The politburo packed with Xi loyalists, the constitution changed to allow the use of force against Taiwan, and an unprecedented third term as the head of the military, the government, and the Communist Party, means Xi Jinping will tighten his grip on civil society, and is more likely to make good on his promise to take Taiwan.

The 20th National Congress of the Chinese Communist Party (CCP) concluded on October 22 with Xi Jinping being awarded a third term as the trifecta head of government, party, and military. Although the official confirmation will not come until March 2023, at the Communist Party plenary session, there is no doubt that Xi is now the paramount leader of China. As such, he has already purged the party of those who posed him any threat, namely officials who were associated with the Youth Faction and former leader Hu Jintao.

Clearing the politburo of any possible opposition sets him up to carry out any plans he wishes. Additionally, during his opening speech, he made it clear that he was shifting his focus from the economy toward national security. He has also stated that he will not hesitate to use force to take Taiwan. At the same time, the Chinese constitution has been amended, specifically stating that force could be used to take Taiwan and against any actor that prevented China from taking Taiwan, a clear threat directed at the United States.

In his third term, Xi is expected to exert greater control over the economy, while intensifying repression against dissidents, ethnic and religious minorities (such as the Uyghurs), house-church Christians, and the Catholic Church. At the same time, his foreign policy will most likely be more aggressive, posing a greater threat to Taiwan, the US, Japan, and the West.

War between the US and China appears more likely now than at any time in the past 70 years. Consequently, this article contains a national security analysis of the People’s Republic of China, across five dimensions: political, economic, social, information, and military, to help understand the threat to China’s ethnic and religious minorities, as well as why war seems likely, and how that war might play out.

Political assessment

Although China has nine political parties, the eight minor parties must all pledge subservience to the Chinese Communist Party (CCP), making the country effectively a one-party state. It is estimated that the CCP has nearly 97 million members. There are five successive levels of the People’s Congress. Citizens vote directly only at the lowest level, where they elect local and village representatives as deputies to the primary people’s congresses, which then elects deputies to the next higher people’s congresses. The president is elected by the National People’s Congress. Therefore, citizens have very little say in the selection of their leaders. And even the outcomes of votes taken at the successively higher congresses are prearranged.

Since being elected in 2012, Xi Jinping has consolidated his power through cunning political manoeuvring, as well as through an anti-corruption campaign which investigated, jailed, executed, or removed from office more than four million cadres.

Over the past ten years, Xi has been eliminating opposition, increasing his control of the party, and paving the way to a third term. He successfully convinced lawmakers to change the constitution in 2018, removing term limits. Now, he could theoretically serve for life. As paramount leader, he holds all three major power roles: General secretary of the CCP, chairman of the Central Military Commission (CMC), and president of the People’s Republic of China (PRC).

Xi Jinping and his new team / Chinese Communist Party / Weibo

At the party congress, he purged the politburo of those who might stand in his way, including Premier Li Keqiang. He even had former leader Hu Jintao publicly removed from the proceedings. During his opening speech, Xi made it clear that he would be focusing on security, rather than the economy.

Li Keqiang was an economic reformer. His removal suggests that Xi will be continuing his crackdown on the private sector, tightening his grip on private companies and civil society. Under Xi, companies have been urged to follow the CCP’s charter, which obliges all companies which employ at least three party members to form a CCP cell. Consequently, over 70 percent of firms listed in mainland stock exchanges, and nearly 70 percent of China companies listed on the Hong Kong Stock Exchange, have in-house CCP cells, while about 15 percent mention Xi in their articles of association. This is in keeping with Xi’s “corporate governance with Chinese characteristics” ideology, which was introduced in 2017, and is expected to intensify during his third term.

Wang Huning who represented “wolf warrior” diplomacy, will be serving on the seven-member Politburo Standing Committee. Former Foreign Minister Wang Yi will be the country’s top diplomat, conducting “wolf warrior” diplomacy. In September, Wang Yi warned the United Nations General Assembly that “any move to obstruct China’s cause of reunification is bound to be crushed by the wheels of history.”

Unlike a president in a true democracy or republic, the Chinese leader does not have to worry about re-election. With no accountability to the public, he is free to do pretty much anything he wants. In Xi’s case, not only has he removed all possible dissenters from government, but Xi Jinping Thought has been enshrined in the constitution of the CCP. This means that no one can criticize his ideas. He will now be living in an echo chamber of unimaginable proportions.

