China’s Mistakes Can Be America’s Gain
The United States does not need to take Xi Jinping’s attempt to project power at face value.
Xi Jinping should be enjoying his final days in charge of China. For decades now, the Chinese Communist Party has regularly replaced its senior leadership—a system crucial to the nation’s success—and after 10 years in power, Xi would be due to step aside and allow a new team to guide the country’s future. But when the country’s top cadres meet in Beijing on October 16 for the 20th Party Congress, Xi is widely expected to break precedent and extend his rule for at least another five years.
Although this departure from custom has been mooted for years, the news might send a renewed chill down the spine of some in Washington, D.C. Xi has transformed China from the U.S.’s potential partner to its chief strategic adversary. The Chinese leader appears determined to capitalize on his country’s recently acquired wealth to challenge America’s economic primacy, technological advantage, and military dominance, and even its assumptions about the global order that forms the foundation of American power. Five more years of Xi almost certainly means five more years of superpower competition, even confrontation.
That is the conventional wisdom. But maybe Washington should be grateful Xi is sticking around. China’s leader definitely intends to roll back American global influence, but he may not be doing a good job of preparing his own country to attain that goal. The actual results of his policies suggest that he is weakening, not strengthening, China as a competitor to the United States. The longer Xi remains at China’s helm, the less competitive the country may become.
Lost amid the hype about China’s ascent is just how poorly the country has performed under Xi’s stewardship in nearly every aspect of policy. The economy has slowed dramatically. The leadership has given up on meeting its once-sacrosanct growth target. Xi’s aggressive foreign policy has alienated most of the world’s major powers and terrified China’s neighbors in Asia. Many of Xi’s high-profile government initiatives are marred by waste and mismanagement. China’s rise, which Xi has called inevitable, is less, not more, certain because of his rule.
That alternative narrative has serious implications for American foreign and domestic policy. In response to Xi’s belligerence, policy makers in Washington feel compelled to contest China on every front: diplomatic, economic, technological, military, and ideological. That was the thinking behind the recently signed CHIPS bill, which is designed to ensure America’s continued mastery of the semiconductor industry against China’s high-tech ambitions. The same strategy guided President Joe Biden’s 2021 Build Back Better World, an infrastructure-building program intended to compete with China’s Belt and Road Initiative and vie for influence in the developing world. These policies were based on the premise that China’s capabilities are keeping pace with Xi’s ambitions. The evidence now suggests that Xi’s aims are outstripping the country’s capacity to sustain them.
The timing of Xi’s overreach is fortunate for Washington. Amid the partisan rancor and social disorder that has preoccupied the United States in the past five years, American global power has probably been more vulnerable than at any time since World War II. Xi could have taken advantage of that disarray to expand Chinese influence at America’s expense. Instead, his actions have had the effect not only of keeping the U.S. in the game but also, in certain respects, of enhancing its global standing. The worldwide American network of alliances, which had come under severe strain, is arguably stronger now than it has been in years—in part due to Xi’s policies.
Xi’s China remains a threat as the only country with both the intent and the resources to undermine the U.S.-led global order. Yet the failings of Xi’s agenda show that the widely held assumption that China’s rise is as unstoppable as American decline is simplistic. Xi wants to be written into the history books as the man who overturned Pax Americana. Instead, he could end up being the one who preserves it.
When Xi Jinping claimed power in 2012, most China experts anticipated that he would follow the immensely successful path laid by the “paramount leader” Deng Xiaoping in the 1980s—based on liberalizing economic reforms, integration with the global economy, and a partnership with the United States. Xi had previously served as an official in some of China’s most economically vibrant regions, so he had long experience with Deng’s central principle of “reform and opening up.” Shortly before Xi became the country’s new leader, he had had extensive interactions with then Vice President Joe Biden, which left the impression that Xi valued China’s fruitful relationship with Washington.
As his rule has unfolded, however, those early assumptions have proved to be wrong. Highly ideological, fiercely nationalist, and obsessed with political control, Xi has deviated sharply from his predecessors’ policies. In so doing, he has altered China’s course in profound and unpredictable ways.
Most dramatically of all, Xi has entirely revised China’s foreign policy. He apparently believes that China’s moment to assume the status of the world’s most powerful country has arrived. Rather than treating Washington as a partner, Xi considers the U.S. to be China’s most dangerous adversary. Instead of immersing China in the American-led global order, Xi is promoting his own vision of a Sinocentric alternative, one that is friendlier to authoritarian regimes. Notably, the Chinese leader has forged a new friendship with Russian President Vladimir Putin, who Xi seems to believe can be an ally in his quest to roll back American power.
Yet the more openly hostile China has become to the current international system, the stronger U.S. alliances have grown. Xi’s agenda has persuaded the world’s democracies to tighten their ties to the United States and to one another in order to counter the threat he presents.
