China’s burning desire, that of a world order not dominated by ‘the West’, might as well have been plastered on billboards at the opening ceremony of the Beijing Winter Olympics.
While diplomats from most ‘Western’ countries boycotted the event due to human rights violations in China, it was all smiles and roses between Xi Jinping and Vladimir Putin, the patron saint of ‘opposition to the West’. In fact, the proceedings looked more like an Authoritarian Association (AA) meeting, with Egypt’s Abdel Fattah Al-Sisi and Serbia’s Aleksandar Vučić in good form, not to mention a cohort of fanboys from various Stan regimes.
Still, it was the Xi-Vlad love affair that stole the show, especially after the release of a somewhat absurd joint statement. Running at about 5,300 words, it is nothing less than an anti-West manifesto; more specifically, a strongman defence of ‘alternative forms of non-Western democracy’. In it, the two chums backed each other’s foreign policy Christmas lists, denouncing Taiwanese independence and the “further enlargement of Nato”, for example.
While neither party mentioned the ongoing Ukraine crisis, Xi’s tacit support for Putin’s military posturing was loud and clear. Much like after the 2014 Russian invasion of Ukraine, we can expect that renewed conflict will only bring the Chinese and Russian economies closer. Already, as announced on the day of the Games’ opening ceremony, China agreed to buy $117.5bn worth of oil and gas from Russia.
Not since the early days of the Cold War, through the friendship between Josef Stalin and Mao Zedong, have the two countries so passionately held hands.
Xi needs stability and strength to stay in power
The latter stages of 2022 will see the start of China’s 20th Party Congress, one of – if not the – biggest dates in the year’s global politics calendar.
Xi aims to use the twice-a-decade event to secure a ground-breaking third term in office, having already manoeuvred in 2018 to remove presidential term limits. Chinese presidents are usually only meant to rule for two terms, or until they reach the age of 68, but Xi is set to bypass these restrictions – thereby putting himself in the legendary class of Mao Zedong and Deng Xiaoping, both of whom ruled the nation until their death. In this, he is very likely to succeed.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below formBy GlobalData
Since this is election year, his utmost priority is to ensure that China’s economy remains stable, while simultaneously projecting the country’s ever-growing show of strength on the global stage.
“All regions and departments must take responsibility for stabilising the economy,” Han Wenxiu, executive vice-minister of the Chinese Communist Party’s (CCP) Central Financial and Economic Affairs Commission, wrote in state-run Outlook Weekly in early January.
As part of maintaining economic stability, China will remain even more focused on domestic issues, such as its zero-Covid strategy (meaning more closed off borders for the foreseeable future) and the curtailing of domestic tech behemoths that Xi fears have become too powerful – think Tencent in 2021. Meanwhile, although the CCP has talked a lot in recent years about rebalancing the Chinese economy through ‘common prosperity’ and ‘dual circulation’ (increased domestic demand and decreased reliance on exports), the deep structural changes required for these shifts, such as the major redistribution of the elites’ wealth, are too risky for Xi to take during election year.
By the same token, it will also be too risky for Xi to engage in military conflict, meaning an invasion of Taiwan or major excursions in the South China Sea are unlikely in 2022. At the same time, Xi’s foreign policy will be increasingly uncompromising, lest he show signs of international weakness before the Party Congress. Since hot war is unlikely, fiery rhetoric may shoot up as Beijing takes a more assertive approach to countering criticism of China abroad and controlling narratives more generally, especially those on ‘alternative democracies’, as pushed forward in the aforementioned joint statement with Russia. As a result, geopolitical tensions are likely to grow even stronger.
The ‘Great Power’ competition will be particularly salient as Xi repackages the Belt and Road Initiative (BRI) as a green, digital and/or high-quality fund, one that can rival US President Joe Biden’s Build Back a Better World programme and the EU’s Global Gateway, both of which are unofficial antidotes to the BRI, undergirded by sustainability and ‘Western’ values.
Foreign companies will have to tread more carefully
Where does this leave foreign direct investment to China this year? New and existing companies will be even more at risk of unleashing Beijing’s wrath, should they criticise or posture against the CCP’s interests.
As a result, we may see an uptick in high-profile divestments from the country (as happened with LinkedIn in 2021), especially in strategic sectors that are vulnerable to political flare-up. Xi’s internal focus means that it will be more difficult for foreign businesses (and governments) to engage with Beijing, meaning less opportunity to manage tensions.
This does not mean that China will not continue to court Western/all foreign investors, and that companies will not continue to pour into the country as they have over the past five years. Beijing will be particularly loving towards international businesses that can offer serious technological leverage, regaling them with greater market access, public funds and commercial opportunities. Multinationals that cannot offer such leverage will be at greater risk of CPP-applied pressure to become Beijing lobbyists (or sorts) in the West.
In short, non-Chinese companies and countries can expect an even more unforgiving Xi Jinping this year, one who is laser-focused on maintaining economic stability and projecting international prowess before his likely re-election as China’s indefinite ruler.