During his first two terms, Xi promised to improve the economy. In the next section of this report we will see that, not only has he failed to deliver, but the economy is in such a bad state that he is unlikely to rescue it. He promised to end Covid-19, but as of the final week of October 2022, millions of Chinese were still under lockdown. His vow to take Taiwan by force is the only one of these promises he has complete control over.

Economic assessment

China’s economy grew at an average rate of 8 percent for most of the past 40 years. For the last few years, however, growth has been trending steadily down. This year, major investment banks are predicting growth of less than 3 percent. The downturn in the Chinese economy has also driven the currency to an all-time low of more than 7.3 yuan to the dollar.

Xi and his supporters are fond of saying that China has raised 800 million citizens out of poverty. And while it is true that fewer than 1 percent of Chinese live below the national poverty threshold of $2.30, the average income in China is only about US$12,556 per year, less than one-fifth of the average income in the US. Additionally, China is now an upper-middle income country. Applying the UN’s upper-middle income poverty line of US$5.50 per day suggests that a full 25 percent of the population are still living in poverty. About 40 percent were below or just above the poverty line before the pandemic. When a full assessment of the post-pandemic economy becomes possible, this number is expected to rise.

Even more, the country has an extremely uneven distribution of wealth. Rural dwellers earn about half of what city dwellers earn. China’s Gini coefficient, a measure of wealth disparity, is 4.6, representing a high degree of inequality. To put that number in perspective, countries like Norway and Sweden have a Gini of less than 3. Economic advisors have recommended that China bring the Gini below 4 by 2025, but once the post-pandemic numbers are in, the wealth disparity is expected to be even greater.

At the macro level

China is facing a major debt crisis. China’s private debt and government debt combined total more than 250 percent of GDP. Local governments owe $7.8 trillion dollars, through a combination of direct borrowing and other debt mechanisms. Normally, they would repay their loans through the sale of real estate, but that sector is in a major decline, leaving local governments with an expected shortfall of US$1.05 trillion this year

State-owned enterprises (SOE) are responsible for 50 percent to 60 percent of total corporate debt. As result of the economic slowdown this year, 90 percent of the smallest companies will have to take on additional debt in order to meet payments on existing loans. China’s real-estate sector, which has been the focus of international news stories, is teetering on the brink of an epic collapse. The sector accounts for about 36 percent of GDP, more than double what it is in the US and most Western countries. Real-estate sales declined 30 percent this year, and developers are having trouble making debt payments. So far, 30 real-estate companies and more than 29 percent of real-estate loans have gone into default. China’s stock market is so dependent on the real-estate sector that it could lose 20 percent in value if the sector collapses. Non-performing loans at state banks now total US$534 billion. Between 13 percent and 28 percent of Chinese firms are expected to have a negative cash-flow this year.

Social assessment

On the civil liberties scale, China scores only 11 out of a possible 60 points. On political freedom, the PRC scores -2 out of 40. When it comes to minority rights, although the constitution says that all ethnicities are equal, the Han majority, making up 92 percent of the population, has much more power than the other 55 ethnic groups. For years, Beijing has implemented programs to forcibly alter the demographics of minority-majority regions, including Xinjiang (Uighur), Tibet, and Inner Mongolia. Han Chinese have been relocated to these regions and local young people have been awarded scholarships in other parts of the country, with the express purpose of removing them from their culture. Government servants are even offered bonuses and other benefits for marrying minorities. As a result of these policies, the Han population of Xinjiang has grown by 25 percent since 2010. Similarly, Mongolians now make up less than 20 percent of the population of Inner Mongolia.

Ethnic minority languages have been banned as mediums of instruction in schools. In 2020, there were large-scale protests by parents and students in Inner Mongolia, demanding that lessons taught in Mongolian be restored. Xi Jinping has also stated that one’s identity with an ethnic minority must be subordinate to one’s identity as a Chinese national. Surveillance and intimidation of ethnic minorities increased in 2020 and 2021. This includes the beating and harassment of Tibetan monks, as well as the 2021 sentencing of a Tibetan monk who exchanged phone messages with Tibetans living in Nepal. In Xinjiang, Human Rights Watch was able to monitor some continued abuse, but reporting was made more difficult because of Covid-19 restrictions. CCP repression of Uighur and activists abroad was also continued.

Religious freedom

While religion is discouraged, Chinese citizens are permitted to belong to one of the five approved faiths, which are represented by the Buddhist Association of China, the Chinese Taoist Association, the Islamic Association of China, the Three-Self Patriotic Movement (Protestant), and the Catholic Patriotic Association. Approved religions are governed by the CCP State Administration for Religious Affairs, which appoints clergy and approves liturgy. Religious texts — even the Bible — have been rewritten to include Marxist ideology.

