What does it mean for US-China Relations?
By: Dylan Shepard
Many in the West think of politics in China as a monolithic institution controlled top-down by Xi Jinping. After numerous reports of the growing consolidation of power away from the larger CCP bureaucracy and into Xi Jinping’s inner circle, this view has become only more entrenched. Traditionally, however, there had always been a vibrant factionalism within the Chinese Communist Party dating all the way back to the end of the Mao era. Following Mao’s death, there was famously a great power struggle between those loyal to Maoist doctrine, namely the Gang of Four, and the reformists including Deng Xiaoping, Zhao Ziyang, and Hu Yaobang. Since Deng instituted presidential term limits in 1982, Chinese politics has been dominated by a complex power sharing agreement between an elitist faction headed by Jiang Zemin and a populist clique led by his successor, Hu Jintao. The conventional understanding of Chinese politics for decades has been that once a presidential term limit is completed, power is exchanged between the two sides and the faction outside of power is given the presidency. Today, however, the centralization of power under Xi Jinping during his second term has thrown into question the entire existence of the factionalist system and has made it increasingly difficult for the US to find good working partners within the Chinese state.
The Elitists
The elitists, which have sometimes also been called the princelings or the Shanghai Gang, primarily reflect the interests of wealthy Chinese living on the eastern coast. The term princeling is used to describe the dynamic that many CCP politicians that are part of the elitist faction are the direct descendants of high ranking CCP officials from the first and second generation of Chinese communist leadership. According to the conventional understanding of Chinese politics outlined in Cheng Li’s often cited 2016 book, Chinese Politics In The Xi Era, Xi Jinping should also fall under this elitist categorization. After all, Xi was the son of Xi Zhongxun, an influential member of the Central Committee of the Communist Party (CCCPC) and later a vice-premier to Zhou Enlai during the Mao era. That being said, Xi has drifted heavily from his seemingly elitist roots since becoming president. He no longer reflects the views of the elitist faction orthodoxy as set by Jiang Zemin starting in the mid-80s to early 2000s.
During Deng Xiaoping’s foray into early market liberalization in the 80s, a number of Chinese cities were designated as special economic zones (SEZs) that were allowed to deviate from the closed economy seen elsewhere in China. It was in these cities, especially in Shanghai which became the pearl of Deng’s model of “Four Modernizations” (四个现代化), that the elitist faction began to form specifically around the figurehead of Jiang Zemin. As Mayor and later Party Secretary for Shanghai, Jiang Zemin became known as one of the early embracers of Deng’s market reforms by promoting international trade and providing conditions to attract more foreign direct investment in the city. After Jiang was promoted and later elevated to the Presidency in 1993, he applied the Shanghai model to the national level—launching his mass privatization campaign in 1997 and lobbying extensively for China’s admission into the World Trade Organization, which he later achieved during his second term in 2001. Today, elitists seek to continue the rapid economic growth concentrated mainly in China’s coastal cities by pursuing market friendly policies and strengthening the Chinese currency to perhaps eventually unseat the United States as the primary reserve currency around the world. Although Xi Jinping was once considered to be a member of the elitist faction, the growing rift between him and Jiang Zemin along with his increasingly protectionist and socialist policies have resulted in the traditional elitists having a diminished role in the Chinese Standing Committee.
The Populists
The second major faction in the Chinese Communist Party is comprised of the populists, also known as the Tuanpai (团派) or Youth League Faction, which largely represent the interests of the more rural and interior Chinese provinces. The name itself comes from the fact that many of its members had been trained and raised in the Chinese Communist Youth League education system from a young age. Most of the populist members of the CCP were those born from poorer backgrounds and spent most of their professional career administrating some of the more impoverished areas in the Chinese heartland. Hu Jintao, the figurehead of the populist faction, spent most of his career (before his appointment to the politburo) working in provincial positions in Gansu, Guizhou, and Tibet—which today represent three out of the four poorest administrative divisions in China by disposable income per capita.
The primary goal for the populists is to make sure that the benefits of China’s economic boom seen on the coast are shared with the poor and those living in interior China. In terms of national policy, according to Cheng Li, their concern is “... eliminating the agricultural tax on farmers, supporting more lenient policies toward migrant workers, economically prioritizing inland cities to allow them to “catch up,” establishing basic health care, and promoting affordable housing projects” (279). During the Hu administration, his so-called “New Deal” sought to revitalize the Chinese interior and protect the poor by bolstering the strength of the Chinese welfare system and initiating large infrastructure projects to bring jobs to many provinces seemingly left out of the growth seen during the Jiang era. After Hu’s replacement with Xi, however, the faction itself appeared to have only one appointed member in the 18th National Party Congress’ (NPC) Standing Committee, and since then has been largely sidelined by the Xi administration.
