Written by Matthew Johnson.

If the narrative of “reforming and opening” China has run its course, what new narrative will replace it? The past week has yielded several important clues in this regard, pointing to the emergence of two new frameworks that we might call “Xi-ist” China and “ideological” China.

Xi-ist China is a narrative of political power. Xi Jinping and his inner circle are alleged to dominate the key agencies and committees of party-state governance, particularly with respect to the economy, security, and the party itself. Former “kingmakers,” like former leader Zeng Qinghong, have been relegated to the sidelines and may soon be targeted by anti-corruption investigators whose work extends into picking off Xi’s remaining opponents. Xi and other “princeling faction” (太子党) members have turned against the political and economic legacies of Deng Xiaoping, and Xi is now being touted as the “core” of a new leadership configuration whose highest goal is to preserve familial power networks at any cost. One key spin-off from this scenario would include reform to the state-owned enterprise (SOE) sector of China’s economy grinding to a virtual standstill, given that SOE-created wealth remains a crucial pillar of princeling power. From a risk and access perspective, doing business at the highest levels in Xi-ist China will require the continued cultivation of relationships with princelings via “sons and daughters” hiring practices already familiar to international banks.

Ideological China is a narrative of political power as well, but also of internal fragmentation and external bellicosity. One version of the Ideological China narrative emphasizes China’s potential for pulling toward two distinct and competing poles of belief–one Confucian-conservative, and one Western-liberal–on the basis of factors such as socioeconomic status, geography, and position relative to networks of competing elite interest. While nationalism remains the common denominator of all points along the political spectrum, debates over wealth distribution and social values within China may be likely to intensify. Viewed from another perspective, battles over Mao’s legacy reflect the attempts of competing social and political groupings to secure legitimacy amidst a complex landscape of power in which the “family-run” side of the Chinese Communist Party itself is divided among various functional satrapies and must constantly renew itself through the meritocratic promotion of high-achieving, and ambitious, bureaucrats. Spin-offs from this scenario include a CCP that, either for reasons of perceived threats to its power or related concerns stemming from shaky legitimacy at home, shows no interest in accommodating itself to “Western” international norms of freedom, law, and trade-based relations. Divided power structures will make China’s internal investment and business environment increasingly unpredictable, while fears of social unrest will drive leaders to prioritize economic growth–and, more worryingly, global expansion and revisions to the international status quo–at all costs.

There is overlap between the two narratives and here we must assume that the evidence is sending a clear message. First, and as is confirmed by the CCP’s own efforts to push forward the study of Xi Jinping’s thought, there is a clear agenda of re-building and re-legitimizing the party through the figure of Xi. Second, this movement parallels ongoing efforts to keep party ideology at the forefront of the military, centralize and rationalize Chinese society through the CCP-directed legal system, and further push back against Western norms and the “channels”through which these norms are believed to spread–primarily the media and NGOs.

Where the narratives differ is in their assessment of causes. For those supporting the Xi-ist China thesis, the prime mover is Xi’s own personal power and boldness in consolidating princeling power in the face of potentially adverse political and economic forces. For those supporting the Ideological China thesis, these developments instead represent the beginnings of an increasingly volatile process through which the CCP’s power is maintained only through periodic, quasi-Maoist campaigns hitting out at internal and external enemies while, at the same time, preserving minimal ideological cohesion through policy measures aimed at further de-Westernizing Chinese society, including its political and economic systems.

The difference, ultimately, can be expressed as one of direction. Xi-ist China remains basically frozen at the current point in the reform and opening process, whereas Ideological China is likely to move backwards. Neither are particularly appealing scenarios for firms and investors, as both invoke limited opportunities and, particularly in the latter case, the very real possibility of increased volatility and protectionism.

Largely absent from both narratives is consideration of how exogenous conditions will continue to shape China’s futures. Here we briefly propose two further pathways for consideration, which represent potential thought leadership opportunities for researchers, analysts, and executives:

  1. The impact of slowing growth on elite coalition-building. Despite loud proclamations from China’s government that SOEs in outmoded and overcapacity-burdened sectors of the economy will be allowed to fail, leaders have shown little appetite for tackling SOE entrenchment, and inefficiency, head-on. However, should economic conditions worsen, political stability may be affected in one of two ways:
    • Popular outcry will create opportunities for ambitious political figures to disrupt, both publicly and behind the scenes, the existing status quo (the “Bo Xilai effect”).
    • Those at the very top of the political-economic pyramid may be forced to choose between winners and losers amidst SOE fallout, thus creating and/or exacerbating intra-elite tensions.
  2. The impact of “new Asia’s” rise on China’s growth and expansion prospects. By this we mean the impact of countries not confined to the industrial Northeast core represented by China-Japan-Korea: India, in particular, seems poised to immediately challenge China’s bid for influence in the Himalayas, Indian Ocean, and East Africa. Morover, China’s rise continues to run the risk of pushback from more traditional hemispheric players should PRC irridentism run unchecked: Russia in Central Asia and along the continental corridor of China’s “new Silk Road” expansion plan, and Japan and the United States in maritime eastern (Northeast, East, Southeast) Asia. Here, consequences may range from adventurism to a crisis of legitimacy for the CCP stemming from its leaders’ perceived mishandling of China’s foreign affairs.

Seen from this perspective, assessment of China’s political economy from the hybrid approach advocated here thus requires toggling not between Xi-ist and Ideological narratives, but between domestic and global frames. Moreover, the question is no longer, “Is China reforming?” but rather “To what degree will China in 2020 resemble China today?”–which is to say, it now appears that the possible scenarios for China’s futures have become increasingly dissimilar.

Matthew D. Johnson is assistant professor of East Asian history and chair of East Asian Studies at Grinnell College, and a co-founder of The PRC History Group (prchistory.org, H-PRC). His most recent publication is the co-edited volume _Maoism at the Grassroots: Everyday Life in China’s Era of High Socialism_ (Harvard UP). His research and analysis on topics related to China’s political economy appears at corintconsulting.com (Twitter: @corintconsult) and on Medium and LinkedIn. Image credit: CC by Global Panorama/Flickr. This post originally appeared at corintconsulting.com.

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