China after the 20th CCP Congress: a new stage in Xi Jinping’s revolution

The 20^th Congress of the Chinese Communist Party (CCP) ended with the complete triumph of Xi Jinping and marks the culmination of a process of radical overhaul of the political system created in the 1980s and 1990s. It marks not only the end of collective leadership in the party, but also a redefinition of the relationship between the party and the state and the relationship between the CCP and society. The transformation of the CCP carried out by Xi Jinping over the past decade provides him with the tools to overcome institutional inertia and the resistance of middle and lower-level party-state cadres – factors that are among the elements holding back the changes in the socio-economic development model of the People’s Republic of China (PRC) that were first announced 15 years ago. Therefore, radical and rapid decisions in this sphere are to be expected in the coming years. They will bring further the Marxist-nationalist ideologisation of the PRC, the introduction of a mechanism of mass redistribution and an increase in the role of the party and the state in all aspects of the social and private life of the population. This, in turn, heralds an increase in totalitarian tendencies.

The CCP will focus on critical internal transformations. These will affect Chinese foreign activity, as they will aim, among other things, to increase economic and technological independence, which will shake up the existing international division of labour – the PRC will cease to export many products but will also cease to import Western technology. At the same time, the radicalisation of the nationalist domestic narrative will force Beijing to make its foreign policy more rigid and respond assertively to the changing international situation. In the near term, this will result in heightened tensions with the West led by the United States, further rapprochement with Russia, attempts to create a ‘Chinese model’ as a developmental alternative to the countries of the Global South, and ideological competition with liberal democracies. As a result, significant changes in the PRC’s economic and political relations with the West are expected to continue. This, in turn, will force individual EU states, as well as the EU as a whole, to accelerate the revision of relations with Beijing.

No alternative to Xi Jinping

The CCP Congress – formally the highest authority in the Communist Party – begins a cycle of change in China’s party-state leadership, which will culminate in March 2023 with a session of the National People’s Congress (NPC).^[1] The resulting personnel arrangement will determine the functioning of the CCP for at least the next five years. The first stage of the current cycle has just closed with the holding of the 20^th Congress from 16–22 October, the first plenary session (First Plenum) of the new CCP Central Committee (CC) on 23 October and the session of the Standing Committee of the NPC from 26–30 October.

The congress approved a new CC, dominated by acolytes and allies of Xi Jinping (69), and amendments were made to the party’s statutes to give top priority to the socio-economic programme he is pushing. His personal power in the CCP leadership is confirmed by another amendment to its statutes. Not only, as at the 19^th Congress, was Xi Jinping recognised as the ‘creative’ continuation of Marxist ideology – this time, above all, his ‘unique leadership role’ was pointed out and ‘all party members were urged to deeply understand the decisive importance of establishing Comrade Xi Jinping’s key position in the Central Committee’.

On the last day of the congress, there was an incident – a resisting Hu Jintao (79), the previous general secretary (2002–2012), was led out of the meeting hall. His unceremonious removal immediately after allowing foreign journalists into the hall sends a clear signal not only to the party apparatus but also to the CCP ranks that Xi Jinping will act with utter ruthlessness. Even if the move was dictated by non-political issues (it cannot be entirely ruled out that Hu Jintao had an incident related to dementia) rather than political ones (the absence of his supporters, including his son, Hu Haifeng (49), from the list of candidates for the CC), it occurred on the express instructions of the current General Secretary, who was aware of the symbolic dimension of the event.

The domination of the new CC by Xi Jinping’s supporters led to him being elected General Secretary for the third time at the First Plenum. This marks the breaking of an unwritten but hitherto observed rule limiting the number of terms of the top leadership to two. The strict application of the rule requiring its members turning sixty-eight in the year of the congress to retire was also abandoned. In practice, this rule only applied to opponents or those who had lost the confidence of the General Secretary. The absence of an obvious candidate to succeed Xi Jinping in the new CCP leadership, on the other hand, leads to the assumption that he does not plan to leave the office at the next congress in 2027, and consequently that he may in practice rule until at least the 22^nd Congress in 2032.

