Xi Jinping extends his control over China and develops a cult-like adoration

The fact China is our number one trading partner, accounting for 32 per cent of merchandise exports and 14 per cent of services last year, is only a fraction of the answer.

The larger point is that Xi has added a whole new element of risk into Chinese politics, the global economy and the geopolitical environment.

“China’s biggest risk … is not from economic failure, it is from its authoritarian political system,” says Australia’s former Ambassador to Beijing, Geoff Raby.

“Under President Xi Jinping, the system has become more authoritarian [and] much less accepting of modest degrees of freedom of expression.”

Raby outlined these concerns in a mid-February speech titled “Why I’m still an optimist on China” and argued while the country’s economic problems were manageable he was worried about the coalescing of thought around Xi.

He believes this will inevitably lead to less diversity of opinion in economic policy making and a situation where the politicians rather than technocrats have control of the agenda.

One example of this was the sharemarket rally of early 2015 and the government’s handling of its subsequent implosion, which began mid-year and returned for a second round in early January. It smacked of populism.

Initially the government, via the state media, encouraged small investors into the market, hoping to boost household wealth and the wider economy.

Then it was forced into a credibility-shredding bail-out when the bubble inevitably burst.

PROTECT SMALL INVESTORS

Bloomberg reported it was Xi himself, in a handwritten note scribbled on a report, who instructed officials to protect small and mid-sized investors when share values began to tumble.

What followed were unprecedented efforts to prop up the stock market, including bans on selling, trading halts for companies and mobilising state funds to buy falling stocks.

It was a complete failure and the benchmark index is down nearly 20 per cent from July when the government began its bail-out.

Similarly, Beijing mishandled the introduction of a new and more market-based system for setting its exchange rate last August. By coupling the announcement with a surprise devaluation, traders assumed the move was about depreciating the currency and started selling. China’s central bank was forced to tap into its foreign reserves to prop up the yuan and now international investors doubt Beijing’s commitment to a market-driven exchange rate.

And so at a time when China needs its famed technocrats more than ever, there are questions over whether Xi’s domination will lead to stagnation, as protection of the Communist Party and Xi’s personal standing over-rides reform.

“The irony of Xi successfully concentrating power on himself is that he can no longer blame others for the declining economy, disturbing foreign policy and the handicapped or zero economic and political reform,” says Warren Sun, an expert on elite Chinese politics at Melbourne’s Monash University.

Sun goes even further and describes Xi as China’s Leonid Brezhnev, the former Soviet leader under whom, in the absence of reform, the economy stagnated. What’s at risk in China is the wave of reform unleased by one time leader, Deng Xiaoping.

“After his three year rule, despite the rhetoric of carrying on Deng Xiaoping’s line, much of the market reform programs have stalled. The political habitat and environment for Chinese intellectuals has turned out to be the worst in the whole post-Mao era.”

TRADE REDUCTION IN STATE CONTROL?

To the economist Arthur Kroeber, the founder of Gavekal Dragonomics and a non-resident fellow at the Brookings-Tsinghua Centre, the question is whether Xi will be willing to trade some reduction in state control for greater economic efficiency or if he’s simply solidifying the party’s authority at all costs.

“He has launched significant economic reforms … but progress on most reforms has been slow and critics argue that even if they are completed they will do little to reduce state power and boost economic dynamism,” wrote Kroeber in his just released book China’s Economy; What everyone needs to know.

To understand how Xi has remade China’s political landscape since becoming the country’s top leader in November 2012, its worth examining the new titles created for himself.

As well as being head of the Communist Party, commander in chief of the armed forces and head of state, Xi is in charge of six so-called “leading small groups”. None of which existed prior to his ascension.

They sit under the party, rather than the state, and capture all the main areas of policy, including reform, the economy, domestic security, foreign affairs, Taiwan, the internet and media.

“He has set up all of these groups but he is not running them well,” says Zhang Lifan, an independent historian and political commentator.

“The two reasons for him to centralise power is to consolidate the leadership of the Communist party and strengthen his position within the party. However, he has amassed too much power, making it difficult to exercise.”

This has led to charges that Xi’s power, coupled with his anti-corruption campaign, has ossified China’s state-owned sector and provincial governments, denting growth as officials and executives second-guess the wishes of their leader.

Such a theory is difficult to prove, other than to note the repeated denials from party officials via the state media.

Regardless of the economic impact, Xi’s power play has certainly raised the political temperature.

DANGEROUS

According to the historian Zhang, Xi is in a “dangerous situation”.

“He has gone against the interests of the three main factions within the party,” he says.

Those put off side include the “Shanghai Gang” led by former President Jiang Zemin and Xi’s own power base, the “Princelings”, so named as their parents fought alongside Mao during the civil war.