The US Outlook on Chinese Factional Politics
Before the rise of Xi Jinping and the uplifting of the traditional factional system, the United States had a clear preference for the elitist clique of Chinese politics. Ever since the formalization of relations between the PRC and the United States during the Nixon administration, the prevailing strategy of the US government has been to integrate China into many of the international political and economic institutions, in the hope that it would eventually embrace liberal reforms. This corresponds greatly with the then emerging neoliberal philosophy in the 80s and 90s that linked the adoption of market liberalization with a more educated and interconnected population that would then inevitably desire more representation and rights from the national government. With America’s goal of integration in mind, it can be understood why Jiang’s policies of continued market liberalization and joining the WTO were considered more favorable by Washington at the time. Hu’s administration, on the other hand, provided more of a challenge to Western goals. Under his leadership the government focused on increasing the legitimacy and stability of the Communist Party instead of further reforming China both politically and economically. After all, Hu broke with Deng’s mantra of “let some people get rich first,” which implied that the enrichment of the growing elite on the coast could come before the growth of China’s poorest interior provinces. It is certainly true that Deng’s policies were not reversed under Hu and that he allowed the continued prosperity of the coastal cities, but he recognized critically that the future stability of the Communist Party rested on delivering results for poorer Chinese that had previously been largely ignored by Jiang and Deng. To address this, Hu broadened the appeal and stability of the party by increasing social safety nets and improving job prospects in interior China while largely prodding along towards the path of market liberalization, although not nearly to the degree desired by the United States or at the speed of his predecessors. The Americans, naturally, cared very little about the domestic popularity of the CCP which potentially undermined the United States’ long term strategic goal of transitioning China more towards accepting democratic reforms. This, paired with Hu’s reluctance to add to the reforms of Deng and Jiang, gave way to the consensus in Washington that the elitists were better partners to do business with. Thus, given the known tradition of giving way to the opposing faction after a presidential term, many in the US keenly observed the proceedings of the 18th National Party Congress back in 2012 which would reveal the next generation of Chinese leadership after Hu Jintao.
The Rise of the “Xi-Gang”
Initially, when it was revealed in 2012 that China’s next paramount leader was supposedly a princeling and a former Party Secretary of Shanghai with close links to Jiang, many in the Western media rejoiced in the seeming inevitability that China was finally going to return to the period of mass liberalization and reform. It was even more encouraging when it was discovered that Xi’s family had been one that was persecuted by Mao during the Cultural Revolution, further giving credence to the idea that Xi was more of a democrat and a reformer. Reflecting on these comments only eight years later, it is difficult to imagine that such a perception once existed.
Under Xi Jinping, the old power sharing system between the elitists and the populists has been largely uprooted. Xi himself has become his own figurehead of a new faction, one that does not correspond perfectly with either the traditional Hu-aligned or Jiang-aligned clans. The Standing Committee for Xi’s first term was dominated by princelings and elitists, which gave the impression in the West that Xi Jinping would be a continuation of Jiang policy. Although Jiang Zemin was one of the two principal patrons for Xi’s ascension to the presidency, upon taking office there has been a growing rift between Xi and Jiang that has resulted in a national policy that looks nothing like Jiang’s Shanghai model of economic liberalization (Li 256). While Jiang Zemin helped cultivate China’s burgeoning private sector by allowing for increased competition under his “Three Represents” (三个代表) policy which sought to “... unleash the vigor of the private sector,” Xi Jinping has only clamped down on private business by introducing anti-competitive laws like the new restriction of gaming on children which saw Tencent’s Hong Kong shares fall nearly 9% in one day. Xi Jinping also oversaw the temporary disappearance of Jack Ma, once considered China’s national star and symbol of recent economic rejuvenation, over a minor critique of China’s economic policy—a reminder from Xi to Chinese business leaders that they can never be bigger than the central government. Instead of adopting Jiang’s model, under Xi Jinping state-run companies have increased their role and influence in the Chinese economy much to the detriment of China’s private sector. He also in a meeting with senior officials in January stressed “... the importance of spreading wealth more evenly among China’s 1.4 billion people, a socialist objective of early party leaders”—something that directly contradicts the Jiang-Deng policy of focusing on the coasts.