Xi Jinping’s supporters have also gained an absolute majority in the Politburo and brought four new people into the seven-member Politburo Standing Committee (PSC). This – along with the two remaining members of the PSC from the previous term who are Xi’s allies – ensures Xi’s total control over the most important body of the Communist Party. He has also retained full authority over the Central Military Commission (CMC) of the Central Committee. Also, the first changes in the staffing of state apparatus were conducted at the Standing Committee of the NPC session, expanding the presence of Xi Jinping’s supporters in these structures (see Appendix). This wave of personnel reshuffles gives Xi de facto total and direct control over the CCP and the state apparatus of the PRC for the first time – until now he has used several instruments, mainly committees in the Central Committee^[2] to deprive his opponents of real influence. A victory at the congress should allow him to further centralise power. This seems likely to lead to tensions between the centre and local cadres in the provinces, especially in the context of the planned radical change in the development model.

The pursuit of a new development model

The CCP leadership diagnosed the accumulating contradictions in the PRC’s development model while Hu Jintao was still in the office. In early 2007 the then-Prime Minister Wen Jiabao (2003–2013) described the ‘trajectory’ of the Chinese economy as ‘unstable, unbalanced, uncoordinated, and unsustainable’ in the long term. The development model to date – based on infrastructure investment and housing stimulation, supported by exports and foreign investment – is still generating GDP growth, but the capacity to continue is running out. This is due to:

• the saturation of more developed regions with housing^[3] and infrastructure and the low or negative rate of return on these projects;
• mounting debt (total debt of corporations, households and public entities exceeded in 2019 300% of GDP^[4] and still growing);
• major demographic changes, including an ageing population and a shrinking workforce;
• transformations in the international environment and changing trends in multinational corporations, pressured by Western governments to diversify or relocate supply chains away from the PRC.

Maintaining the current model risks the economy gradually sliding into stagnation which, with development inequalities and widening material disparities, poses the danger of social unrest.

The answer to the growing inefficiency of the current model is to be found in the concept – prepared in Hu Jintao’s time – of basing development on domestic consumption; this requires a rapid and significant increase in people’s incomes while avoiding inflation. The aim is to build a new ‘socialist,’ middle class, meaning one deeply connected to the CCP. Crucial to this is a reduction in the savings rate (currently around 45% of GDP), which has been kept high for years to finance investment in the economy, and to base growth on the stimulation of consumption. Xi Jinping’s socio-economic policies follow the same paradigm, but now that he has gained full power over the CCP and the state apparatus, they are to be implemented by new means and within the framework of new relationships within the party and also new relationships between those in power and the people.

The 20^th Congress adopted amendments to the CCP’s statutes on the concepts of ‘common welfare’ (共同富裕) and the strategy of ‘dual circulation’ (国内国际双循环). The former was created by Mao Zedong in the 1950s and aimed at redressing social inequalities through collective ownership and egalitarian state policies. The concept was redefined in the 1980s by Deng Xiaoping, who stated that ‘shared prosperity’ meant that some might get rich before others, but that the overall increase in wealth would translate into an increase in living standards for all. Xi Jinping redefined ‘shared prosperity’ as a mechanism for greater redistribution. The ‘domestic-international dual circulation,’ on the other hand, is the strategy proposed by the PSC in May 2020 to reorient the PRC economy by prioritising domestic consumption (‘domestic circulation’) while remaining open to international trade and investment (‘external circulation’). However, supply chains of sectors considered strategic (e.g., semiconductors, but also food) are to be controlled solely by Chinese entities and produced only domestically. Foreign competition is only allowed in ‘external circulation’ and will have a complementary function to ‘internal circulation’.

