Combination portrait of Chinese leader Xi Jinping and former leader Deng Xiaoping. Image: Facebook/Getty

American elites have woken up to Beijing’s threat to global US hegemony. Now questions about China and its institutions are on everyone’s mind. Will its economy continue to expand or will it stagnate? Exactly how communist is China anyway? How stable is the regime? In sum, where is China going?

To answer these vital questions, we must examine the origins of China’s current institutional and ideological structure, which was shaped primarily by Deng Xiaoping during his leadership of the country from about 1980 to 1992. Xi Jinping inherited this structure and has not fundamentally changed it.

The future of China will follow the tracks Deng set down, through a series of institutional reforms that enabled the country’s tremendous drive for growth. As the foundations of this reform decay, so will the growth, eventually leading China into stagnation unless another successful reform is undertaken, which neither Xi nor his successors appear capable of.

Deng had two key objectives in pursuing this growth: to ensure the survival of the communist regime and to improve China’s geopolitical position. He succeeded with honors on both counts, because he understood that achieving those two objectives required dealing with a key constraint: is it possible to open up trade without ceding power to the outside world? 

The political limits of trade

China’s history had shown that trade and subjugation can go hand in hand. Centuries earlier, the Ming dynasty broke trade agreements imposed by the Mongol leader Altan Khan, fearing that their gains would be outstripped by rising Mongol power. In doing so, they knew that a relative advantage is often more politically important than an absolute one. Deng knew this history well, and so his central concern was retaining sovereignty.

Scholars and decision makers today take the stability of the political system for granted and believe the market is more fundamental than other social infrastructure. In fact, the opposite is true. Societies need a large and very effective bureaucracy, either a military or a private one, to establish and maintain a market. If a government has to choose between growth and sustaining itself, it is perfectly happy to forgo growth altogether, as North Korea demonstrates today. 

Over the long run, a stable society also needs live players to repair the institutions that enable markets. Every garden needs a fence, but even with a fence weeds can grow. Similarly, the market doesn’t maintain itself. It doesn’t correct for violations of market norms, like dishonest advertising or sabotaging competitors. The market mechanism is also bad at removing government distortions of various kinds. The government game isn’t made obsolete by the markets game.

Deng’s refounding

As a student of contemporary capitalism, Deng closely observed Singapore’s development, which showed that a culturally Chinese society had the prerequisite social technologies to productively use markets. Second, he understood that with the right trade approach China could maintain sovereignty and keep out American political influences.

Third, he solved the problem of ideological legitimacy. How do you bring about market reforms in a communist state? In this effort, Deng was helped by Party disillusionment with the Maoist approach to development and politics.

Part of this disillusionment came from the failure of Mao Zedong’s economic policies, but it had a deeper source. Mao was a better revolutionary than governor. Once in power, problems caused by his poor governance led to deadly contests with rising rivals such as Peng Dehuai and Liu Shaoqi.

After winning the Chinese Civil War, Mao was swamped by court politics and the simultaneous responsibility for handling China’s massive internal problems. The only way he could return to uncontested power was to carry out another revolution. The Cultural Revolution was Mao’s second revolution, intended to return him to a dominant position.

This ploy ultimately failed. In the early 1970s, Mao had a falling-out with his chosen successor and key deputy for the Cultural Revolution, Lin Biao, who allegedly attempted a coup and died under suspicious circumstances in 1971.

Afterward, Mao retreated into paranoid isolation. By his 1972 meeting with Richard Nixon and Henry Kissinger, Mao was little more than a prisoner in a golden cage. He had also become very dismissive of his ideological thinking, telling his visitors, “Those writings of mine aren’t anything. There is nothing instructive in what I wrote.”

To Nixon’s protest that “the Chairman’s writings moved a nation and have changed the world,” Mao responded, “I haven’t been able to change it. I’ve only been able to change a few places in the vicinity of Beijing.” 

