Xi Jinping’s victory lap looks a little premature

The Communist Party’s historical resolution that smooths the way for Xi Jinping to rule indefinitely doesn’t shrink from bestowing greatness on China’s leader. That notably includes giving him credit for successfully completing an economic transition that has far from run its course.
China’s development “has become much more balanced, coordinated, and sustainable,” says the communique released by the official Xinhua news agency. The economy “is now on a path of higher-quality development that is more efficient, equitable, sustainable, and secure.” It doesn’t look that way. China’s economic growth is weakening and credit markets are in turmoil, buffeted by widening contagion resulting from the financial pressure on China Evergrande Group and other developers. These stresses are themselves the product of efforts by the government to restrain the inexorable growth of property-related debt. Yields on junk-rated Chinese bonds soared to almost 25%.
For decades, China’s growth has been dependent on debt-funded investment in fixed assets such as real estate, and the government has talked repeatedly about rebalancing towards a more stable model driven by consumption. The turbulence in markets this year arguably signals the birth pangs of that transition, but even if this so, it is a process that will take years. Property and associated industries still account for more than a quarter of gross domestic product. To date, Xi’s vaunted “common prosperity” program is still mostly talk. The economic structure remains basically unchanged.
The communique’s words are a mirror of those used by former Premier Wen Jiabao, who in 2007 called China’s economy “unbalanced, uncoordinated, and unsustainable.” In echoing Wen’s formulation, the document implicitly states that Xi has solved a problem the retired premier could only bewail. Yet Xi himself spoke in similar terms just weeks ago. The party journal Qiushi republished a speech by Xi on October 15 in which the president said “we must be soberly aware that the problem of my country’s unbalanced and insufficient development is still prominent.” Things move fast in China, though perhaps not that fast.
It’s not the only place where the 5,400-word communique departs from observable reality. On international relations, the document says that China has broken new ground in its diplomatic endeavours and turned crises into opportunities, resulting in a marked increase in the country’s international influence and “appeal.” This assertion conflicts with a host of surveys showing China’s “wolf warrior” diplomacy has been counterproductive. In nine of 14 major economies, unfavourable views of China reached their highest level since Pew Research Center began polling the question more than a decade ago, surveys by the Washington-based opinion organisation showed last year.
This all points to the real purpose of the historical resolution adopted by the Communist Party’s central committee, only the third such document in its 100 years of existence, after those authored by Mao Zedong (1945) and Deng Xiaoping (1981). Lacking the achievements of those founding fathers of the revolution, Xi is more in need of a propaganda tool to burnish his authority. That explains why there is only space for good news in this verdict. The party has proved to be “great, glorious, and correct.” There is no mention of the Great Leap Forward, the Cultural Revolution, or any of the other traumas that delivered death and misery to so many millions of Chinese people during the party’s rule.
China’s greatest disasters happened under an over-powerful leader whom an autocratic system lacking checks and balances was unable to restrain. It’s hard for a political structure that shuts out criticism to self-correct; accurate information on how badly things were going wrong failed to penetrate. Deng’s solution was to recommit to collective leadership.
Xi has dismantled that collective tradition. Power has been centralised. Incipient signs of a personality cult are hard to miss. Freedom of expression has become more constricted and self-serving narratives are once again beyond challenge.

—Bloomberg