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China Outlook 2023: China at Historical Crossroads as Crises Surge

As crises come to a head, political risk levels for Xi and the CCP will rise exponentially in 2023.

Our China 2023 outlook contains 36 predictions covering eight categories.


Xi Jinping and the Chinese Communist Party entered 2023 having resolved none of the pressing crises plaguing the regime in recent years. If anything, those crises have substantially worsened, particularly those pertaining to the economy, the “zero-COVID” policy, and the international community’s willingness to stand up to the CCP. 

More troubling for Xi and the CCP is growing social instability in China. The anti-lockdown, anti-regime “blank paper revolution” near the end of 2022 is a sign of things to come, and Beijing could face more demonstrations in 2023 as the regime’s ills metastasize. 

As crises come to a head, political risk levels for Xi and the CCP will rise exponentially. Factional struggle and other factors could force Xi to make shocking moves as he struggles to preserve himself and his legacy.  

We anticipate three broad trends in 2023:

  1. Factional struggle in the CCP elite will observably intensify. Partly because of this, Beijing will increasingly step up social controls. Meanwhile, mounting social problems will sharply increase the PRC’s sense of crisis. How these crises develop and how Xi Jinping goes about resolving them could see China move in the direction of transitioning to a post-communist era.
  2. The global economy will head toward a recession. Countries could struggle between rising interest rates to fight high inflation and cutting interest rates to prevent debt explosion. Concurrently, the growing load of hidden leverage in financial markets could spike and possibly trigger a global financial crisis. The state of the global economy will impact China’s economy and make it difficult for the CCP to achieve its optimistic growth targets. 
  3. As global crises (war, energy, food, pandemic, etc.) grow, governments will increasingly turn to authoritarianism and technology to consolidate their control. The erosion of freedoms could undermine government authority and credibility, leading to social unrest and even the removal of politicians from office. Political upheaval abroad will scuttle the CCP’s plans for domination (“the East is Rising, the West is in Decline,” etc.) and could trigger political Black Swans and economic Gray Rhinos in China. 

The above trends could shift if there is drastic change in China’s political situation. How Xi Jinping responds to the situation will determine whether things change for the better or worse in a post-communist China. Changes in China will in turn have a major impact on the globe. 

Our China 2023 outlook contains 36 predictions covering eight categories: Politics, the economy, military, society, Hong Kong, cross-strait relations, Sino-U.S. relations, China and the world.

 

SinoInsider subscribers can download our China 2023 outlook here.

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