China’s Xi Jinping problem | Financial Times

Fish ponds have been abandoned, fields growing bamboo and flowers have been torn up. Instead, Xi Jinping wants China’s farmers to grow rice and wheat.

In the run-up to next week’s Chinese Communist party congress at which Xi, 69, is expected to be appointed for a third term as leader, farmers across China have been contending with unwelcome ultimatums from local authorities.

In accordance with Xi’s determination to enhance China’s food security in the face of what he sees as a hostile west led by the US, they have been told to divert resources from profitable agribusinesses to basic staples.

These edicts represent a departure from the historic agricultural reforms that, in the late 1970s and early 1980s, set the foundation for China’s rapid transformation into the world’s second-largest economy.

They also present a window into the sort of country that China has become under Xi, the party’s most powerful leader since its revolutionary hero, Mao Zedong. Xi’s reappointment to a third term will mark the culmination of his relentless centralisation of power over the past decade, which has given him more freedom to act decisively than his recent predecessors — and democratically elected politicians in the west.

But that centralisation has come with enormous risks. It could dull the dynamism that has been China’s hallmark since economic reforms began more than four decades ago. And it could deprive China of the mechanisms for self-correction that the Communist party has put in place in recent decades — exposing the life of a nation of 1.4bn people to the whims of a single leader.

The new farming edicts are in keeping with a number of other policy decisions, in areas ranging from the technology and property sectors to Covid-19, in which the costs increasingly appear to outweigh the benefits.

There is mounting evidence that Xi’s dominance over the party since he came to power in 2012 — and the party’s increasing dominance over the economy and civil society — has made it much harder for China to modify, let alone reverse, potentially damaging decisions.

Lance Gore, a China expert at the National University of Singapore’s East Asian Institute, argues that Xi is “steering in the wrong direction”. “How much room you give to the market and lower-level bureaucrats, how much freedom you allow individuals to have — these are even more fundamental than certain policy issues,” he says. “As time pushes on, the consequences are going to show.”

To his many and vocal admirers, Xi is the right leader at the right time — a sage and courageous “helmsman” who rejuvenated a weak party dominated by corrupt special interest groups and stood up to what they see as US-led efforts to contain China.

In their view, Xi’s crackdown on Hong Kong’s pro-democracy movement and this summer’s unprecedented military exercises around Taiwan were all necessary measures taken to protect the country’s national security interests from meddling by the US and other “hostile foreign forces”.

“Xi had a lot of achievements over his first two terms and these will be acknowledged during the party congress,” says Tam Yiu-chung, a pro-Beijing stalwart in Hong Kong and the territory’s only representative on the standing committee of China’s parliament, the National People’s Congress. “When our national sovereignty is being challenged and when our development interests are being hurt, national security must be emphasised and protected.”

For Xi’s supporters, his insistence on stamping out any and all Covid outbreaks may have come at a huge economic cost, but they argue it is the price China has to pay to save millions of lives — something US politicians were either unable or unwilling to do.

Xi’s critics counter that his apparent strength really signals the ossification of China’s party-dominated political system. “Xi’s centralisation of power has created many problems,” says a high-ranking scholar and government policy adviser in Beijing.

“On the surface, Xi and the central government have the final say on everything,” he adds. “But how can one leader control 1.4bn people? There is no way you can peek into what everyone is doing and thinking.”

The Financial Times spoke to more than two dozen farmers, business executives, government officials, government advisers and Chinese scholars for this article. Most asked not to be named, citing the possible repercussions for saying anything perceived as critical of Xi or his policies.

‘No easy way out’

Under Deng Xiaoping, who emerged as China’s top ruler after Mao’s death in 1976, farmers were given more freedom to grow what they wanted for profit — the start of a process of accumulating savings that would fund the rise of the country’s many world-beating manufacturing industries. At the same time, Deng sought better relations with the US, its rich Asian allies and western Europe as he opened China to global trade.

That foreign policy consensus was already breaking down before Xi took power but in his first decade as the party’s top leader, he has jettisoned this and many other of Deng’s economic and geopolitical tenets.

Xi’s domestic policy initiatives to restrain the power of private sector technology entrepreneurs including Alibaba’s Jack Ma, while also reining in runaway property prices, have stalled two of the economy’s most important growth engines.

Both policies are part of Xi’s broader “common prosperity” agenda, which aims to finally address chronic wealth inequality and deflate unsustainably high levels of debt. Supporters of this agenda argue that stricter oversight of large tech firms was long overdue and also consistent with regulatory trends in the US and EU. They add that China’s debt-driven property bubble was unsustainable and had to be deflated.

“The tech companies, and Alibaba in particular, were on the government’s radar because they got so big,” says one Shanghai-based technology investor. “The government should be regulating to ensure market competition and protect customers.”

As for reining in the property sector, Michael Pettis, a finance professor at Peking University, says “it should have been done 10 years ago” given China’s over-dependence on debt-fuelled industries for growth.

“But there is no easy way out,” he adds. “There is just bad and worse. So much of China’s growth has been driven by real estate and infrastructure spending, so it’s good that they clamped down on real estate.”

Xi’s crackdown on China’s domestic tech sector also coincided with hardline policies on Hong Kong and Taiwan that exacerbated tensions with the US, which responded in part by restricting Chinese companies’ access to semiconductors and other critical components.

“Xi has strained relations with the US,” says Gore at the National University of Singapore. “I don’t know how much innovativeness China can have when you are competing at the highest level with the US and you don’t have that kind of vitality and creativity. Hopefully he can adjust.”

There are few signs, however, that Xi wants to adjust his approach. And for some critics, that means he risks doubling down on what already appear to be big policy blunders.