Changes to the CCP’s statutes of this kind indicate that Xi Jinping, after assuming uncontested power, intends first and foremost to carry out the change in the PRC’s socio-economic development model that has been postulated for more than 15 years but still not implemented, including redistribution mechanisms under the concept of ‘shared prosperity’, while reducing dependence on foreign countries under ‘dual circulation’. Therefore, it seems that in his new term, he will seek to further centralise the management of the economy, increase the dominance of the state sector (since 2016, the growth of the non-state sector’s share of GDP has stalled and remains at around 38%), and sever the links between local party-state cadres and business. Another problem is the leadership’s aversion to making tough economic decisions, which – at least in the transitional period – will reflect negatively on the PRC. During Xi Jinping’s first two terms in the office, Beijing intervened more than once in the face of the negative effects of the changes introduced – often rolling them back or reducing their scope.^[5]

Xi Jinping’s top-down revolution

The 20^th Congress and the personnel changes that followed signal a breakthrough in the top-down revolution that Xi Jinping launched after becoming General Secretary in 2012.^[6] He is expected not only to gain formal direct control over the entire party-state apparatus, but also to give the entire structure a new impetus. These expectations are symbolised by the 27 October visit of the new PSC to Yan’an in Shaanxi province, where the CCP established the capital of the areas under its control after the Long March. There, Xi Jinping pledged that the party would continue the revolutionary struggle. In doing so, he referred to the ‘spirit of Yan’an’^[7] and to the example of the CCP’s 7^th Congress, which in 1945 led to the elimination of intra-party opposition to Mao Zedong’s rule and prepared the communists to win the civil war and gain power in China.

The symbolism of this trip can hardly be overstated. The visit heralds an end to the toleration of intra-party contestation of leadership policies, a further tightening of discipline within the CCP and a return to ideology as not only a tool of control but also a means of managing the party apparatus. To a considerable extent, this represents the re-Stalinisation of the PRC, albeit conducted under different internal circumstances and by different means than used by Mao Zedong in the 1950s. It is also a warning that the party and the state are facing challenging times, and a signal that the role of ideology as the common denominator ensuring the cohesiveness of the apparatus will increase as the common economic interest begins to lose ground.

It is difficult to say how much the need to implement radical changes within the CCP stems from the need to depart from the previous development path, and how much the socio-economic transformation is just a pretext for increasing Xi Jinping’s personal power. However, for more than 15 years, attempts to remodel the economy have been met with resistance from local party-state cadres, which are the beneficiaries of the model based on massive investment in infrastructure, housing and industry. However, the survival of the regime and of Xi Jinping himself, who has concentrated more power in his hands than anyone since Mao Zedong, depends on the successful implementation of the economic and social transformation.

As the potential of the PRC’s current development model becomes exhausted, internal problems are increasing. Previous opportunities for social advancement are being reduced and stratification is becoming entrenched.^[8] As a result of the pandemic, the share of exports in China’s GDP has again started to rise,^[9] which is at odds with the direction of economic change. The ‘zero COVID’ strategy is exacerbating and accelerating the economic crisis^[10] and stirring up growing resistance among the population, leading to increasing protests against pandemic restrictions. However, there are no tools to determine the extent to which opposition is generated by specific COVID-related measures by the authorities and to what extent they are merely a pretext to manifest growing frustration with the economic situation, especially among young people (who are affected by almost 20% unemployment.^[11]

For the moment, the party is managing to maintain stability by tightening its control over the population – whether in the fight against the pandemic or previously initiated programmes such as the Social Credit System.^[12] Restrictions (intensified during the pandemic, but already introduced before it) are, however, lowering enthusiasm for Xi Jinping’s rule and causing increasing negative economic consequences. However, the authorities are striving to develop indigenous technologies and achieve food self-sufficiency. This is to be achieved by tightening state supervision of the economic activity of private actors, including peasants, and by further increasing the role of state-owned enterprises in specific sectors of the economy.

The accumulation of socio-economic problems and the increasing costs of transformations that have been postponed for years, and this delays the implementation of a new development model a matter of urgency. However, it requires overcoming the resistance of local party cadres interacting with regional economic elites. Xi Jinping has two paths to choose from. The first is to increase the centre’s control over the regions and systematically ‘march through the institutions’ down successive levels of administrative division. However, this is a slow, time-consuming process and requires long-term cohesiveness of the group supporting him. The second involves using the growing frustration of the population to initiate grassroots changes that would force local cadres to make concessions and accept the need to lose significant revenue in exchange for social stability. While it would be quite difficult for the CCP leadership to control such a movement, this step would capture popular activity and win genuine support for the transition.