Initially, European leaders were uncomfortable with Washington’s tougher line on China, insisting on their “strategic autonomy.” This divergence sowed some dissension within the Atlantic alliance. However, Xi’s support for Putin amid Russia’s invasion of Ukraine has gone a long way toward healing that rift. At a virtual summit in April, ostensibly meant to bolster cooperation between China and Europe, the leaders of the European Union criticized Xi’s pro-Russia stance, warning him against aiding Putin’s war effort.
Then, in June, the leaders of Washington’s four main partners in the Pacific—Japan, South Korea, Australia, and New Zealand—participated in a NATO summit for the first time to discuss the Chinese threat. This was a sign that a more coordinated or fully united alliance that brought together the democratic powers in Europe and Asia might be possible. In addition, India—usually wary of entangling itself in superpower competition—has become more active in the Quad (a security partnership that also includes Australia, Japan, and the U.S.). This suggests that India sees the group as a potential bulwark against Beijing, which has alarmed Indian leaders by pressing territorial claims along the two countries’ disputed border.
Xi seems not to care about these effects of his actions. In mid-September, on his first international diplomatic trip since the start of the coronavirus pandemic, Xi chose to meet Putin, thumbing his nose at the United States and its European allies. He has also pressed ahead with his undiplomatic diplomacy, which has at times descended into threats and demands delivered by his appointees. In a July meeting with his Australian counterpart, Chinese Foreign Minister Wang Yi blamed the two countries’ strained relations on Canberra’s “irresponsible words and deeds.” He went on to say that they could be improved—if Australia avoided “being controlled by any third party”—that is, the U.S.—according to an official Chinese summary of the conversation.
Shortly after that, China’s foreign ministry directly threatened the U.S. that it would “pay the price” for House Speaker Nancy Pelosi’s visit to Taiwan, which Beijing perceived as a violation of its sovereignty. (The government in Beijing considers Taiwan part of China.) A few days later, a senior Chinese official warned the Israeli ambassador to Beijing not to allow the U.S. to influence Israel’s approach to China, with a tactless claim that the Jews and the Chinese share a common grievance as victims of the West.
As a consequence of all this, China’s image has deteriorated sharply around the world, according to a recent survey of 19 countries, mostly major democracies, by the Pew Research Center. Xi himself fares poorly, too, with respondents in many countries expressing little or no confidence that the Chinese leader will “do the right thing” in international affairs.
China is perceived somewhat more favorably in parts of the developing world, and Beijing’s foreign policy has become increasingly focused on winning support in what’s called the “Global South.” But even there, Xi blunders. China, for instance, failed to corral the small nations of the South Pacific into a security and economic pact, in part because of Beijing’s arrogance. Henry Puna, the secretary general of the Pacific Islands Forum, a regional policy organization, said in a July briefing that local leaders had rejected the initiative because Chinese officials had presented them with fully drafted documents for the pact without consultation. “If anybody knows what we want and what we need and what our priorities are, it’s not other people—it’s us,” he said.
Xi isn’t doing much better at home, particularly with China’s economy. Growth has slowed significantly on his watch. In 2012, at the start of his tenure, the economy grew 7.8 percent, but this year the International Monetary Fund forecasts a meager 3.3 percent expansion. A reduction in the rate of growth was probably inevitable as the economy developed, but Xi’s policies have likely made matters worse.
The key to China’s decades-long economic boom was the withdrawal of state intervention in the economy and its opening to overseas trade and investment, which allowed private enterprise to thrive. To some extent, Xi has reversed that—enough to undercut some of the most vibrant sectors of the economy and divert capital and talent into wasteful endeavors, such as a slate of state-led industrial programs.
The most obvious sign of that shift is the extensive new regulatory burden imposed on private companies. Some of it is well intentioned—ensuring that food-delivery workers get better treatment, for instance—but all of it has been introduced haphazardly and has curtailed the expansion of some of the country’s most important companies. The once-flourishing private-education industry, which offered after-school classes for college-hungry kids, has suffered layoffs and heavy financial losses after an edict forbidding these businesses from making money out of teaching core-curriculum subjects to most students. One prominent technology firm, the ride-hailing app Didi Chuxing, has suffered so much harassment from a cybersecurity investigation and restrictions on its operations that its share price has plunged by more than 80 percent since its initial public offering a year ago.
Instead of propelling fresh economic growth, the tech sector as a whole has been downsizing and laying off employees. That has made jobs harder to find for recent college graduates: In July, youth unemployment reached an all-time high of nearly 20 percent (though it improved slightly in August).
