Centennial Goals” within a month of becoming China’s leader in 2012.
First, by 2021, when the Chinese Communist Party celebrates its 100th anniversary, China will have built a “moderately prosperous society” by doubling its per capita GDP from 2010 to $10,000. Second, by the 100th anniversary of the People’s Republic in 2049, it will be a “fully developed, rich, and powerful” nation.
The IMF estimates that China’s economy will be 40% larger than the United States if it achieves the first goal, which it is on track to do (measured in terms of purchasing power parity). If China achieves the second goal by 2049, its economy will be three times that of the United States.
Xi Jinping, China’s president, is still attempting to have it both ways. Is there any way he can get away with it for much longer?
Later this year, Xi Jinping will seek approval from the Communist Party leadership for a record-breaking third term in office.
To do so, he must demonstrate two things: that his signature policies (Covid Zero with strict lockdowns) are effective and that the economy is resilient.
Key Readings include:
- Lockdowns in China wreak havoc on the economy, despite Xi’s pledge of support
- China’s Contagion Threatens to Derail Emerging Markets Around the World
- China’s Xi promises to promote capital development that is healthy.
- India’s scorching heat will deal a new blow to global wheat supplies.
- Singapore predicts a global recession in the next two years.
It’s becoming increasingly difficult to juggle these competing demands. Xi has personally endorsed Covid Zero as China’s response to the pandemic. However, economic difficulties are increasing, and some of them are beyond his control.
Covid Zero-related disruptions to factory activity (a weekend slate of PMI data releases was poor) and supply chains are having an impact in China.
There are also global headwinds, some of which are related to Russia’s war in Ukraine, which could last months, if not years. Grain, cooking oil, and fertiliser shortages are driving up prices and endangering crop production thousands of miles away from the conflict.
Europe is looking for alternatives to Russian energy as part of its effort to wean itself off of it. This could drive buyers out of existing markets, including Asia, and drive up prices even higher.
Meanwhile, as central banks reverse their pandemic bond-buying blitz, the global shift away from easy money is expected to accelerate.
Economists are already doubtful that Xi can stick to his Covid Zero strategy and achieve the 5.5 per cent growth target he set last week.
To keep his grip on power, he must first keep his people happy and believe in China as a success story.
Xi’s problem is figuring out a way out of Covid Zero without losing face before the lockdowns, and the economic downturn causes people to lose faith in him.