The traumatic collective experience of the CCP leadership dating back to the Cultural Revolution (1966–1976) seems to make them reluctant to activate the population and they will rather choose the path of top-down institutional revolution. However, regardless of the course of action they adopt, the PRC is entering a time of rapid change. Even if the optimistic scenario materialises, there will be a transitional period when one engine of growth ceases to function and the other has yet to generate positive effects. During this time, the country will be extremely vulnerable to external factors and internally unstable.

Siege mentality

There is a growing fear of the West within the party elite. From the CCP’s point of view, it (the West) exerts an ideological and cultural pressure that has a corrupting effect on the morale and worldview of Chinese society and thus strikes at the foundations of authoritarian rule. Moreover, since at least the Obama presidency, Beijing has felt that successive US administrations have increasingly aggressively sought to contain the PRC’s rise and have been building a coalition against it in the Indo-Pacific region. Therefore, although the CCP’s attention is currently focused on domestic affairs and it seems to be putting international ambitions on the back burner,^[13] Xi Jinping’s Report of the 19^th Central Committee repeatedly warns of ‘hostile forces’ (both in the context of Taiwan and attempts to contain China’s rise) or states ‘seeking hegemony’ and calling for the ‘construction of a multilateral’ world. These are thinly veiled attacks on the West, and above all on the United States. They are routine in nature, but they have been redoubled and their rhetorical overtones have been strengthened.

This would indicate that the PRC’s policy towards the West may take on a more confrontational character after the congress, especially as the CCP is not giving up on creating a ‘Chinese model’ that, with some transformations, would be attractive to developing countries. In this way, Beijing wants to extend and consolidate its influence in the Global South or even become its leader. This creates another level of rivalry with the West at the level of economic and political systems. As a result, from the CCP’s perspective, it goes far beyond the economic framework and concerns the survival of the regime, with the result that the party leadership is not ruling out any scenario, including armed conflict.

A decision was made to write ‘opposition to separatist forces seeking “Taiwanese independence”’ into the party’s charter. This is due to a sense of pressure from Washington, as this is the perception in Beijing of the US strengthening Taipei’s defence capabilities and its support for the island’s maintenance of sovereignty. Added to this is the voice of domestic public opinion, which has been subjected to nationalist propaganda for decades, so the leadership is now held hostage to its own narrative. The social transformation in Taiwan itself is also significant, with the number of its people identifying with China constantly falling and the number of them seeing themselves as a separate nation increasing.^[14] This makes the prospect of the region’s integration with the PRC even more difficult. These circumstances confirm that the island will become a flashpoint in relations with the United States. During Xi Jinping’s third term in office, it should therefore be expected that anti-Taiwan rhetoric will intensify, that provocation in the Taiwan Strait will continue and that Beijing will seek to further isolate Taipei.

In this context, it seems significant that Xi devoted significant space in his report to state security, the destabilising international environment and the need to further modernise the army. From China’s point of view, however, the prospect of confrontation with the West also forces it to extend its de facto alliance with Russia.^[15] Beijing – like Moscow – sees itself as a victim of Western ’expansion’, but also recognises the Kremlin as a partner that is effectively focusing its rival’s attention on itself. The Chinese are also convinced that a possible victory for the West in the current conflict with Russia will allow it to put even stronger pressure on the PRC. Therefore, sustaining authoritarian, anti-Western rule in the Kremlin will be one of the CCP’s priorities in the coming period. All this also determines China’s attitude to Russian aggression against Ukraine and its opposition to sanctions (despite it opposition, though, Beijing does not want to break the sanctions for fear of negative consequences for its troubled economy). This situation will continue at least until the Chinese leaders recognise that the power of the elites they favour in the Kremlin is under threat.

