No one doubts that Xi has fundamentally changed China in his first ten years in power, regardless of how they view him. Xi has already put in motion dynamics that will continue to deliver significant change in the years ahead. China is already very different from when Xi took over in 2012/2013. In the immediate post-Mao era, the CCP established a peaceful transition of power based on two-term limits and age limits. Under this system, power passed from Deng Xiaoping to Jiang Zemin to Hu Jintao to Xi. He broke with party tradition when he clinched a third term as the party’s General Secretary at the 20th Party Congress in October 2022, though the move was universally expected as Xi signaled his intentions in 2018 by abolishing the two-term limit for the party post of PRC Chairman - a title usually held by the state president. In 2022, Xi installed a new leadership team of (overwhelmingly male) cadres of proven personal loyalty and effectiveness at implementing his political agenda. The annual meeting of China’s largely ceremonial parliament in March 2023 approved Xi’s third term as president, clearing the way for his ambitious “New Era” agenda. As the “New Era” includes a fundamental reorganization of government institutions to further tighten the party’s control over all state organs, it is likely that China’s governance will look very different by the 21st Party congress in 2027.
Three trends that shaped China in Xi’s first and second term (Xi I and Xi II) will also be particularly relevant for China’s development in Xi III: Slower growth, external pressure and increased centralization of power.
China’s economic growth, the engine of its tremendous progress since the 1980s, is facing a long-expected slowdown as the easy gains of catch-up development fade. Growth from infrastructure construction and low-tech exports has run its course. But China has not yet made the shift to a more sustainable growth path built on better paid jobs, increased technological capabilities and less environmental damage. The challenges of this economic transition were anticipated long before Xi came to power. During his first term (Xi I), the effects became fully visible, but were relatively well controlled, as growth rates descended from the double-digit-era of the early 2000s to around 6 percent annually. In Xi’s second term (Xi II), growth volatility started to pose serious tests for stability. Although triggered by the Covid-19 crisis, they stemmed from many underlying factors – low productivity and high dependence on exports or government investment. In Xi’s third term, China’s socioeconomic challenges will carry the risk of significant crises, even by the party’s own assessments, which cite negative demographic trends, financial stress and external pressure.
The changing international environment is the second main trend seriously impacting China’s trajectory, in particular the rivalry between China and the United States. In 2013, Xi inherited a Sino-US relationship that, though stressed and competitive, was fairly stable. Relations deteriorated during Xi’s first term and longstanding conflicts moved to the forefront, beginning with tensions over US president Barack Obama’s “pivot to Asia” and the on-and-off volatile hostility during President Donald Trump’s tenure. Under the Biden presidency, the relationship has moved towards the more systemic competition and sustained confrontation. As Xi’s third term gets underway, both the United States and China are locking in their security, economic and technology policies with the determination to prevail in a long, fierce rivalry to be the world’s leading power.
The combination of slowing growth and a shifting, more volatile international environment is producing considerable socioeconomic stress.
Centralization of power
Xi has centralized power in a way not seen since – and in some ways exceeding – the era of Mao Zedong. The party frames its push towards centralization and control as a necessary and effective policy response to rising socioeconomic challenges. Strengthening the CCP with himself at the core, has also been a priority of Xi’s and one that he has fulfilled successfully. In effect, he put in place a system in which he wields so much authority that even China’s policy mistakes during the Covid 19 crisis were no serious challenge to his position, despite sparking rare public demonstrations of anger.
Although Xi and the CCP leadership have achieved their top priorities, even they concede that China has moved from a stressed, but rather stable country to one that is more unstable and less predictable in the ten years since 2013. The fact that “stability and control” are now key concepts of Xi’s agenda underscores what shaky ground the system is standing on. In an unstable environment, pathways can easily lead into other, more extreme scenarios.