Xi’s motivations appear part ideological, part purely political. He seems to fear that Big Business, and especially the tech sector, could amass sufficient influence and wealth to pose a challenge to Communist rule. Party officials have said plainly that they want greater control over the management of private enterprises, and Xi himself has spoken of the “need to prevent the disorderly expansion and unchecked growth of capital.” Xi prefers instead state-led endeavors that he can more easily superintend. The government has provided lavish investments, subsidies, and tax breaks to support industries that Xi’s bureaucrats favor in sectors they want China to dominate, including electric vehicles, semiconductors, and artificial intelligence.
Although these industrial programs are in too early a phase to pass final judgment on, and there are a few signs of progress, the results so far are generally not encouraging. One observer, Scott Kennedy, a senior adviser at the Center for Strategic and International Studies, noted in a recent essay that in spite of huge government support, “there is almost no sector where China is the dominant technology leader.”
One of the most high profile of these state-driven missions—to develop a semiconductor industry advanced enough to make the country self-reliant—has been plagued by corruption. To date, it has made only glacial progress in catching up to industry leaders in the U.S., and has not come close to reducing the Chinese economy’s dependence on foreign-made chips.
Xi’s apparent distrust of free-market reforms has also exacerbated the economy’s most dangerous weakness: its broken growth model. Chinese policy makers and economists worldwide have long warned that China’s growth is too dependent on investment, which is often debt driven and excessive—squandering resources on unnecessary apartments, factories, and infrastructure. Xi continued the practice of pumping credit into the economy whenever it slowed below the party’s preferred target, and he’s suffering for it today. Debt has risen steeply during Xi’s tenure, from less than double national output in 2012 to almost triple today.
The consequences are emerging in the bloated but vital property sector. A government attempt to rein in highly indebted developers led to a crisis last year at one of the industry’s giants, Evergrande, and the sector’s troubles have deepened. With developers defaulting, property sales falling, real-estate prices sinking, and new construction slumping, the instability of the sector represents a risk to the nation’s banks, which are deep in property-related lending, as well as to the wealth of the country’s middle class. In a remarkable indication of diminished public confidence, families across the country recently engaged in a “mortgage strike”—suspending payments on unfinished apartments out of concern that cash-strapped builders will never complete them.
Xi is adding to these woes with his strict pandemic controls. Undoubtedly, the biggest achievement of Xi’s tenure was limiting COVID-19’s hold in China and averting the scale of public-health crisis that so many other countries have suffered. But Xi’s mandate that COVID cases must be kept at or near zero has become an intolerable burden on the nation. Recurring closures of major cities and industrial zones have stifled travel, output, and commerce. Hardest hit have been the smallest businesses, those neighborhood restaurants, salons, and corner shops that provide crucial urban employment.
Amid the strain of quarantines and joblessness, domestic discontent has reached an unusually high level. The government faced widespread resistance in imposing its two-month COVID shutdown of Shanghai earlier this year. Residents confined to their homes banged pots and pans and screamed out of their windows to protest the harsh restrictions. In Beijing, where residents must still present a recent negative COVID test in order to ride the subway or eat in a restaurant, testing stations have become targets for vandalism, in some cases defaced with graffiti reading “Give me liberty or give me death.”
The sources of public dissatisfaction are not limited to the lockdowns. In July, hundreds of protesters from all over the country massed in the central city of Zhengzhou after their bank deposits were frozen thanks to a local financial scandal.
The angry mood seems to have overwhelmed efforts to censor criticism on Chinese social media. “People are not happy!” proclaimed one recent post on Weibo, China’s version of Twitter. “Your government positions are secure but people at the bottom are having a hard time surviving.”
The evidence of rising discontent with Xi’s government is anecdotal, of course. In an environment without free speech and a free press, what the Chinese public really thinks about Xi Jinping is impossible to gauge. But the willingness of ordinary citizens to risk reprisals for their displays of defiance—in Zhengzhou unidentified thugs assaulted protesters with the apparent complicity of local authorities—is a measure of how frustrated people are with the current state of China.
None of these diplomatic, economic, or social problems appear likely to derail Xi’s quest for a third term. They may, however, make his rule unpredictable. The more China’s fortunes fade, the more of a threat Xi may become—not unlike his friend Putin. Xi has shifted toward nationalism to legitimize his hold on power. Hence Beijing’s heightened rhetoric on issues such as Taiwan, and the relentless anti-American propaganda from its foreign ministry and state media. Xi needs enemies abroad to deflect public disaffection with his failures at home.
For Washington, Xi’s continued rule presents both dangers and opportunities. The correct strategy will be to ensure that tensions do not escalate into conflict, while capitalizing on Xi’s missteps to bolster American power. This approach involves a delicate balance, one fraught with the possibility of war. But if Washington manages the situation well, the U.S. could reap the benefits of Xi’s rule and make China bear the costs.