If there had been any opposition within the party to the partnership with Russia so far, this was eliminated at the 20^th Congress. This was evidenced by the first conversation between Wang Yi – foreign minister and newly elected Politburo member – and Sergey Lavrov. During it, for the first time since the outbreak of war, Wang Yi personally supported Vladimir Putin, but also Russia’s superpower ambitions.^[16] This statement clearly indicates that the alliance between the two countries is permanent and that it will not be revised. Nor will its participants give up their ambition to radically remodel the global system under their dictates, signalled in the joint declaration of 4 February 2022.^[17] Beijing will also continue to seek closer strategic coordination with Moscow on the international stage.

Anxiety about potential Western economic restrictions is causing the CCP to move towards reducing the PRC’s dependence on foreign markets, technology and capital, although the main factor here remains the need to rely on ‘internal circulation’. This will be accompanied by a further ‘pushing’ of external companies out of industries deemed strategic. Xi Jinping is calling for food self-sufficiency, which will also translate into increased protection of domestic agricultural producers from competition. Maintaining ‘external circulation’ will, however, allow relations to continue with selected countries – both developing countries (which are sources of essential raw materials) and developed countries (whose selected corporations will be tied to the PRC economy so that indirect influence over their governments’ policies may be maintained).

This strategy objectifies Beijing’s economic partners, including EU members. On the one hand, it provides it with leverage in the form of ‘external circulation’ access to the Chinese market, while on the other hand, it immunises the PRC itself against external pressure by basing strategic sectors on ‘internal circulation’. This will allow the CCP leadership to influence partners to take sides in the competition with the United States. It can be considered that Beijing – like Moscow – will seek to break down transatlantic unity through economic means. This will force member states and EU institutions to review their economic and political relations with it.

Conclusions

The 20^th Congress closes the period of dismantling the PRC’s socio-political system, which Deng Xiaoping was the architect of. It marks the irrevocable end of the so-called ‘era of reform and opening-up’. As a result of the changes of the last decade, we are already dealing with a different CCP and a different Chinese state. It does not hesitate, for example, to resort in its international relations to assertive measures (‘wolf diplomacy’)^[18] which, even if counter-productive, allow it to pursue ‘dignity’ goals. The break with the pragmatism policy of the Deng Xiaoping era in foreign relations^[19] – as in domestic affairs – is a new and permanent feature of PRC policy. It may lead to a precarious economic situation and pressure from the US and its allies forcing the CCP to accelerate its programme of ‘internal circulation’ and to make the economy immune to Western sanctions.

The 20^th Congress confirms and radically strengthens Xi Jinping’s mandate to complete the top-down revolution. Any success associated with a change in the model of socio-economic development will allow the party to consolidate power for decades to come and enable the PRC to take on its far-reaching international ambitions and openly challenge the United States for hegemony in the Indo-Pacific region. Failure, on the other hand, will lead to further drift in the system and growing popular discontent, which will be quelled by increasing repression. The repressions, however, even if successful, will extinguish popular activism altogether with any initiative, and will entrench systemic inertia. This, in turn, may push the leadership into radical action against Taiwan, since the conviction may prevail that war – whatever its course – will not only restore internal legitimacy but, above all, will provide (under martial law) the tools to solve structural problems that cannot otherwise be achieved.

Xi Jinping’s top-down revolution is already having global effects – it is increasing polarisation on the international stage as, contrary to the CCP’s propaganda narrative, it is also Beijing that is increasingly pushing and will continue to push its partners to unequivocally take sides in its rivalry with the West. As the ‘dual circulation’ agenda moves forward, the PRC’s place and role in the global division of labour will also change. This will affect a number of global economic processes: the anti-inflationary impact of Chinese exports, for example, will disappear; and the subsequent course of globalisation will change, perhaps splitting into two or more competing strands.

In its relations with the EU, Beijing will increasingly expect member states to make concessions in return for access to its internal market. In addition, the PRC will attempt to force both consent to technology transfers and to limit criticism of its human rights violations or concessions at the international level, including in multilateral organisations and in relation to Taiwan. In doing so, continuing to maintain close economic ties will expose EU companies to the risk of being subject to US sanctions. In this context, the deepening Sino-US rivalry will force Brussels to loosen or strengthen its cooperation with the US and rethink the role and potential of the EU in the system of collective security in Eurasia, and even the model of development of the EU itself and the direction of the European integration process.

