Is the Communist Party of China (CPC) witnessing a power shift? It is well known that President Xi Jinping exerts significant control on the governance and political frameworks. However, in the recent past, reports in the international media suggest a growing rift between Xi and Premier Li Keqiang, contributing to a policy dissonance.
The reports note that the Chinese official media are giving more space to the premier, and there is growing speculation that Li is taking control of economic policy.
For instance, at a mega-national teleconference with more than 100,000 participants, Li called on local authorities to “earnestly implement policies to stabilize the economy and support market entities, employment and people’s livelihoods.”
The 20th National Congress of the CPC will be held later this year, and it may herald leadership changes. Therefore, Li Keqiang’s recent moves are getting more attention from domestic and international observers.
While there is no hard rule, the Chinese premier is generally in charge of economic policy. However, President Xi has sidelined Premier Li.
For instance, in 2013, Xi “headed the Leading Group on Comprehensively Deepening Reform.” Similarly, in 2020, Li was not present at a symposium to discuss China’s 14th Five Year Plan, and Xi steered the conversations.
As a consequence of getting marginalized, the premier was never in a position to implement his economic philosophy fully, which is based on three pillars: “ending fiscal stimulus, deleveraging, and structural reforms.”
However, the dual challenges of resurgent outbreaks of Covid-19 and subsequent economic challenges have given space for Li Keqiang to regain control of economic policymaking.
Li has a short window in which to restore confidence in the economy, as he will retire this year after completing two full five-year terms as premier.
According to usual practices, Xi Jinping should also step down during the 20th Party Congress and hand over the baton to a successor. However, a constitutional amendment in 2018 eliminated term limits, opening the possibility for Xi to remain as president for additional terms. At the moment, there is no designated political heir or a visible challenger to Xi.
In his retirement message, Li noted that Xi would be at the core of the Party Central Committee, indicating that Xi may get a third term. If Xi Jinping gets one more term, it will herald a significant shift in Chinese politics.
However, in the run-up to the 20th Party Congress, there will be considerable power play and posturing for other offices between various factions in the party. The CPC is not a homogeneous entity and has many factions within it.
While the “Princelings” (such as Xi Jinping) and “Tuanpai” are the dominant factions, there are others such as the “Shanghai Gang” and “Tsinguha Clique.” Many Tuanpai members, including Li Keqiang and former president Hu Jintao, hail from the CPC’s Youth League.
If the economic crisis deepens, the subdued murmurs against Xi will gain greater momentum. Of course, Xi’s team may look for a scapegoat to carry the albatross of economic mismanagement.
However, given that was sidelined in a very visible manner, the possibility of making him carry the proverbial can of worms is limited. In fact, Li is better placed to impact the political process, and it appears that the premier is determined to achieve the following four political goals.
First, while Li cannot continue as premier because of term limits, he can still be a member of the Standing Committee of the Central Political Bureau of the CPC. As a Standing Committee member and with wide networks within the party, Li can impact policymaking despite not being the premier.
Second, an important objective for Li would be to appoint people to high offices to hasten the pace of reforming state-owned enterprises and create conditions to carry forward the structural reform. Significant economic muscle of the Princeling faction comes from control over the SOEs. So reforming those enterprises is also an attempt to alter the balance of power in domestic politics away from the Princeling faction.
Third, Li may get a fellow faction leader (such as Vice-Premier Hu Chunhua) appointed as premier, who can serve as a check and balance to the president’s office. Chunhua was earlier associated with the Youth League, and his appointment would reinforce the perception that Xi Jinping does not have complete control of the party.
Senior party leaders might be interested in such development as it would ensure a more equitable balance of power in the party leading to the return of a consensus-based leadership style. For the office of the premier, a few other names are also in contention, such as Wang Yang, former vice-premier (not a close associate of Xi Jinping) and Li Qiang, Communist Party chief of Shanghai (a confidant of Xi Jinping).
Fourth, if some of the above political objectives are not achieved, Li and his Tuanpai faction may seek to increase their presence in the Politburo and associated platforms.
In the next few months, the economy’s performance will have a significant bearing on the outcomes of the 20th National Congress of the CPC. If Xi eases pandemic-related lockdowns, then there is a possibility that there may be increased incidence of the Covid virus in the country. On the other hand, the continuation of severe lockdowns is negatively impacting the economy.
Either way, Xi’s credibility is getting dented. Therefore, he will have to make tough choices in the coming months.
To use terminology from the game of tennis, for now, it is “advantage Li Keqiang.” However, there are still many more points to be played before the winner takes the game.
To predict political outcomes in authoritarian countries such as China is a perilous enterprise as the rules of the game tend to change overnight. President Xi can tone up or tone down the rhetoric on various domestic and international issues to divert attention away from economic and pandemic challenges. He continues to have many leverages to define the trajectory of the country’s political process.
Given the opaqueness of the CPC, many intra-party conflicts will be difficult to decipher. External powers engaging China should be cognizant that the CPC is likely to witness political battles in the coming months.