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China’s strongman is here to stay. And weaker than it looks.


Yet for all its reputation as an economic juggernaut, China is struggling. Its economic growth is slowing, due to factors ranging from Xi’s zero Covid strategy to war-related inflation in Ukraine, according to the World Bank. China’s youth unemployment rate stood at around 19% in August. That’s dangerously high for a party that touts rising living standards as proof of good governance.

But Xi has refused to back down from his “no limits” partnership with Russian President Vladimir Putin and is maintaining zero-Covid despite the costs. Moreover, its ideologically driven economic policy prescriptions – which lean towards an armed interventionist approach rather than support for the country’s burgeoning private sector – could further dampen growth.

Xi’s third term has clearly spooked markets in Hong Kong and the United States. Investors were dumping shares of China’s tech sector on Monday, fearing that Xi could maintain policies that have wiped billions off the balance sheets of once-booming tech companies over the past year.

The Chinese Communist Party has retained power in part through decades of steady economic expansion. If Xi cannot continue to deliver on that promise, it could threaten his grip on power.

China is grappling with “Xi Jinping’s disastrous economic policies and a series of dangerous structural imbalances, including a declining birth rate, an inadequate social safety net, and the CCP’s decision long ago to correlate its political legitimacy with China’s economic growth rate,” Alex said. Gray, former National Security Council chief of staff and senior fellow at the US Foreign Policy Council.

A threatened Xi Jinping could change course in several ways that would affect the country’s relations with the rest of the world. He could turn his energy inward to tackle domestic issues. But he could also take it out abroad.

Gray argued that economic problems make it “highly likely” that Xi will launch military challenges in the Indo-Pacific region “faster than expected and from a position of domestic weakness”, he said.

Kristen Gunness, former director of the Navy Asia Pacific Advisory Group at the Pentagon and now a researcher at the RAND Corporation, said she would expect to see more militaristic propaganda, more aggressive statements toward Taiwan or an increased military presence around the ‘island.

China is still an economic colossus on track to replace the United States as the world’s largest economy by the end of the decade. Its massive manufacturing sector has made it the world’s leading exporter, and its thirst for raw materials to fuel its economic machine makes it the leading trading partner of the United States, the European Union and the majority of countries in the Indo- Peaceful.

But Xi has hurt those trade ties in recent years with economic coercion tactics designed to punish countries for policies that offend Beijing.

China has restricted imports from Australia in 2020 in retaliation for Canberra’s call for an independent investigation into the origins of Covid-19. And Beijing has responded to Lithuania’s closer ties with Taiwan with an embargo on Lithuanian products and threats against companies that buy products from Lithuania.

Last year, Xi launched an “anti-inequality campaign” calling on China’s wealthiest to “give more to society”. This has stalled the sector’s growth as Chinese tech megacompanies such as Tencent and Alibaba have donated billions of dollars to joint prosperity initiatives to demonstrate corporate submission to Xi’s economic agenda.

Xi aims to ease the pain of Chinese consumers by funneling money from these tech donors and additional government funds into a program to provide social benefits to low-income citizens. But his strategy is centered on state-owned industries plagued by poor management practices and an overreliance on subsidies.

“Xi Jinping has made it clear that his preference is for a command economy…very much about control and secrecy,” said Dexter Roberts, senior fellow at the Atlantic Council’s Asian Security Initiative and Chinese economic policy expert.

And the external constraints on Chinese growth are getting tougher. This month, President Joe Biden reversed Xi’s plan to spur growth through “greater autonomy and strength in science and technology”, by imposing export restrictions aimed at stifling Beijing’s supply of microchips used in advanced computing and military applications.

Xi could, of course, extend China’s surveillance state and its controls over the movements of its people to prevent internal opposition to its economic policies. But his policies also antagonize some of the powerful people within his own party, which could be dangerous for Xi.

“There will be increased resistance among Party elites to the kinds of hyper-nationalist economic policies that Xi has implemented… [fueling] internal political instability,” said John Lee, a former Asia adviser to the Australian government, now a senior fellow at the Hudson Institute.

If an economically weak Xi continues to step up its already aggressive foreign policy, many expect Taiwan to be the target. Xi reaffirmed last week that China will “never promise to renounce the use of force” to secure “reunification” with Taiwan.

The Biden administration already sees the danger growing. Secretary of State Antony Blinken warned last week that “Beijing is determined to pursue reunification in a much faster time frame.” Chief of Naval Operations Admiral Mike Gilday echoed that concern two days later by suggesting that Xi’s timeline for invading Taiwan had shifted to “a window of 2022 or potentially a window of 2023”.

Yet Lonnie Henley, a former US intelligence officer specializing in the Chinese military, argued that an attack on Taiwan is so risky that Xi is unlikely to take that step, no matter how serious the problems. interiors.

“Any conflict over Taiwan would pose an existential threat to the CCP regime, so it’s the last thing a beleaguered Xi would see as a distraction from domestic issues… so no, I don’t accept the theory of ‘wiggle the dog’,” said Henley, who now teaches at George Washington University.

But Xi’s record of trampling on CCP tradition to bolster his power and his admission of a hawkish vision of “national rejuvenation” tied to defending China’s “territorial integrity” don’t stop Xi to use military force even in the event of major risks.

“Xi is a known risk-taker and seems very confident – if misguided – in both his judgment and the weakness of his opponents,” said Robert Haddick, a former U.S. Special Operations Command contractor. United States and Visiting Senior Scholar at the Mitchell Institute for Aerospace Studies, Air and Space Forces Association. “Few people expected Vladimir Putin to be so irrational that he invaded Ukraine, but he obviously did. Why not Xi too?

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