Deng saw the dysfunction in Josef Stalin’s and Mao’s regimes and concluded that the cult of personality was to blame. However, he didn’t pursue a policy similar to Nikita Khrushchev’s de-Stalinization, which he thought weakened the Soviet state. Rather than demonize Mao, he merely allowed the clear failures of the party to work in his favor, and made it clear that Mao’s misguided strategies would not be repeated.

Deng simultaneously refounded the Communist Party of China’s principles of succession. He proposed rotating leadership, so that the most ambitious party officials would have an opportunity to change the party’s dominant ideological and policy position. He also proposed a generational theory of government – that every generation should get a chance at the helm of the country. These changes lessened intra-party conflict, allowing the CPC to turn its energies towards expansion.

Xi’s China

Xi Jinping came of age during Deng’s reforms and witnessed the collapse of the Soviet Union. These two experiences profoundly shaped his world view. Xi is haunted by the collapse of the Soviet Union as much as Russian President Vladimir Putin, who called it “the greatest geopolitical catastrophe of the century.”

A similar fall from power would likely result in a potentially violent fragmentation of the country, hence Xi’s focus on preventing China’s peripheral provinces, like Tibet and Xinjiang, from breaking away. These are parts of the country with a low population and bad logistics, where it would be easy to supply weaponry. Xinjiang could easily become China’s Afghanistan. 

The New York Times recently published documents apparently showing that the oppressive policies in Xinjiang are in fact coming from the top down, rather than the bottom-up initiative of local administrators, and this is why – stability at any price. In fact, CPC officials sometimes object to these directives and are subject to disciplinary measures.

Xi is trying to circumvent normal controls established by Deng because he believes that, without such circumvention, ideological failure is inevitable, and it is this failure that represents the greatest threat to the CPC.

In a 2013 speech to China’s National Congress, he highlighted the Soviet Union’s failure to compete ideologically as the cause of its collapse. Key Soviet officials were ideologically demoralized. Without belief in Marxism, they were not motivated to sustain it actively, only passively. The machinery of state became brittle, first cracking rather than bending under strain. Xi blames Western intellectual subversion for this ideological failure. He is determined not to let China suffer the same fate.

Xi has suppressed any dissent from this interpretation, at the same time doubling down on improving Marxist education. One of the problems he faces is that, rather unsurprisingly, when young people study Marxism they tend to decide that they need to organize unions and fight the central government.

The ideology on which the Communist Party is built, when applied, gives a blueprint for local troublemaking and revolutionary activity. This is the fundamental problem of revolutionary ideologies. The methods to get you into government are not necessarily the methods that result in good government.

A future of stagnation

The continued success of China under Xi stems from his continuity with Deng and his deep appreciation for the country’s fragility. However, I see no evidence that the generation of leaders after Xi retains this knowledge or strong motivation, so I expect a succession failure

Xi has made the CPC more closed for people with his skill and ambition who might be concerned for the future of the party. There is less generational cycling and fewer opportunities to dissent from the center. It has become commonplace for rising or independent players, whether truly guilty or truly innocent, to be crushed through engineered corruption scandals.

Moreover, Xi has no known protege to be his successor. This means that after Xi leaves office the government either will be in bureaucratic autopilot or undergo a revolution.

It is also possible that a capable successor emerges as a surprise, as happened with Vladimir Putin’s ascent to the Russian presidency, but I think the former is far more likely. If so, about 20 years after Xi leaves office, China will enter a period of stagnation like that in the contemporary US, which will continue until the regime is sufficiently withered that a major reform is attempted.

Given China’s strict bureaucracy and high degree of technological sophistication, it may well take a century after Xi’s departure before a reform is possible. The contemporary US period of stagnation has lasted for about 50 years since the 1970s, with no clear end in sight.

America was a lot less bureaucratically and technologically sophisticated than modern China when it entered this period of stagnation. If a future reform fails it could, like Mikhail Gorbachev’s reforms, lead to state collapse.

Samo Burja is the founder of Bismarck Analysis, a consulting firm that investigates the political and institutional landscape of society. He is a research fellow at the Long Now Foundation and a senior research fellow in political science at the Foresight Institute. You can follow him on Twitter @samoburja.