◎ It is becoming increasingly clear that the Sino-U.S. trade agreement has placed the Xi leadership in a Catch-22 situation.
The Chinese Communist Party’s Politburo decided that the Central Committee will hold its fourth plenary session in October during a meeting on Aug. 30.
According to state mouthpiece Xinhua, the CCP Fourth Plenum will see the Central Committee:
- Hear a Politburo report on its work;
- Discuss “important issues concerning how to uphold and improve the system of socialism with Chinese characteristics”;
- Make progress in modernizing the People’s Republic of China’s “system and capacity for governance.”
From the above, the CCP will deliberate ways to safeguard the Party, protect its political power, and strengthen its control over society at the upcoming Fourth Plenum. This agenda is in line with the theme of Party-building per past plenary sessions held in the third year of each Central Committee. The Party-building agenda also means that the 19th Central Committee will effectively “skip over” discussion of economic work issues, the customary theme of the third plenary session that is typically held in the fourth quarter of the second year of each Central Committee.[1]
We believe that the timing and agenda of the upcoming Fourth Plenum indicate that the factional struggle in the CCP is very intense, and confirms our earlier assessment of political crisis in China.
Our take:
1. The Fourth Plenum’s agenda—“safeguard the Party, protect its political power, and strengthen its control over society”—indicates that the CCP feels imperiled by the “perfect storm” of problems it currently faces, namely, “strategic competition” with the United States; the impact of the Sino-U.S. trade and tech war; capital flight and the devaluation of the renminbi; food shortages; pest and disease, etc.
2. Plenary sessions are where the CCP elites set the tone (定調) on policy and agenda for the regime. The fact that Xi Jinping opted to “skip over” discussion of economic work at the upcoming Fourth Plenum suggests that he is unable to bring the Party to a consensus and set the tone on that issue.
We believe that Xi was forced to delay the Fourth Plenum and “skip over” discussing economic work because he has been unable to forge a consensus within the Party on reaching a trade agreement with the United States. Xi also seems to lack sufficient “quan wei” (權威; see [2]) to force the CCP elites to follow his lead.
3. From the perspective of Party and factional struggle interests, Xi Jinping would have found it virtually impossible to bring the CCP elites to a consensus on what to do with the U.S. on the trade deal. Indeed, it is becoming increasingly clear that the Sino-U.S. trade agreement has placed the Xi leadership in a Catch-22 situation.
On the one hand, Xi would be harming his and the Party’s interests by abandoning trade talks with America. If Beijing were to continue trade negotiations with the U.S., there is a chance that an agreement could be reached to end the trade war, rescue China’s rapidly deteriorating economy, and avert a financial crisis. The alternative to walking away from trade talks now is the escalation of the Sino-U.S. trade war into a full-blown “Cold War 2.0.” All-out confrontation with the U.S. sharply increases the odds of economic and financial blow up in China, which in turn dramatically raises the probability of regime collapse and greatly increases Xi’s political risks.
On the other hand, the Xi leadership invites intense pressure on itself by continuing with the trade talks under current circumstances. The Trump administration has made it clear that it will only accept a trade deal on its terms, i.e. China must make structural changes; commit to a working enforcement mechanism; cease intellectual property theft and forced technology transfers; and make the trade agreement transparent. All of those demands are unacceptable for the CCP because their full implementation would eventually result in regime collapse; already, several media outlets have reported that the CCP is increasingly coming around to the view that the U.S. is not so much interested in a trade deal than in containing and vanquishing the PRC. Unless the Xi leadership can wrangle critical concessions from Trump and get him to back down on some of the current demands, or at least create the impression that the U.S. is compromising, Xi Jinping will be perceived to be betraying the Party’s interests by negotiating with the “enemy” United States.
Meanwhile, Xi’s political rivals and others who oppose him will also not hesitate to weaponize Party orthodoxy against the Xi leadership to prevent him from continuing trade negotiations with the U.S., reaching any sort of trade deal, and declaring victory in handling the Americans. A Xi victory would swing the balance of the factional struggle in his favor, greatly boost his “quan wei,” and possibly grant him enough leverage to eliminate his political enemies. Given that the odds will be heavily stacked against them when Xi reaches an amicable settlement with the U.S., the various Party factions and influential interest groups will do their utmost to deny Xi a trade win.
4. Based on our observation, it is clear from factional struggle developments in the past year that Xi Jinping does not have enough “quan wei” to force the CCP elites to come to a consensus on America and hence set the tone for the Party’s economic work. Notable incidents include:
- Soft coups in the fourth quarter of 2018 (see here, here, and here);
- A high-key study session on “guarding against major risk” in January 2019 (see here);
- The marginalizing and purge of Xi ally Liu Shiyu (see here and here);
- Pushback from the Jiang faction-controlled intelligence apparatus (see here);
- Pushback from the Jiang faction-controlled political and legal affairs apparatus (see here);
- Public appearances by Party elders and Xi rivals Jiang Zemin and Zeng Qinghong in April (see here);
- Xi’s tour of “red” CCP revolutionary sites (see here and here);
- Beijing suddenly “reneging” on the trade deal in May;
- Xi’s “flip-flop” between implementing “structural changes” and “structural arrangements” in the regime before and after the G-20 summit in June (see here and here);
- The chaos in Hong Kong and the CCP’s “mixed messaging” on handling the protests (see here and here).
Xi will almost certainly try to work within the Party system to break the current impasse in the elite ranks. And if Xi is playing by Party rules, he will look to boost his “quan wei” by highlighting the PRC’s need for strong leadership in the face of existential crisis before attempting to ram through his decisions and policies. Hence, through the Fourth Plenum’s agenda of safeguarding the Party, protecting its political power, and strengthen its control over society, Xi appears to be again looking to reinforce his “core” leadership, reassert his “quan wei,” and get the Party behind his effort to tackle the multiple crises facing the regime.
What’s next:
1. CCP history has shown that truces in factional struggles are temporary and consensus can be sacrificed to further factional interests. Thus, Xi Jinping will not enjoy any real advantage from boosting his “quan wei” at the coming Fourth Plenum in the name of “protecting the Party.” Put another way, Xi cannot resolve any of the PRC’s pressing problems as long as he seeks answers from within the CCP system.
2. Party orthodoxy and the Xi-Jiang factional struggle have caused a severe political crisis in the CCP. Presuming that U.S. President Donald Trump holds firm in his trade deal demands, the CCP’s political crisis will prevent the Xi leadership from reaching a trade agreement with the United States.
Notes
[1] The Fourth Plenum of the 19th Central Committee should be regarded as the Third Plenum in terms of discussion agenda. The third plenary session is numerically the fourth plenary session because the Central Committee held an “extra” session in January 2018 to amend the state constitution by adding Xi Jinping’s political thought to it and scrap term limits for the Chinese president and vice president.
[2] In “quan wei” (權威), the character “quan” stems from “quan li” (權力), or “power.” The character “wei” is drawn from “wei wang” (威望), or “prestige.” In referring to a CCP leader’s “quan wei,” we are talking about the sum total of his formal and informal power, authority, and prestige. For instance, the former CCP chairman Hua Guofeng had superior authority in the regime by virtue of his titles, but he did not have the “quan wei” of Deng Xiaoping and was eventually sidelined.
The English translation for “quan wei” (權威) is “authority.” When used in governance or politics, “authority” has connotations of legal and formal rights and powers. But as seen from the example in the paragraph above, “authority” fails to accurately capture the totality of what “quan wei” means.