Xi’s recent policy of restraining China’s uber-rich sits more in line with Hu’s populist faction than with the elites, though Xi Jinping is definitely not a populist in the traditional sense like Hu. Although Xi’s “Chinese Dream” (中国梦) campaign has undoubtedly unleashed a torrent of populist and nationalistic sentiment in projecting greater strength on the world stage, he has done very little so-far in improving China’s abysmal social services and welfare state that was prioritized greatly by Hu’s populists. Instead, the government’s primary focus can be seen in the rapid increase of China’s military budget, which has practically doubled since he took office in 2013. It was only the challenge provided by the pandemic that the Chinese government was forced to rapidly increase their public health spending by a staggering 15% in 2020. In the countryside and rural areas, which was much of the focus of the Hu administration, healthcare under Xi remains incredibly backwards and vastly inferior compared to China’s urban areas and coastal provinces. In Inner Mongolia, for example, it was discovered that 61% of healthcare professionals still did not use gloves while 40% did not even wash their hands—a factor that may have contributed to the early spread of Covid-19 in China. This in large part can be attributed to Xi’s failure to fully reform the Chinese Hukou (户口) system, something he promised to do upon taking power but so-far has failed to deliver, much to the disappointment of China’s interior provinces. The Hukou system is a household registration scheme that allocates access to healthcare, benefits, and social services based on one’s area of birth and family residence. In practice, it is an extremely unequal system that provides a greatly different quality of service depending if one lives in wealthy Shanghai or deeply impoverished Gansu. Despite this, however, poorer interior Chinese cannot simply move on their own volition to the rich coastal cities in order to take advantage of the increased benefits and job opportunities. As explained well by Ankit Panka, regular contributor to The Diplomat, under Hukou “... Chinese rural citizens wishing to seek greater fortunes in the country’s generally more prosperous cities had to either wait for a permit that would let them move to a city and use public resources or remain content to live as second-class citizens, without access to state-run social services.” Back in 2014, the government launched a minor reform plan that created a new registration system "that does not distinguish between 'agricultural' and 'non-agricultural' [households],” opting instead to classify residents based on their point of origin. This adjustment marginally increased the cap of immigrants given permits to move into urban areas, however, this virtual semantic name change does little to improve the reality on the ground. A small minority are set to benefit from being given permission to move eastward, while those stuck in the subpar healthcare services of the interior provinces have to wait for either more government investment or more reforms to the Hukou system that thus far have remained elusive.
On top of rejecting populist policy prescriptions, Xi Jinping has also sidelined traditional Hu allies in the Standing Committee. Li Keqiang, current Premier of China and de-facto leader of the populists after Hu, although technically holding the second most powerful position in China, has been largely shut out of his principal designated area of focus—the economy. Instead, Xi Jinping appointed himself as head of the Leading Group on Comprehensively Deepening Reform, a government task force that deals with managing the economy, which largely takes Li Keqiang out of the decision making process. Last year, he was also appointed by Xi Jinping to head the government’s response to Covid-19 in a move to seemingly designate Li as the “fall guy” for China’s mishandling of the pandemic. Thus, although Xi Jinping may frame himself as a man of the people, he certainly deviates greatly from the precedent of the populist clique by rejecting their policies and sidelining its members.
America’s Dilemma: The Principal Issue Posed By The Rise of The “Xi-Gang”
In 1984, when Margaret Thatcher met Mikhail Gorbachev at Chequers, then only a senior member of the Soviet politburo, she famously reported back to Ronald Reagan and told the BBC later that year, “I like Mr. Gorbachev, we can do business together.” It was coming at a time when diplomatic inroads into the USSR had largely frozen over since relations had broken down in the late 70s, with tensions between the West and East at their worst in more than a decade. Although likely unknown at the time, it was that initial trust put into Gorbachev by Thatcher that helped facilitate the positive working relationship and eventual détente between Washington and Moscow that later culminated in the peaceful conclusion of the Cold War.
In 2021, Washington desperately wants to find working partners in Beijing so that productive negotiations can resume between the two nations. The primary challenge to this, similar to finding partners in communist Russia, has been the opaqueness of the Chinese system and the difficulty of finding reliable actors within the Chinese Communist Party. As a result of Xi Jinping’s overthrow of the traditional factions of the CCP, this lack of clarity has only worsened, completely destroying the United States’ understanding of domestic Chinese politics and ruining Washington’s aim of empowering elitists to further the liberalization of China. On its own, Xi’s new faction is neither elitist nor populist aligned, but rather an entirely new clique that seeks to establish China as the preeminent power on the world stage. Thus far, Sino-US relations have taken a nosedive under Xi yet it remains unclear if détente will be possible down the line. Will the United States have to wait out Xi for a more agreeable leader to do business with, much like how Reagan and Thatcher waited out the Soviet old-guard like Brezhnev and Chernenko for a reformer like Gorbachev? Given the abolishment of presidential term limits and the destruction of the old power sharing consensus between the populists and elitists, the West may have to get used to both Xi Jinping and future disciples of the “Xi Gang” for many years to come. Regardless of what happens at the 20th National Party Congress in 2022, the coming decades are set to be critical in determining the fate of Washington and Beijing’s increasingly strained relationship. The outcome of whether the current US-China conflict becomes another triumph of détente or another example of the Thucydides Trap is of prime importance to all China watchers and foreign policy practitioners. In order to avoid a horrific modern war with no possible limit on the scale of destruction, it is necessary for the United States to find new inroads into Chinese politics and deal with the new reality posed by the rise of the “Xi Gang.”
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