Unrivalled Xi Jinping still has challenges
Originally published in the Australian Financial Review. China’s ruling party and its leader are now masters of everything they survey. But can the economy keep delivering when the private sector is cowed?
To understand the Chinese Communist Party on the eve of its 100th anniversary, and the importance of the private economy to its survival, a good starting point is the museum in Shanghai celebrating its first meeting in 1921.
Any Chinese visiting the city need only hop in a taxi and ask to go to the “First Meeting Hall” to be taken to the museum in one of the city’s fanciest districts, where the meeting and its attendees have been lavishly recreated.
The fact that one of Chinese communism’s “sacred sites” sits amid a yuppie wonderland of luxury shops and restaurants barely generates a resigned sigh in China these days. In fact, the opposite is the case.
What might once have been seen as a fatal contradiction has been turned by the party into a core strength, a reminder that Xi Jinping sits atop not just the biggest political party in the world, but the richest as well.
The 100th anniversary on July 1, which will be marked with everything from grand parades to enforced study sessions, coincides with perhaps the most confident moment in the history of the party.
Chinese growth has rebounded faster from the ravages of COVID-19 than any other major economy. The country’s military has never been stronger and better equipped in modern times. China is a genuine superpower in the making.
Unlike his predecessors, including Mao Zedong, Xi has no discernible rivals nor identifiable successors, mostly because he has used his power to make sure none can emerge.
But his exceptional status clouds a larger truth, that his agenda embodies the core of what the party has always wanted to do: eliminate opposition at home and project power abroad, especially in Asia.
Essential to both targets is a successful economy, which builds legitimacy with the local populace and provides the financial foundation for a military with the firepower to dominate the region and keep the US at a distance.
The party’s involvement in commerce once made it, as one Chinese academic quipped, akin to “the world’s biggest holding company”. But those old jokes about the party being “a giant chamber of commerce” and “the world’s largest mixed business” are passé in the era of a strongman such as Xi.
Entrepreneurs have been officially welcomed as party members since the 2002 party congress, but as their wealth and business clout have grown, so has Xi’s determination to discipline them and make them subordinate to the CCP.
All roads lead back to the party under Xi, as Jack Ma, the founder of e-tech giant Alibaba and one of the country’s richest men, found out in recent months.
Ma criticised financial regulators ahead of the listing of his payments arm, Ant Financial, in late 2020 for an estimated $US35 billion. He was quickly summonsed to Beijing and the listing cancelled. He has barely been seen since.
Xi’s attitude to billionaire entrepreneurs was summed up in a quote in the Wall Street Journal. “Xi doesn’t care about if you made any of those rich lists or not,” a senior Chinese official said. “What he cares about is what you do after you get rich, and whether you’re aligning your interests with the state’s interests.”
Xi’s view – that there can be no powerful person, group or set of interests independent of the ruling party – is no different in substance from the views of the traditional communists at the party’s first meeting in 1921.
Ma is one casualty, but barely a day goes by without the authorities in China cracking down on companies or practices within the tech sector, be it illegal use of personal data or anti-competitive practices.
Other entrepreneurial sectors have felt a chill wind in recent years, especially property and energy, with numerous entrepreneurs either being jailed or agreeing to curtail their business.
Xi is old-fashioned in the way he harks back to Marxist-Leninism in a far more trenchant and dogmatic fashion than his immediate predecessors.
The Leninist organisational framework of the party has been strengthened under his leadership. So too has the Marxist notion that the party is both an instrument and vehicle of history for China to regain its place as a global superpower.
The two streams have coalesced neatly in the crackdown on the private sector and cleared the way for the campaign to force companies to have party committees inside their corporate structures.
The fact that the CCP has allowed billionaires to join its ranks has ironically facilitated their downfall. As party members, they are subject to party discipline, which means they can be detained at any time.
The bigger question is whether the hybrid economy that Xi is building, one in which the private sector is increasingly shadowed by the political apparatus, can thrive as it has in the past.
The old drivers of growth – urbanisation, heavy industry and infrastructure – are drying up. Without a vibrant private sector, the dangers of low growth rise and the legitimacy of the ruling party shrinks.
That’s not a happy thought for an anniversary.