Thank you for the opportunity to testify before the special committee. It is my honour to be here.
Leading up to the 20th National Congress of the Chinese Communist Party, scheduled for October 16, a lot is at stake. President Xi Jinping is widely expected to be appointed for a third term and to hold on to power for at least another five years.
I would like to offer three predictions on the political and economic landscapes of China in the next five years, with implications for our bilateral relations.
Number one is that President Xi will be further consolidating his authority within the party’s upper echelons of power. With his various political campaigns launched in the last decade, most notably the anti-corruption campaign, President Xi has eradicated not only corrupt officials but also members from rival factions.
The foundation of elite support is changing, however, from one that is united by spoils to one that is increasingly ruled by fear. For decades since the reform and opening, spoil sharing has been the glue, in my view, that holds the system together. The arrangement has been eroded by Xi’s attempt to curtail crony capitalism and to reduce the role of entrepreneurs, but a system that is ruled by fear will likely and most probably be less stable than one that's underpinned by the sharing of spoils.
Number two is that at the non-elite level, the party may appear to have a strong grip on society, continuing its stranglehold on civil society while doubling down on surveillance and stability maintenance. However, this facade belies a society that is becoming more contentious and fractious in the coming years, short of large-scale collective actions or social movements.
In the past six months, the first signs of an increasingly restless society have emerged with popular discontent with zero COVID. We've seen the responses to zero COVID evolve from one of widespread compliance in the first 18 months to growing in-person resistance and strident discordance on the Internet.
As I argued in my recently published book, Outsourcing Repression: Everyday State Power in Contemporary China, which is based on a decade-long study of how the Chinese state implements its very ambitious urbanization policy—which has a lot of similarity with zero COVID—non-state actors, such as grassroots brokers and volunteers, play an outsized role. Because these people are embedded within the society and trusted by the community, their administration of everyday policies is more likely to result in compliance than if government officials were sent to do the same jobs. The strategy of outsourcing social control to selected members of society has been fundamental to the exercise of everyday state power in China.
However, recent events have tested the limits of this hugely successful strategy. As zero-COVID policies become more nonsensical, people are required to sacrifice their personal freedom and, at times, be separated from their loved ones and denied medical care because they cannot produce a vaccine certification. We will see discordance being amplified and people becoming more blasé and restive.
As Xi tightens the grip on society after the party congress, we might see more signs of dissidence, as we did with the extremities of the Great Leap Forward in the early 1950s under Mao. Chinese society will inevitably become more contentious, despite political repression.
Lastly, number three is that the risk factors for the Chinese economy have also been amplified. The Chinese economic model has traditionally relied on the real estate sector as a growth engine. That is grinding to a halt as the economy slows. In the past summer, many households across the country that paid advance deposits but ran into failed projects organized a large-scale collective action to pressure the government for a rescue plan. Such large-scale collective action is very rare in China, so we should take it seriously as a sign of something bad to come.
In summary, all is not well on the economic front.
To sum up, in both the economic and the political sense, China is undergoing some structural transformation, which creates enormous uncertainty for its domestic and social stability, as well as foreign diplomacy.
Foreign countries that can effectively deal with China are those that have the capacity to conduct scenario planning and to devise action plans to respond to a range of diverse scenarios in the coming years. No one can be absolutely certain in which direction the political winds will actually blow. We must be prepared to change and adapt our strategy swiftly when necessary, and strong China endowment actually begets this adaptive capacity.
Thank you.