Xi Jinping’s top-down revolution will also determine the PRC’s ability to create a development model that is attractive to developing countries and competitive with the Western one. In the long term, it will also indirectly determine the Global South’s relationship with the West. In the medium term, it will exacerbate the rivalry between the PRC and the West (primarily the United States) in developing countries. It may have a destabilising effect on regions of the world already affected by many problems and increase immigration pressure on Europe.

APPENDIX

Personnel changes in the party-state apparatus after the 20^th CCP Congress

The CCP Congress is only the first formal stage of the process of political change. The March 2023 session of the NPC will decide on the filling of key state posts. Although all key personnel decisions were made in the run-up to the 20^th Congress, they will be announced to the public in accordance with the formal political calendar. In the reality of the PRC, this simulates the participation of the population in the decision-making process.

At the First Plenum of the 20^th CC, Xi Jinping introduced four new members to the seven-member PSC. They are: Li Qiang (63), Cai Qi (66), Ding Xuexiang (60) and Li Xi (66), who owe their careers to him and have no political background of their own. The body’s remaining members (besides Xi Jinping himself), Zhao Leji (65) and Wang Huning (67), are his allies. Li Qiang, Shanghai’s first party secretary, will become the new premier during the NPC’s session in March 2023. Cai Qi, former head of the CCP in Beijing, will replace Wang Huning as first secretary of the CC secretariat and will be responsible for organising the work of the CC. Li Xi, first secretary in Guangdong province, will become head of the Central Commission for Discipline Inspection, where he will replace Zhao Leji. Ding Xuexiang, former Director of the CCP General Office, is tipped as First (Executive) Deputy Premier.

The NPC will be headed by Zhao Leji – formally number three in the party hierarchy (sixth in the 19^th PSC). In the new arrangement, he stands above Wang Huning, who is ranked fourth (previously fifth) and will take over the leadership of the Chinese People's Political Consultative Conference (CPPCC) – a purely advisory body, but important for mobilising external support for the party. Zhao Leji is currently the highest-ranking member of the leadership; he is one of Xi Jinping’s close allies but has an independent political position within the CCP. Considered the party’s chief ideologue, Wang Huning will manage not only the CPPCC, but also the United Front, the CCP’s key instrument of socio-political control (every political, social or cultural organisation in the country has to function in its structure).

As a consequence of the 20^th Congress, there were also changes among those in the leadership dealing with international affairs. The incumbent, presumably until March 2023, Foreign Minister Wang Yi (69) not only retained his seat on the CC but was promoted to the Politburo and is likely to replace Yang Jiechi (72) as head of the office of the CC Foreign Affairs Commission, which oversees Chinese diplomacy on behalf of the CCP. Ambassador to the US Qin Gang (56) and Party Secretary to the Ministry of Foreign Affairs Qi Yu (61) have also joined the CCP. It is possible that one of them will become the new head of the Foreign Ministry. In addition, Chen Wenqing (62), who owes his career to Xi Jinping and who is the former head of the Ministry of State Security (in charge of external security, including intelligence) has been, by the decision of the Standing Committee of the NPC, replaced by another Xi Jinping loyalist Chen Yixin (63), and – has become a member of the Politburo and will replace Guo Shengkun (68), an ally of Xi Jinping, as secretary of the CCP’s Political and Legal Commission, which oversees the work of internal and external security organisations on behalf of the CCP.

The Central Committee also appointed General He Weidong (65) as vice-chairman of the CMC; he is a former commander of the People’s Liberation Army’s Eastern Theatre of Operations (2019–2022), which includes forces being prepared for a potential invasion of Taiwan. At the same time, Zhang Youxia (72), a retired general widely seen as a close ally of Xi Jinping, retained his position as vice-chairman of the CMC.