◎ Escalating Xi-Jiang faction struggle will raise political risk levels in China in 2022.
Xi Jinping and the Chinese Communist Party’s increased financial and property sector regulation, as well as crackdowns on technology companies, private tuition, video gaming, entertainment, and cross-border gambling, roused many this year to the pitfalls of political risk in China. Such risk will ramp up rather than die down going forward as Xi and the CCP make preparations for a critical political conclave next year
Xi is not stepping down at the end of his second five-year term in 2022 per current norms. Instead, all signs indicate that he is gearing up to take a third term and stack the leadership team with his allies and supporters at the 20th Party Congress. To get what he wants, Xi will have to settle unfinished business with factional rivals and complete the “rectification” of their strongholds. Xi will also seek out even more “quan wei” (prestige and authority) and achievements to make an unimpeachable case for taking a third term.
Meanwhile, Xi’s enemies have greater incentive to trip up the Chinese leader in his quest for an extended reign as they struggle for survival and to regain former glory. To that end, Xi’s rivals will look to seize or create opportunities next year in hopes of derailing Xi’s political ambitions at the 20th Party Congress and even marginalizing him.
Xi Jinping sought to lay the theoretical groundwork for taking a third term at the 20th Party Congress by issuing a rare “historical resolution” in November. Though the resolution would appear to affirm Xi’s political supremacy, the document merely provided Xi with a boost in authority and prestige (“quan wei”) and ideological justification for staying in power.
The resolution also leaves Xi more vulnerable to attack from factional opponents like the Jiang Zemin faction, which retains influence over key apparatuses and sectors in the regime, should he fail to adequately handle the many crises facing China today.
Party insiders have since disclosed that Xi did not get his way with the “historical resolution.” Yuan Hongbing, an Australian-based Chinese dissident and jurist, told overseas Chinese media that per his sources in the CCP, Xi originally wanted his resolution to criticize the “major political mistakes during the Jiang Zemin leadership”; Mao Zedong and Deng Xiaoping both used their respective “historical resolution” to condemn the “incorrect line” of their factional rivals at the time and establish their political orthodoxy.
However, Xi was prevented from doing so after objections from Party elites led by Jiang faction member and former Politburo Standing Committee member Zhang Gaoli. According to Yuan, the scandal involving Zhang and Chinese tennis star Peng Shuai that emerged just before Xi’s “historical resolution” was unveiled in early November is a consequence of the former’s role in blocking Xi’s effort to directly denounce Jiang Zemin in the document. Meanwhile, the resolution as published failed to create a sense of “out with the old, in with the new,” and contained only very mild and indirect criticism of Xi’s major factional rival.
Xi Jinping’s recent maneuvers suggest that he is finding ways to get around this setback. For one, Xi has stepped up political mobilization to both rally supporters and prepare to take future action against Jiang Zemin and the Jiang faction. People’s Daily op-eds by senior officials like Central Military Commission vice chairman Zhang Youxia and propaganda vice minister Shen Haixiong obliquely condemn the Jiang faction for almost bringing the Chinese regime to ruin before Xi stepped in to “turn the tide,” “steer the giant ship of China through dangerous shoals and turbulent waves,” and “deliver the country from distress.”
Other officials like Tianjin Party secretary Li Hongzhong and CCP Organization Department director Chen Xi urged officials to safeguard the “Xi core” and noted that promotion is dependent on “maintaining a high degree of consistency with Comrade Xi Jinping” rather than the previous evaluation of various performance metrics. The more blatant shift in what constitutes political orthodoxy in the CCP away from Jiang era norms and the entrenchment of Xi’s norms will generate more intra-Party friction and result in greater political instability ahead of the 20th Party Congress.
The arrest of Macau gambling mogul Alvin Chau near the end of November also foreshadows an intensification of the Xi-Jiang factional struggle. Chinese dissident Yuan Hongbing cites Party insiders in the Macau system as saying that Chau is the bagman of Jiang faction elites like former Politburo Standing Committee member Zeng Qinghong and Central Political and Legal Affairs Commission head Meng Jianzhu. If so, an investigation into Chau would likely produce dirt on the aforementioned Jiang faction members and others of their ilk, handing Xi leverage to wield against his factional rivals and deter them challenging his 20th Party Congress agenda.
Factional struggle in the CCP elite is “you die, I live.” Years of purges and “rectification” campaigns may have weakened the Jiang faction and the “anti-Xi coalition,” but they still retain influence and have not surrendered to Xi Jinping or let up in their determination to undermine him.
The rapid deterioration of the Chinese economy under the Xi leadership provides his rivals with a legitimate avenue of attack. A few short weeks after the Sixth Plenum meeting in early November and the unveiling of Xi’s “historical resolution,” Beijing quietly shifted gears from praising Xi’s “achievement” in promoting “economic development” to signaling that it is considering releasing stimulus, cutting the bank reserve requirement ratio, and easing some financing restrictions on the real estate industry. Such measures indicate that the economy is struggling badly and financial contagion from the China Evergrande debt crisis is becoming more serious.
The Xi leadership’s ability to remedy economic problems would be further limited next year when the U.S. Federal Reserve takes action to curb inflation, and as foreign investors withdraw from Chinese real estate or pull capital from China as they fear losses from government crackdowns. Serious economic downturn will provide Xi’s rivals with a bulletproof reason to hold him accountable.
Xi’s rivals can also use growing international pressure on Xi and the CCP against him. They can point to diplomatic boycotts of the 2022 Beijing Winter Olympics, increasing global support for Taiwan, heightened attention to the Xinjiang persecution campaign and genocide, a perceived strengthening of the international democratic coalition, continued U.S. restrictions against Chinese companies, and even international #MeToo furor over the Peng Shuai-Zhang Gaoli affair as a failure of Xi’s so-called “great power diplomacy.”
Further, Xi’s enemies could potentially pull off some mischief to worsen Beijing’s many problems, or simply allow gravity to take its course as the domestic situation and international opposition to Xi and the CCP compounds. Under such circumstances, Xi’s eligibility for a third term would naturally come into question.
Xi Jinping could preempt the pushback by restricting the movement of the Party elite and taking down some Jiang faction “big tigers” before the 20th Party Congress to intimidate the others. However, Xi’s rivals will unlikely roll over and could be compelled into attempting desperado tactics to strike back. Escalating Xi-Jiang faction struggle will in turn raise political risk levels in China in 2022 and create conditions for political Black Swans to emerge.