Information assessment

Restriction of press freedom and freedom of speech intensified in 2021 under the guise of protecting society against subversion, separatism, or speech which is harmful. All major media continue to be state-owned, with the CCP’s propaganda department distributing daily briefings to media, telling them what they should and should not cover. As a result, China ranks 175 out of 177 countries for press freedom. On internet freedom, China scored 8.25 out of a possible 40 points.

Military assessment

The United States has the world’s no. 1 military by overall firepower, while China ranks no. 3. The US defence budget is US$770 billion, while China spends US$230 billion. The US has 1.39 million active troops, plus 442,000 reserves. The People’s Liberation Army (PLA) has 2 million active personnel, 510,000 reserves, and 624,000 paramilitary personnel.

The US has more tanks and armoured vehicles than China, but China has more artillery, self-propelled guns and mobile rocket projectors. This is in part because China must defend all 14 of its land borders. As a result, the Pentagon estimates that only about 20 percent of the PLA personnel and assets can be moved within China’s borders, and an even smaller percentage could be deployed overseas. 

The United States has an edge in terms of defence technology, in such areas as command, control, communications, computers, intelligence, surveillance, and reconnaissance (C4ISR), as well as air, surface, and undersea weapon systems. The US has 13,247 aircraft to China’s 3,285. China has more naval vessels than the US, 777 vessels to 484 in the US Navy, but the US military is much more powerful, with 11 aircraft carriers to China’s 2, and 79 submarines to China’s 68.

In terms of nuclear capabilities, the US has conducted 1,054 nuclear weapon tests, whereas China has only carried out 45 nuclear weapon tests. The US has 3,780 warheads while China only has 350 nuclear warheads.

Experience and overseas deployment

The US has more recent experience fighting wars: World War II, the Korean War, the Vietnam War, Panama, Grenada, the First Gulf War, Kosovo, Iraq, and Afghanistan. Additionally, the US has nearly 800 bases in 70 countries allowing the US military to deploy anywhere in the world quickly. In time of war, the US could fight nearly anywhere, using its network of bases for resupply. Specifically, as relates to China, the US maintains bases in Japan, South Korea, Thailand, Singapore, Australia, Guam, Diego Garcia, Saipan, American Samoa, and the Philippines, as well as joint-use arrangements in other Asian countries.

Alliances

China only has one official overseas base, in Djibouti, an unofficial naval station and airbase in Cambodia, and a security pact with the Solomon Islands. China has no official alliances, apart from North Korea. Russia and China are sometimes-allies who cooperate when their interests overlap, but the two countries do not have a mutual defence pact.

The most likely flashpoint for a war between the US and China would be Taiwan, the Republic of China (ROC). Xi has clearly signalled that he is prepared to use force to annex the island nation. With no opposition to face in China, Xi may well seize the opportunity to cement his legacy. Furthermore, the Chinese economy is in trouble, and experience from two world wars, and many other conflicts, teaches that economic crisis can be a catalyst for war. War would give  Xi an excuse for the declining standard of living in China.

If China invades Taiwan, it is unclear whether or not the US would fight. Under the Taiwan Policy Act, the US provides Taiwan with weapons to defend itself, but does not pledge to fight. On the other hand, the Biden administration has publicly stated, at least four times, that the US would fight for Taiwan, although the White House later walked back the comments each time.

Japan’s former prime minister, the late Shinzo Abe, said that an attack on Taiwan would be considered an attack on Japan. Essentially, by launching a large-scale invasion across the Taiwan Strait, the PLA Navy and PLA Air Force would breach Japanese territory, which, under Japanese law, would give Japan the right to defend itself. Washington is bound by the US-Japan defence agreement to defend all territory controlled by Japan. If Japan fights, the US is legally obligated to fight. Should the US become involved in a war to save Taiwan, other alliances would most likely play a role, including the Quadrilateral Security Dialogue (Australia, India, Japan, and the US) and the AUKUS alliance (Australia, the United Kingdom, and the US), amplifying the firepower directed at China.

Antonio Graceffo

Dr. Antonio Graceffo, PhD, China MBA, is a China economist, the author of Beyond the Belt and Road: China's Global Expansion and The Wrestler's Dissertation. He is based in Ulaanbaatar, Mongolia.