Chinese Protests: Reading the Tea Leaves

The current unrest might have challenged the authority of Xi there, but there is unlikely to be an imminent threat-or change in his idea of nation or world- in foreseeable future. — KK Srivastava

Chinese Covid-zero strategy has understandably resulted in widespread resentment and protests by the ordinary citizens there. These eruptions may actually pose one of the most significant challenge to Xi Jinping and his communist party rule since the Tiananmen square agitation of 1989. A crackdown against this exhibition of widely shared anger cannot be ruled out. But such a repressive approach, if followed, will create martyrs. Ironically easing the lock down may cause a spike in illness and death, since a significant percentage of elderly Chinese are either not fully vaccinated – or boosted – or have received less effective Chinese vaccine; understandably some Zero Covid measures have been eased. But simultaneously there is an attempt to tame the protesters’ ‘Leaders’. This is an attempt on the part of the government to buy some time; after all it can not afford to backtrack or admit that Xi is wrong. Chinese universities have been shut and police are out on streets to prevent more protests advocating ‘no dictatorship but democracy’. People are exasperated never the less, since they feel their freedoms have been curbed too harshly; these are the citizens who have never tasted democracy and have no role to suggest how they should be governed. Yet, they chose to come out on streets. 

This has led to a slump in factory production as also it has affected general population’s ability to earn the daily bread. But China is trapped by its own propaganda directed at projecting the infallibility of its top leadership, mainly of course the president. Xi has called out for ‘common prosperity’ which is just a slogan like zero covid. There protest have certainly not reached a stage where the state loses control of the situation, and are unlikely to. One may recall how the 1989 uprising was crushed with brute force. Yet one must admit that such burst of anger takes courage in a nation where individuals, having very weak legal rights, are governed with iron hand. But most certainly the country’s economy is unlikely to recover in a hurry. The Yuan has lost ground to the US dollar. Also there is increasing internationalization of protests wherein people have gathered in front of Chinese embassies in several parts of the world. Generally China dismisses such criticism's this time it may be different. Can we expert China to quit it is game of make believe and make peace with the truth? In our assessment it is rather unlikely that China will act responsibly given that Xi has been elected (!) for the third consecutive term, and his governance model has to be defended at all costs. Xi cannot allow his authority to be dented. 

But 2023 will not be 1989. Then China reclaimed the economic high ground. Now it seems hardly likely. Look at the projections by S and P (S&P) below.

The IMF expects the Chinese economy to grow at 3.2% in 2022, nearly 1.2% point slower than its emerging market peers in Asia. In fact Chinese economy has been losing momentum. Between 2002-2012 the economy grew at a CAGR of real GDP at nearly 11% but this rate got reduced to less than 7% during 2012-2021, the Xi period. Xi aims at making China a mid level developed country in the next decade. For this it needs to grow annually at around 5%. But some commentators estimate that it may actually grow at around 2.5% only. So it is not just a matter of temporary lockdowns. Shrinking population, declining productivity growth, and heavy debt burden will present it from becoming the world’s largest economy. While earlier (during Deng Xiaoping) private capital – including global players – was welcomed, now there will be greater role for the state, more central planning and attainment of common prosperity. This sea shift of equation between the state and the private capital will likely adversely affect Chinese economic prospects.

Xi’s agenda in all matters, economic, political, governance, seems to be solely driven by a need to prove his policies right. But in the process this authoritarian model of governance is likely to fail to respond to the plight of ordinary citizen. But this also means that resentment will find expression in angry protests, especially when political and democratic unfreedom will not be compensated by economic well being. The political supremacy of the communist party will not remain unchallenged. While the government there may not relent in near future, one wonders how the Chinese model will draw its sustenance in the long run. While the Chinese state enjoys immense power as of now over its subjects, perhaps it may increasingly become unsure of its own authority. Democracy as a model may not be ideal but authoritarian regimes are certainly in deep crisis. People are longing for ‘Freedom’-political plus economic they wish to govern themselves. Closed societies which feed nationalistic pride to its members while putting their wellbeing at risk themselves are open to upheavals. That’s why China found itself unable to contain the epidemic, rejecting the foreign vaccine. Those with their belly full may opt to surrender their political freedom for a while; but when even economic development may not take place they start valuing their personal freedom.

Yet it may be premature to write the obituary of the current regime in China in foreseeable future. This is because Xi may offer tactical concessions on one hand and attempt targeted repression on the other; indeed the regime there has already started working in that direction. Second, most protests – as history worns us – are either contained through a brute force or fade out. Third, these protests need to have a leadership and must be widespread; there is news that instead of having any contagion effect these protests have been quelled. Fourth, now that the power is concentrated in one man and his protégés, who owe it all to him, it will be highly unlikely that Xi will refrain from reasserting his authority, quickly. A concession should not be read as conceding completely. The world may witness a little stepping back by the regime in China but an about turn is not what we may witness.

So, what is the take away? Well, in our opinion Xi faces no substantive threat to his rule or policies as of now. Yet, it will be foolish for him to be in self denial mode; his authority has been definitely challenged. Now only that Xi wants to reposition China as aggressive, revisionist world leader, it actually wants to reshape the local and the world order that should be dictated by him. But he is likely to face a backlash both locally and in international arena. Perhaps he has served himself too much on his plate, political control at home, increasing reliance on state as against markets for economic growth, and more assertive policies aboard in the name of shared destiny. So is the clock ticking? Well, we will have to wait to find an answer.

Share This