China’s President oversees major shifts

Stratfor Global Intelligence

Geopolitics tells us that the narrower the time frame, the more significant individuals become. Impersonal forces may shape the broadest strokes of a nation’s history, but it is up to people to realize those forces, wittingly or not, in the here and now. It is a paradox of geopolitics that the patterns and structures apparent only in 50- or 100-year increments work themselves out yearly, monthly and even daily through the actions of individuals. The challenge for the analyst is to correctly identify the nature of these actions and their immediate context; to accurately assess their place in the wider narrative arc of a given country; and to not mistake insignificance for significance, or vice versa.

The upcoming year will be a fertile one for thoughts of this sort with regard to China and its president, Xi Jinping. In the nine months since he took office in March 2013, Xi has managed to amass a larger portfolio than any Chinese ruler since Deng Xiaoping — the last true “paramount leader,” who launched China on the path to “Reform and Opening” in 1978 and who died in 1997. Deng’s ascent signified the start of a new cycle in Chinese politics, economy and society, one that Deng himself catalyzed and partly oversaw. Does Xi’s rise, arriving just as the model put in place by Deng reaches its limit, point to a similar sea change in Chinese politics?

Judging by the tone of international media coverage of Xi in recent days and weeks, it might. To be clear, Xi is not yet Deng. His consolidation of power remains, by and large, on the level of public discourse more than of meaningful actions with specific, lasting consequences. Only time will tell whether and to what extent Xi’s consolidation manifests in real, concrete changes to China’s behavior and model of governance -- namely, in a shift from the consensus-based decision-making structure that undergirded China’s economic rise in the 1990s and 2000s to one centered more firmly on the president himself. Indeed, the obstacles to such a shift are enormous.

Nonetheless, there is a growing perception -- partly real and partly imagined — that Xi is different from his predecessors, and that his difference reflects not only the man himself, but more important, a new juncture in the country’s politics and a realignment of its political structure. Stratfor has written before that the consensus-based model of governance that corresponded to the post-1992 economic growth cycle would not suffice to guide China stably in the difficult decades following the 2008-2009 global financial crisis ­— decades that would be defined by economic slowdown and restructuring, demographic change, growing energy insecurity and other challenges. Now we must consider whether a new model is emerging to meet these challenges.

Already, Xi swiftly took control of the country’s political and military affairs, the core duties of the presidency since Jiang Zemin took office in 1993. He has created a new National Security Council, which like its US counterpart will seek to integrate and streamline control over both domestic and international security under himself and his closest advisers. He has simultaneously launched a far-reaching anti-corruption campaign that has notably ensnared two critical pillars of Communist Party power: the state-enterprise sector and the police force. Gaining firm control of both, in part by sidelining potential rival power bases (such as that of former security czar Zhou Yongkang, will be critical to maintaining social and economic stability in the years ahead and for cementing Xi’s influence within the Party.

Perhaps most striking, however, is that Xi also appears to be establishing himself as the country’s leading force in the realm of economic reform. In the month since November’s Third Plenary Session -- at which the Chinese government outlined its roadmap for social, political and economic reforms in the coming decade — Xi has made clear that he, not Premier Li Keqiang, will be the public face of and driving force behind the country’s economic transformation.

If true, this represents a substantial break from precedent. For 20 years, management and reform of the economy have fallen under the premier, not the president. It was Zhu Rongji, not Jiang Zemin, who carried out sweeping reforms of China’s state sector in the late 1990s and paved the way for Chinese accession to the World Trade Organization in 2001. It was Wen Jiabao, not Hu Jintao, who oversaw China’s response to the 2008-2009 global financial crisis. Now, if the message of November’s Third Plenum is borne out, the day-to-day management of economic affairs may be split from the design and implementation of key reforms. The former duty would remain with the premier and the latter would shift — under the broader rubric of an integrated social, political and economic reform platform — to the president. Stratfor has identified the three pillars of geopolitical power as politics, military and economics. As he enters his second of 10 years in power, Xi looks to be grasping for control of all three.

The question now is whether Xi’s efforts to bolster his position portend more profound changes to China’s political system in the coming months and years. The ingredients for such a shift are there, not only in terms of the Chinese and international public’s evolving perception of Xi and his personal ambitions and abilities, but also in terms of China’s broader situation today. China’s economic slowdown has exposed profound fissures in its model of governance, discrepancies that are apparent in everything from rampant corruption and environmental degradation to severe overcapacity in key industries like real estate and steel. These imbalances are not coincidental, but rather are hardwired into China’s current political structure. Eliminating these imbalances, it follows, will require reforming that structure.

In the past, Stratfor has argued that China would undergo a profound and destructive transformation sometime during this decade. The question is not whether China will be transformed -- in many ways, that transformation is already underway and has been since 2008-2009. This is the stuff of impersonal forces, not individuals and their actions. But how that transformation plays out, what is destroyed, and what emerges to replace it is, to some extent, another matter. We remain skeptical that Xi or any leader can effectively and stably guide China, and more pointedly the Communist Party, through this transformation without first sustaining considerable, perhaps debilitating and irrevocable, shocks to the existing system’s legitimacy. But for now, we note the first tentative signs of a confluence between China’s structural situation and needs and the early actions of its new leader.