Both have been hit by the anti-corruption campaign, according to Zhang while the party’s other faction the Youth League, is angry at the sidelining of its highest-ranking official, Premier Li Keqiang.

“The anti-corruption campaign did help him [Xi] to win the hearts of the public but it lost him support within the party and endangered his position,” says Zhang.

“The reason Xi is centralising power is because of a sense of insecurity. He wants everyone to be afraid of him.”

Such a loss of support within the party might partly explain why Xi has sought to bolster his popularity outside it, as he seeks to solidify his leadership and create his own political legitimacy.

In doing so he has scrapped a convention that no single leader is above the party.

That safeguard was put in place after the madness of Mao, whose unchallenged power led to famine during the Great Leap Forward and chaos during the Cultural Revolution.

“Xi is becoming more and more like Mao,” says the dissident author Yu Jie, who has written extensively on the party under Xi.

“He is very different from former leaders Deng Xiaoping, Jiang Zemin or Hu Jintao.”

Yu notes when Xi travelled to London last year, the assembled rent-a-crowd on the footpath was not only waiving Chinese flags but holding up photos of Xi as well. “It was a type of personal worship which didn’t happen during official visits by previous leaders,” says Yu.

For its part the state media has been mostly compliant with the changed environment.

In December last year, the People’s Daily famously featured Xi in 12 separate front-page headlines in a single edition.

Still, there have been some signs of opposition, particularly after Xi led a controversial media tour in February during which he call on state-media outlets to reflect the party’s views and protect its authority.

One editor was sacked for appearing to criticise Xi’s media policy through the clever placement of headlines. And another publication posted an open letter, signed by a group of “loyal party members” calling for Xi’s immediate resignation. Any reference to the letter has since been blocked from web sites inside China.

CRACKDOWN

However, the cult of Xi propaganda assault is far broader than anything created by state media.

The premier’s campaign ranges from internet cartoons explaining his corruption crackdown, love of soccer and overseas visits, to posters, badges and songs aggrandising Xi. Often these draw a less than subtle parallel between Xi and Mao.

During this year’s Spring Festival, calendars featuring the two leaders were hanging side by side in open air markets across the country. Families looking for a decoration to brighten their apartments could also buy posters of Xi and his wife Peng Liyuan, a glamorous former singer for the People’s Liberation Army.

This is a significant departure from the practice of his two predecessors.

Neither Hu nor Jiang sought such personal profile, preferring to present a cold, often unsmiling image to the world. Both also strictly adhered to the convention that no one leader was above the Party and therefore resisted any urge to practice retail politics.

Xi has done the exact opposite.

“Papa Xi – like Mao before him – is now to be emulated in all facets of life,” says Jonathan S. Landreth, the editor of the Asia Society’s China File blog.

Even in marriage it seems.

“If you want to marry, marry someone like Xi Dada,” goes the title of a new song.

It has gone viral in China, with the tacit endorsement of propaganda officials, and is even accompanied by online videos instructing people how to correctly dance to the tune.

This has invoked comparisons to the “loyalty dances” performed for Moa.

The song says Xi is “a man full of heroism with an unyielding spirit” who is “decisive in act and serious in work”.

Such a focus on China’s top leader has relegated the six other members of the Politburo Standing Committee, the country’s top leadership body, to minor parts in Xi’s drama.

Within this, the biggest casualty has been the technocratic Premier, Li Keqiang, who is a much diminished figure after Xi took control of the economy and did away with the collective leadership model.

This speaks to Raby’s point about the growing singularity of thought in China – not just within the Party but via the crushing of public intellectuals and academics who no longer have a platform to express alternative views.

“Social media is increasingly monitored and bloggers who attract big followings, who may be social commentators or worse, critics of the state, are intimidated into silence or obscurity,” says Raby.

For Kroeber the issue is that with tighter political control, the opportunity for China to maintain high levels of growth, via reform, is threatened.

Despite promising signs early on in Xi’s presidency the government would tackle the dominance of the state-owned enterprises by improving management and encouraging mixed ownership, little progress has been made. Meanwhile, the number of state-owned firms continues to grow from 110,000 in 2008 to 160,000 in 2014.

“There is growing concern that Xi has tipped the scales in favour of political control, at the expense of economic growth,” he says.

But while foreign critics are lining up to warn about the cult of Xi, the riches on offer in China mean plenty of outsiders have also joined the chorus of adulation.

Among them is the founder and chief executive of Facebook, Mark Zuckerberg, whose social media company is banned in China.

He’s lobbying hard to change this and has been suitably laudatory about Xi’s book, The Governance of China.

“I’ve bought copies of this book for my colleagues as well. I want them to understand socialism with Chinese characteristics,” he wrote in a review published on Amazon.