TAICHUNG (Taiwan News) — Xi Jinping (習近平) and the Chinese Communist Party (CCP) are struggling with the current COVID crisis as the chaos and horrors in Shanghai playing out across television screens worldwide spread to other Chinese cities.
Alone, this is disastrous but potentially only temporary and survivable for Xi and the party — but other crises lurking around the corner could challenge their hold on power.
Worse for Xi and the party is that they entered this crisis already weakened. An earlier column looked at how the unofficial post-Tiananmen social compact between the party and the country's Han majority is fraying.
Another column examined a pattern in the party’s handling of recent crises: how it initially failed to manage the situation, how this was followed by a brutal, overzealous approach that often created further harm, and how crises were exacerbated or even caused by a failure of long-term planning. Even before the current crisis was playing out, confidence in Xi and the CCP's ability to rule effectively was weakening.
In the previous column, we delved into the current disaster and supply chain issues that could compound it going forward could result in new catastrophes. However, this is potentially just the tip of the iceberg.
No matter what, inflation is set to rise; the only question is by how much. It is already a worldwide problem, but lockdowns or slowdowns in key ports like Shanghai will stoke it further, both for the Chinese and a world dependent on Chinese products.
Xi should be sensitive to this. The Tiananmen Square protestors in 1989 got considerable support from the public, not so much out of an idealistic yearning for democracy but frustration with corruption — and crucially — inflation.
So now, Xi is caught between his insistence on being infallibly correct on zero Covid, the extreme infectiousness of Omicron, and the need to keep supply chains functioning and inflation under control.
If he fails on the the latter two, problems will mount further. Factories and businesses will go out of business, starved of crucial components and products and burdened with contracts and backorders made when inflation was still manageable.
That, of course, leads to large-scale job losses and economic decline. Then add to the mix how much of the economy is tied up in property and housing, which was already facing disaster prior to the Shanghai lockdown in what the Financial Times billed “the end of China's property boom” and questioned whether it could be China’s “Lehman moment.”
Much of the Chinese public’s wealth is tied up in property. If the economy (already facing headwinds) is hit severely, many businesses and newly unemployed people may start selling property to stave off disaster, potentially driving down prices. Ironically, inflation could help shore up the market in some ways as people will be more reluctant to sell for cash that is rapidly depreciating in value. Those with cash may buy property as a hedge against inflation, but if basic confidence in the real estate market and the stability of the system fails, the market will go into freefall.
These aren’t the only potential crises that Xi and the CCP could face. In any normal year, there are natural disasters such as typhoons, flooding, sandstorms, earthquakes and extreme weather.
Due to China's location, size, and population, one of those disasters plays out on a grand scale every few years, with flooding and earthquakes being particularly deadly. With the country already reeling from the lockdowns, it may not be able to react effectively to mitigate the damage, which it wasn't great at doing in the best of times.
In addition to resulting in more loss of life than normal, these could further snarl supply chains and fuel even more inflation and delay key essentials reaching the market.
One particularly devastating disaster would be a drought, as China is already facing a water crisis. If the situation were dire, China would no doubt choke off the Tibetan Plateau river system.
The Mekong (which supplies Southeast Asia), Yellow River, Yangtze, Yarlung Tsampo (known as the Brahmaputra in India), Indus, and Karnali all originate in Tibet. Already a major source of tension with neighboring countries, if China cuts off enough of that water supply it would mean disaster for tens or even hundreds of millions throughout the continent.
That would be not only economically disastrous but potentially lead to war.
Also possible are environmental and industrial disasters of the CCP’s own making. Just a few examples include nuclear disaster or, as the largest industrial chemical producer in the world, the risk of an accident sending plumes of toxic gases over a large area. With China's famously low safety and environmental standards and massive industrial base, the list of potential disasters is huge.
There are significant challenges to China’s stability now and a wide range of possible ones in the near future, and most are of the CCP’s own creation. How many may come to pass by the 20th party congress later this year we can’t say for sure, but Xi must be nervous indeed.
There are four possible scenarios going forward: either CCP rule is maintained with enough public support and the situation remains more or less stable, public protests spread but are crushed and a crackdown is successful, the CCP realizes the risks to its own survival and sacrifices Xi to appease the public, or the CCP is overthrown.
In the first case, the CCP and Xi manage to muddle through without the situation becoming severe enough to spark an uprising. That is entirely possible; the risks of challenging the almighty party-state are high, but resentment will almost certainly have risen, possibly storing up problems for the future.
The second possibility is already happening to a certain degree but remains localized and uncoordinated. Should the Shanghai situation spread, however, it could morph into a national movement.
This happened in 1989. While the main focus was on the events on Tiananmen Square in Beijing, protests hit cities across China, but the CCP was eventually able to crush the movement.
The third option also has precedent. After the disastrous Great Leap Forward that left tens of millions dead, the CCP sidelined Mao Zedong (毛澤東), leaving him effectively powerless over the government (at least until he stoked the Cultural Revolution to take back power).
If this were to happen to Xi, they would likely sacrifice him publicly and blame the disasters on him. Unlike Mao, Xi isn’t the founding father of the People’s Republic and isn’t as useful as a figurehead.
There is considerable chatter about factions loyal to former Chairman Jiang Zemin (江澤民) and his protege Hu Jintao (胡锦涛) — both of whom are still alive and led the country when things were perceived as moving in the right direction. Some even theorize that the crackdown in Shanghai is aimed at Jiang’s power base there, but like everything in Chinese politics, all of this is highly speculative.
For the third option to happen, enough of the CCP would need to fear their own survival in power more than challenging Xi. It’s hard to know when that tipping point would occur, but the upcoming party congress would be a good time for the opposition to make its move.
Things would have to really spiral out of control to reach the point where the CCP itself is overthrown, and this remains the least likely possibility. Still, as these columns have pointed out, it is no longer unimaginable.
Courtney Donovan Smith (石東文) is a regular contributing columnist for Taiwan News, the central Taiwan correspondent for ICRT FM100 Radio News, co-publisher of Compass Magazine, co-founder of Taiwan Report (report.tw), and former chair of the Taichung American Chamber of Commerce.