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    Xi Jinping’s third term is a threat to China and the rest of the world

    November 2022

    Xi Jinping has been confirmed for a third term as general secretary of the Communist Party and head of the military. So, the question remains, “is his achievement of such unchallengeable power good for China or for the rest of the world?”

    In my opinion – clearly NOT. It is dangerous for both. It still would be dangerous even if he had proven himself a ruler of matchless competence. But in my opinion he has not done so. As it is, the risks are those of ossification at home and increasing friction abroad.

    Ten years in my opinion is always enough. Even a first – rate leader decays after that long in office. One with unchallengeable power tends to decay more quickly. Surrounded by people he has chosen and protective of the legacy he has created, the deepest will in my opinion become increasingly isolated and defensive, even paranoid. As a result reform halts. Decision- making slows. Foolish decisions go unchallenged and so remain unchanged. It’s a vicious cycle and Xi’s zero – COVID policy is in my opinion just one example. If one wishes to look outside China, one can see the madness induced by prolonged power in Putin’s Russia. In Mao Zedong, China has its own example. Indeed, Mao was why Deng Xiaoping a genius in my opinion of common sense, introduce the system of term limits Xi is now overthrowing.

    The advantage of democracies in my opinion is not that they necessarily choose wise and well-intentioned leaders – Donald Trump forms the perfect example. Too often they actually choose the opposite – in Italy from Draghi to Meloni. But these can be opposed without danger and dismissed without bloodshed. In personal despotisms, neither is possible. In institutionalized despotisms, dismissal is in my opinion conceivable. But it is and remains dangerous and the more dominant the leader, the more dangerous it becomes. It is in my opinion simply realistic to expect the next 10 years of Xi to be worse than the last with a high possibility of Xi’s China invading Taiwan.

    So how bad then was his first decade?

    In my opinion Xi Jinping has three main goals: personal dominance, revitalization of the Leninist party state; and expanding China’s global influence.

    He has in my opinion been triumphant on the first formally successful on the second; and had mixed success on the last. While China is today by no doubt a recognized superpower, it has also mobilized a powerful coalition of anxious adversaries.

    Notably, reforms that could undermine state-owned enterprises have been avoided. Stricter controls have also been imposed on famous Chinese businessmen, such as Jack Ma, the founder of Alibaba. So I really can’t see economic reform among Xi’s principal objectives.

    Above all, deep macroeconomic, microeconomic and environmental difficulties remain so far largely unaddressed. China’s economy in my opinion is unstable, unbalanced, uncoordinated and most importantly unsustainable. The fundamental macroeconomic problems are in my opinion excess savings, it’s concomitant, excess investment, and its corollary, growing mountains of unproductive debt. These three things go in my opinion together: one cannot be solved without solving the other two. Contrary to widely shared belief, the excess saving is only partly the result of a lack of a social safety net and consequent high household savings. It is as much because household disposable income is such a low share of national income, with much of the rest consisting of profits. The result is that national savings and investment are both above 40% of gross domestic product (GDP). If the investment were not that high, the economy would be in permanent slump. But, as growth potential has slowed, much of this investment has been in unproductive, debt-finance construction. that is a short-term remedy with the adverse long-term side effects of bad debt and falling return on investment. The real estate bubble in China has in my opinion ballooned to about 60 trillion US dollar. The solution to China’s slowing economy is not only to reduce household savings, but raise the household share in disposable incomes. Both threaten powerful vested interests and have not happened.

    The fundamental microeconomic problems have in my opinion been pervasive corruption, arbitrary intervention in private business and waste in the public sector. In addition, environmental policy, not least the country’s huge emissions of carbon dioxide, remains an enormous challenge. To his credit, Xi has at least recognized this issue.

    More recently, Xi has adopted the policy of keeping at bay a virus circulating freely on the rest of the world. China should instead have imported the best global vaccines and, after they were administered, reopened the country. This in my opinion would have been sensible and also would have indicated continued belief in openness and co-operation.

    But Xi’s program of renewed central control is not surprising. It was a natural reaction to the eroding impact of greater freedoms on a political structure that rests on power that is unaccountable, except upwards. Pervasive corruption was therefore the inevitable result. The price of trying to suppress it is risk aversion and ossification. It is hard to believe that a top-down organization and one man’s absolute control can rule an ever more sophisticated society of 1.4 billion people sanely, let alone effectively. Therefore it is not surprising either that China has become increasingly assertive. Western unwillingness to adjust to China’s rice is clearly a part of the problem. But so has been China’s open hostility to core values the west – among many others – hold dear. Many of us cannot take seriously China’s adherence to the Marxist political ideals that have demonstrably not succeeded in the long run. Yes, Deng’s brilliant eclecticism did work, at least while China was a developing country. But reimposition of the old Leninist orthodoxies on today’s highly complex China must be a dead end at best.

    At worst, as Xi stays indefinitely in office, it in my opinion could prove something even more dangerous than that, for China itself and the rest of the world.