Some experts point to the many parallels between Xi’s zero-Covid policy and China’s infamous one-child policy, launched in 1979. Both were enforced brutally and arbitrarily by city district and village-level officials, who are reacting to clear but ultimately vague policy directives and wield unchecked power in their domains. Both policies proved disastrous for the economy — zero-Covid in the short-term and the one-child policy in the long term given its demographic consequences.

“There are a lot of parallels that show how hard it will be to roll back zero-Covid in the short run,” says Wang Feng, a sociologist and China expert at the University of California, Irvine. “At the time, the size of China’s population was deemed a national emergency and all measures were taken to bring it down through forced sterilisations and abortions.

“It was very hard for the government to walk back the policy, despite the excesses that it caused, due to the huge bureaucracy established to enforce it,” Wang adds.

Similar to the one-child policy, zero-Covid has spawned a sprawling and profitable infrastructure of testing and quarantine centres with huge demands for medical supplies. Local government officials are also being judged primarily — if not exclusively — on how they implement it.

Any reservations Xi’s peers have about his policies have not sparked strong political backlashes because they fear the potential personal consequences of crossing the paramount leader, especially given the intensity of his long-running anti-corruption campaign. Joseph Torigian, an expert on elite Chinese and Soviet Union-era politics at American University in Washington DC, notes that China has an “extraordinarily leader-friendly system”, especially when commanded by a powerful figure such as Xi or Mao. “There just isn’t a trigger for a leader to be pushed out of power because he has done poorly,” Torigian says.

Cadres are also wary of undermining the party and its grip on power, which is the ultimate guarantee of the extraordinary privileges they and their families enjoy — a fear encapsulated, Torigian says, by the Chinese expression tou shu ji qi, which translates as “if you shoot at the rat, you might hit the vase”.

“Even when they gripe and complain, people within the party understand that having a strong ‘core’ leader — someone with the authority to bang on the table and make decisions — is a stabilising factor,” he adds. “Mao and Deng made catastrophic mistakes, but there was a rally-round-the-flag effect even if those crises were created by poor policymaking.”

Agrarian conflict

The impact — and the potential perils — of having such an all-powerful leader are evident in the edicts handed down to farmers.

Part of the impetus for Xi’s efforts to improve food security was the trade war with the US that started in 2018, during which his administration slapped retaliatory tariffs on American wheat, soyabeans and other agricultural commodities.

It also dovetailed with a broader effort to increase China’s self-sufficiency. Chinese officials have been alarmed by President Joe Biden’s ability to rally Washington’s allies in a “united front” on a range of issues such as confronting Beijing and opposing Russia’s invasion of Ukraine.

In doing so, however, Xi is setting back earlier campaigns to rejuvenate rural areas and eliminate poverty. Last year, Xi declared the party’s war on poverty had been won.

A rural entrepreneur in central Hubei province told the FT that he laid off 20 of his 40 workers this year after the authorities told him to turn his nursery into paddy fields. “Eight of them had been living in poverty when I hired them,” he said. “Now they are poor again thanks to President Xi’s food security drive.”

A county official in Zhejiang province, where Xi served as the party’s top official from 2002 to 2007, says that he and others had no choice but to implement the government’s food security policy — and would try to figure out how to ameliorate its negative impacts later. This spring the official and his colleagues in Wencheng county destroyed local farmers’ water bamboo seedlings, promising them compensation that works out at less than 10 per cent of the harvest’s expected profit.

“Converting fields to grains is a national policy that everyone must follow,” the official says. “Personal interest should give way to the national goal of self-sufficiency in food.

“We will”, he adds, “examine ways to make rice farming more profitable.”

For at least one farmer in Jinhua, a city in Zhejiang famous for its flower industry, China’s leader is even more powerful than the weather.

“Since ancient times, the weather was Chinese farmers’ biggest worry,” says the farmer, who was forced to close his 600 mu (100 acre) tree and plant nursery in Jinhua this year and has switched to rice. “Now our biggest risk is government policy. You never know when your farm or nursery, which until a few years ago received policy support, will become illegal,” he says.

A senior Chinese investment executive said that the operations of the country’s sovereign wealth fund, China Investment Corporation, had also been affected by Xi’s food security drive, as well as his insistence that the party take a leading role in all spheres of the economy and civil society.

“A few years ago CIC was actively looking for agricultural investment opportunities abroad — it is now focused on securing domestic supplies,” says the executive, who works closely with CIC on its investments.

“[CIC’s chair] doesn’t have to attend investment committee meetings, but he will be present at every party committee meeting and employees must pass a written test on party development to be considered for promotions . . . The assumption is that good party members will also be wise investors.”

Desmond Shum, a Chinese entrepreneur who did business with some of the country’s most powerful families and now lives in the UK, predicts this party-centric trend will continue during Xi’s third term. “Given how much Xi has changed China in the past decade, it’s rather frightening to think he could be even more radical,” Shum says.

Rebuffing such criticism, Victor Gao, a former Chinese diplomat and translator for Deng, argues that China needs a prolonged period of decisive leadership that Xi has proven himself able to deliver.

“The party is more united than ever before under the paramount leadership of Xi Jinping,” Gao says. “China needs a strong leader who does not cave into pressure from foreign countries and can stand up and assert China’s national interests on the global stage. Xi Jinping turned out to be the leader that China needed.”

Gao adds that he can even envisage Xi being appointed to a fifth term as state president in 2033, when he will turn 80. “Why not?” Gao asks. “When Deng was 80 he was at the peak of his career.”

Additional reporting by Chan Ho-him in Hong Kong