Since China missed its GDP growth target for the second quarter this year, Western media have started predicting that China has entered an economic “doom loop.” Although Xi Jinping tries to mitigate the failure, he cannot seal the cracks. Xi’s China is entering a period of stagnation.
All of these assessments and predictions sound eerily familiar.
As early as 2001, an American scholar predicted that China would collapse within 10 years, by 2011. He later changed the predicted year of collapse to 2012. However, his prediction still did not come true. In 2020, one article from ABC News argued that the Chinese Communist Party (CCP) was at a fatal age for one-party regimes, as most Communist-ruled countries did not survive longer than 70 years, including the Soviet Union and the East European socialist states.
Indeed, China’s economy is decelerating due to deflation, a real estate crisis, weak exports, and high youth unemployment. The government’s shift from debt-fueled growth to quality growth has limited stimulus measures. Investors are losing confidence and pulling money out. However, some perspective is useful. The current situation of the Chinese economy is much better than it was during the Mao regime. An estimated 30 million Chinese people died of starvation between 1960 and 1962 as a result of natural disasters and governance failures. The Chinese economy was on the verge of collapse during the Cultural Revolution. Yet, Mao’s regime survived.
The market economy is the foundation of the capitalist economy and democratic political system. The economy is usually the top concern for most American voters. If the U.S. president cannot represent the majority of the people, she or he will be voted out of office. In contrast, the Mao regime’s legitimacy was based on the victory of the Communist revolution.
Today, Xi’s legitimacy relies not only on economic performance but also on political control by propaganda, coercive force, and pyramidal organization. Poor economic performance may damage Xi’s reputation but it does not fundamentally harm the political regime. Countless unpopular and half-down projects directed by Xi Jinping himself, including the zero-COVID campaign and the ghost city Xiongan, have not weakened his position as the supreme leader. Xi’s regime would not collapse unless the two support systems – economic and political – collapsed simultaneously.
Even looking purely at the economy, predictions of China’s imminent demise are overblown. Most economies go through a regular development cycle of prosperity, boom, and recession. In the post-Mao era, the Chinese economy took off in the early 1980s and began to decelerate in 2011. The U.S. sanctions and the emerging trend of global decoupling from China could further slow down the Chinese economy. However, it is also possible that these challenges could lead to a new economic breakthrough for China – and the start of another development cycle.
The Chinese economy is a so-called socialist market economy that is tightly controlled and managed by the party-state or “CCP Inc.” The CCP is able to use all of the country’s resources to develop its economy and prevent the economy and financial system from crashing. Meanwhile, there are few signs that the Chinese people are looking to rebel. Chinese cultural and political nationalism has run higher since the Trump administration launched its trade war with China. Such nationalism helps the CCP retain its power, as the party shifts responsibility for economic woes to the U.S. and Western societies.
The CCP is still powerful and influential, with more than 90 million party members and 88 million members of the Chinese Communist Youth League. It’s entirely plausible that if reform becomes necessary, the CCP could reform within the current political system. Historically, the party has been able to renew itself, which is why the CCP has survived into the 21st century. New technology including the internet, smartphones, and AI could help develop democracy and also enhance the CCP’s power to stabilize society. The CCP could cut off the internet to prevent massive public gatherings if it becomes necessary, as other countries have done.
Despite these realities, the United States has not abandoned its illusions about the CCP. After Mao died, the U.S. had high expectations for Deng Xiaoping, and then Jiang Zemin and Hu Jintao. However, these hopes were dashed as none of those leaders proved at all interested in true political reform. Similarly, many hoped that Xi Jinping would become China’s Gorbachev. Unexpectedly, Xi has returned China to the “red” era. Xi has denounced Gorbachev as a traitor who sold out his homeland and caused disaster for his people. Now, he backs Russia countering the U.S. and its allies. There is a simple truth here: All the top leaders of the CCP are fundamentally the same because they are produced by – and must represent the interests of – the party.
Without a doubt, a high percentage of Chinese people are losing faith in the Xi regime. However, the Chinese middle class are the greatest beneficiaries of the CCP’s policy, and they are not willing to turn against the party under current circumstances.
Practically speaking, there is no spark to trigger a massive movement. There have been a couple of large democratic movements under the communist regime, the April 5 Tiananmen Incident in 1976 and the June 4 Tiananmen Square Incident in 1989. They were triggered by the death of Premier Zhou Enlai and General Secretary of the CCP Hu Yaobang, respectively. Each was a beloved figure seen as representing the people’s interests.
There is speculation that the central government is preparing for the death of the former top leader of the CCP, Hu Jintao. Even if this happens in the near future, Hu is not inspiring enough for his death to spark a massive political movement against Xi’s regime. Moreover, after the 20th Party Congress, most other factions of the CCP’s high level leaders have been eliminated. The seven current members of the Politburo Standing Committee are all members of Xi Jinping’s inner circle. There is no one who is willing to turn against Xi or capable of replacing him.
Xi’s regime will not come to an end because of China’s faltering economic development. Overemphasizing the possibility of Xi Jinping’s downfall does not serve American national interests. Instead, it motivates the CCP to renew itself to compete with the United States, even as it could lead the United States to indulge in complacency and lose the opportunity to make another American century.