For Chinese leader Xi Jinping, it's all about the Communist Party

For three years President Xi's priority has been to restore the heart and soul of China's ruling party. Is that goal now causing harm to its economy? 

Three years ago this week, freshly installed as the dynamic new leader of China’s ruling Communist Party, Xi Jinping made a speech that caused people to sit up and take notice.

His point – that the Constitution is the foundation of lawful rule – would not cause a stir in most countries. But China's Constitution has largely been ignored for decades.

So was this new leader about to take seriously the guarantees of freedom in the national charter, which was revised in 1982?

Was Mr. Xi, soon to become president, actually revealing himself to be a Western-style "reformer"?

Well, no.

Xi has in the past 36 months changed much about how China is ruled. But his policies have not forged the liberal, free market, more open-minded path that outside observers call "reformist."

On the political front Xi has taken the opposite tack. Authorities have stamped down all signs of public criticism with renewed vigor. The official media has adopted a more chauvinistic tone. The Communist party has put new powers in the hands of its top leader.

And on the economic front, where market forces were assigned “a decisive role” by a policy blueprint two years ago, progress towards the sort of liberalization that the government claims to espouse is uneven.

“Reforms to enhance productivity don’t seem to have got much traction…because that is not where Xi’s priorities are,” says Arthur Kroeber, head of GaveKal Dragonomics, an economic research firm in Beijing. “His priorities are ensuring that the party is in the driver’s seat with regard to everything, and maximizing his own power in the party.”

War on corruption or political purge? 

If all goes according to plan, and Xi is re-elected at the next party congress in 2017, as expected, Xi will be in power until 2022. So far his defining policy has been a sweeping anti-corruption campaign that has ensnared tens of thousands of party officials, from lowly village councilmen to the former head of China’s security forces, Zhou Yongkang and China’s top soldier, Gen. Xu Caihou.

The campaign, says Sidney Rittenberg, the first American to join the Chinese Communist party and who retains close contacts among the leadership, is aimed at “purifying the party, to win back lost prestige among the people, to make the party shine again.”

Though the campaign shows some signs of being a political purge – none of Xi’s allies have been caught up in it – that is not its primary purpose, says Zhang Jian, a professor at Peking University’s School of Governance. “Xi saw the party as corrupt, in decline and losing its spirit and soul,” he says. “His ambition is to revitalize it.”

That is a Herculean task, given the extent of corruption and the influence of the campaign’s privileged targets, says Huang Jing, an expert on the Chinese leadership at the National University of Singapore. “To push through this struggle, Xi has no choice but to centralize power in his own hands,” he says in sympathy.

'Chairman of Everything'

Since taking power Xi has parlayed his ebullient and forceful personality into a position of unmatched strength. He arranged to sweep aside nearly two decades of the ruling collective leadership model where power was shared at the top, and made himself “Chairman of Everything,” as Geremie Barmé, a prominent Australian Sinologist, puts it, only half jokingly.

Xi is not only head of state and head of the ruling party. He also heads seven “small leading groups” set up by the party, dealing with key matters ranging from economic reform to foreign affairs to cyberspace. They outrank government ministries and form a series of kitchen cabinets.

Importantly, Xi also heads the military, which is a branch of the Communist party, not of the state. Last week he announced military reforms that clearly illustrate the motives behind his approach: They were designed, he said, to ensure that the party “has absolute leadership of the armed forces.”

Party discipline is being enforced with new rigor on civilians too. A handbook of regulations issued last month to the party’s 80 million members threatened any of them practicing “improper discussion” of the leadership’s policies with expulsion.

Two weeks ago the chief editor of the party newspaper in Xinjiang, the predominantly Uighur province bordering central Asia, became the first prominent victim of the rule.

A squeeze on civil society

Civil society as a whole has fallen victim to Xi’s fears of unfettered criticism. The tone was set two years ago in a leaked Central Committee circular known as Document No. 9 warning that “advocates of civil society want to squeeze the party out of leadership…to the point that their advocacy is becoming a serious form of political opposition.”

Since Xi took office, citizens have been imprisoned for demanding freedom of expression, non-governmental organizations’ work has been circumscribed, human rights lawyers have been rounded up and every hint of dissent is punished.

Some senior party officials, says Mr. Rittenberg, hope that “once Xi has made substantial progress on economic reform he will loosen up” on the political front. Xi would then be less worried that criticism might derail his economic plans, in this view. 

That, scoffs Scott Kennedy, a China analyst at the Center for Strategic and International Studies in Washington, “is like waiting for Godot.” Aside from anything else, he argues, economic reform has been moving sluggishly under Xi.

Interest rates and the currency exchange rate have been liberalized, but all the country’s banks remain state-owned. Prices for utilities and oil have been freed up, but the state still holds the most commanding heights of the economy and “they are not trying to sell off the state owned enterprises, just make them stronger,” says Mr. Kennedy.

Xi has presided over a continuing shift away from exports and investment as key drivers of economic growth, and towards consumption. His ambition to modernize the Chinese economy has borne some fruit; services now account for more than half the economy.

But economic growth is faltering, and Xi has a lot to do with that. His anti-corruption campaign has scared government officials high and low across the country. Fearful of doing something that might be construed as extravagant, they are sitting on their hands rather than approving projects.

“Xi is sacrificing growth for a policy he thinks will help keep the party in power,” says Kennedy. “That is the new normal.”