(Bloomberg Businessweek) -- China’s decision to repeal presidential term limits marks the moment when President Xi Jinping dropped any pretense of following the rules. The move, which may extend his tenure beyond 2023, shows just how deep the cult of Xi runs in Chinese politics. His political thought was enshrined in the Communist Party’s charter alongside his name last fall, giving Xi, 64, the same mythic status as Mao Zedong and Deng Xiaoping. His government regularly bends Chinese companies to its iron will. Just ask Wu Xiaohui, who faces prosecution for alleged fraud, and whose debt-burdened Anbang Insurance Group Co. was seized on Feb. 23 by the government as it cracks down on financial risk.
Yet China’s embrace of lifetime job security for its top leader is fraught with geopolitical implications. It cements Xi’s status as the world’s most powerful autocrat just as countries question the reliability of U.S. leadership and as Russia demonstrates its willingness to subvert democratic processes.
Xi’s China and President Vladimir Putin’s Russia are seeking “a world consistent with their authoritarian models,” U.S. Defense Secretary Jim Mattis said in early January as he unveiled the Pentagon’s National Defense Strategy. China has viewed its centralized system as necessary to govern 1.4 billion citizens and says it doesn’t seek hegemony. The report, in contrast, sees China as rapidly modernizing its military, assertively staking its claim to disputed territory in the South China Sea, and using “predatory economics to coerce neighboring countries to reorder the Indo-Pacific region to their advantage.”
Inside China, the business terrain has shifted, and not just for debt-besotted private conglomerates such as the Dalian Wanda Group Co. and HNA Group Co., now being pressured by greater regulatory scrutiny to jettison billions of dollars in assets. Marriott International, Mercedes-Benz, Delta Air Lines, Qantas Airways, and Medtronic—all have expressed regrets for perceived slights to China in recent months to protect their business interests on the mainland.
In December, Chinese billionaire Jack Ma, founder of Alibaba Group Holding Ltd., praised China’s one-party state for the stability it provides and backed tight control over online content, while he urged Facebook Inc. and Google to “follow the rules” if they want to be competitive in the Chinese market. Last year, Xi’s government insisted that foreign tech companies locate their servers containing local content on Chinese soil, a move that would make it easier to enforce censorship policies. “Businesspeople shouldn’t assume they’re dealing with their Chinese counterparts from 10 or 15 years ago” who were interested in profits and growth, says Zhang Jian, an associate political science professor at Peking University. “They are very different animals now … they have a lot of new political calculations.”
Together, China and Russia “are undermining the international order” of free trade, unfettered capital, and digital data flows “from within the system by exploiting its benefits while simultaneously undercutting its principles,” according to the U.S. strategic review. Russia is a far smaller economic player, but it punches above its weight by bullying countries on its periphery such as Georgia and Ukraine. Putin has reasserted Russian interests in the Middle East by cozying up to Iran and Syria, and his government is trying to marginalize the North Atlantic Treaty Organization military alliance.
Even if you don’t fully buy the assessment of the Americans (and it’s not clear President Trump does), it’s hard to argue that autocracy isn’t making a comeback. The global liberal democratic order that’s dominated over the past seven decades faced “its most serious crisis in decades in 2017 as basic tenets—including guarantees of free and fair elections, the rights of minorities, freedom of the press, and the rule of law—came under attack around the world,” according to independent watchdog Freedom House’s latest report.
Putin has also successfully sidestepped constitutionally mandated term limits in Russia. In 2008, after eight years as president, he was appointed prime minister by his successor, Dmitry Medvedev. Putin then ended regional governor elections, extended the presidential term from four to six years, and was reelected as president in 2012. Soon he will seek a fourth presidential term that will keep him in power until 2025. “Putin seemed to be on the wrong side of history when he did it,” says David Cohen, a Beijing-based managing editor at consulting firm China Policy. “I don’t think anyone could confidently say now that Xi is on the wrong side of history.”
What’s changed? It’s not as if the world has abandoned democracy. The Economist Intelligence Unit’s democratic-health index in its 2017 annual review shows that half of the world’s countries are democracies to some extent—but more than half saw their scores decline according to five categories such as electoral integrity and press freedom. In Eastern Europe, Polish press freedoms are being unwound, while the Czechs in January decided to keep in power President Milos Zeman, who’s fond of anti-Muslim rhetoric. There’s been backsliding of press freedoms or election meddling in Latin America (Brazil and Venezuela) and Africa (Kenya).
Then there’s the unpredictable behavior of Trump, who suggested Putin is a better leader than Barack Obama and called Xi “the king of China.” He’s also a fanboy of other strongmen, including Philippine leader Rodrigo Duterte (“unbelievable job on the drug problem”) and Turkish President Recep Tayyip Erdogan (“a friend of mine”).
In his first year in office, Trump has withdrawn the U.S. from the Trans-Pacific Partnership free-trade deal and the Paris Agreement on climate change. He’s threatened to renege on the Iran nuclear deal, a free-trade agreement with South Korea, and the North American Free Trade Agreement. America’s standing in the world has plummeted, according to a Pew Research Center survey published last summer of 33 nations assessing the U.S.’s image as a global leader. It fell from 64 percent at the end of the Obama presidency to 50 percent under Trump—vs. 48 percent for China, which backs the Iran and Paris deals.
Beijing at least has a plan for winning friends and building influence even as its treatment of dissidents and the press blemishes its international reputation. Debt challenges aside, the achievements of its roughly $13 trillion economy are indisputable. So are the big-money development packages via the “One Belt, One Road” infrastructure loan program and other initiatives aimed at winning hearts and minds in strategically crucial emerging markets.
Xi is a true believer in the Chinese system, and the end of term limits means he may be in it for the long haul. But making himself the center of everything could also be risky. His anticorruption campaign has made him enemies in China’s most powerful political and business circles, while the sidelining of his peers makes him the only plausible culprit if the economy tanks. Even in China’s tightly censored social media world, criticisms of Xi’s elevation were visible as users shared articles about Deng’s contribution to China’s retirement norms. One web meme, taking in demographic as well as political anxieties, goes: “My mom said I must get married within Big Daddy Xi’s term in office. Now, finally, I breathed a sigh of relief.”
For now, though, Xi rules. Abroad, he’s building out Chinese influence. At home, he is rooting out corruption and committed to remolding the Communist Party in his own image. “Xi Jinping offered a rescue plan for the party,” says Peking University’s Zhang. He’s now using the party as his tool of choice to transform China and reshape global institutions. “The party is playing a bigger role in the country in a more straightforward and naked fashion,” Zhang says. Xi is anything but subtle. —With Gao Yuan
To contact the authors of this story: Brian Bremner in Tokyo at bbremner@bloomberg.net, Peter Martin in Beijing at pmartin138@bloomberg.net.
To contact the editor responsible for this story: Howard Chua-Eoan at hchuaeoan@bloomberg.net, Brendan Scott
©2018 Bloomberg L.P.
