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China Outlook 2024: Political Black Swans Loom Large for Xi and the CCP

We expect many of the internal and external crises plaguing the PRC to continue and worsen for Xi and the CCP in 2024.

Our China 2024 outlook contains 27 predictions covering eight categories.

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China’s widely anticipated post “zero-COVID” rebound did not materialize in 2023. Instead, official figures told a story of persistent economic weakness while indirect indicators hinted at sharp economic deterioration. China’s real estate sector debt crisis also continued to worsen, with top developer Country Garden defaulting on a US dollar bond and the arrest of several senior executives at China Evergrande. Signs of financial contagion from the real estate sector began to surface in 2023 in the form of trouble at shadow banks like Zhongzhi Enterprise Group, local government debt problems, growing unemployment, and other issues. 

China’s economic woes and polycrisis in 2023 also saw Xi Jinping face mounting political pressure. Negative rumors about Xi and his leadership proliferated in Chinese and English-speaking circles, and especially after the sudden death of former premier Li Keqiang. Western media and politicians speculated intensely about whether Xi would invade Taiwan, forcing him to publicly deny that he had plans for aggression during his meeting with President Joe Biden in California. Xi’s growing authoritarianism, purges, and policy failures only fed the rumor mill and seemed to justify his being labeled by critics as the “accelerator-in-chief” (總加速師) of the regime’s demise. 

We expect many of the internal and external crises plaguing the People’s Republic of China to continue and worsen for Xi and the CCP in 2024. Xi’s doubling down on strengthening his control over the regime and the systemic deficiencies of the CCP dictatorship will hurt more than help Beijing’s effort to resolve the various crises. Should developments proceed on the current trajectory, 2024 could see charging economic Gray Rhinos and the emergence of political Black Swans in China. 

We anticipate three broad trends in 2024: 

  1. Several of China’s internal and external risks could be triggered and in a concentrated fashion. The CCP authorities would be unable to resolve most of these risks and would instead cover up regime crises by attempting to further strengthen control over society and stepping up propaganda. The emergence of political Black Swans and economic Gray Rhinos would increasingly weaken Xi Jinping’s “quan wei” (authority and prestige) and reduce the CCP authorities’ governing effectiveness. 
  2. China could see large-scale capital and investment outflows regardless of the situation with global markets as investors increasingly account for diminishing returns to investment and growing geopolitical risks. Meanwhile, global recessionary pressure could rise and there could be some market turmoil related to the U.S. economic and financial situation (including over anticipated Fed rate cuts). 
  3. The global geopolitical situation in 2024 could be as volatile as in 2023, but regional conflicts are unlikely to escalate into broader conflicts. Communism and socialism will be on the retreat globally as trends such as traditionalism and nationalism gain ground; the rebalancing of society could lead to social instability in some areas. 

 

Our China 2024 Outlook contains 27 predictions covering eight categories: Politics, the economy, military, society, Hong Kong, cross-strait relations, Sino-U.S. relations, China and the world.

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