What will China do in 2022?

Xi Jinping's Consolidation of Power

• Xi Jinping is preparing to seek a historic third term at the upcoming Party Congress, becoming the first leader since Mao Zedong to extend beyond a standard two five-year terms.
• This move aims to establish a precedent for a potential fourth term, requiring a justified agenda that centralizes Party power.
• Domestic challenges are being addressed through authoritarian means that merge Western concerns with state control, including:
  • Crackdowns on consumer tech dominance, monopoly power, data usage, and youth screen time.
  • The destruction of approximately $2 trillion in market value of tech companies in October.
  • Aggressive suppression of dissent, exemplified by the treatment of athlete Peng Shui.
• Despite these authoritarian measures, internal support remains high due to:
  • Peak levels of Chinese nationalism and national pride.
  • A perception of success regarding low COVID-19 mortality rates compared to advanced democracies.
• Significant domestic friction persists regarding:
  • A poor record of arresting journalists.
  • The detention of over one million Uyghurs in re-education camps in Xinjiang.

State Control Over the Private Sector

• The 2021 clampdown did not mark the death of private enterprise but rather a definitive assertion of Party control over business activities.
• Private firms are now expected to serve at the behest of the Communist Party and further its strategic goals.
• This domestic shift coincides with a move toward greater international assertiveness, aiming to place China at the center of the global stage.

US-China Relations and the Geopolitical Landscape

• The transition from the Trump to Biden administrations did not result in a thawing of US-China relations.
• Analysts argue the "New Cold War" framework is flawed because:
  • Unlike the Soviet era, the US and China economies are deeply interlinked.
  • Both are major global powers whose countries (particularly in Southeast Asia) rely on US security guarantees and Chinese prosperity simultaneously.
• Forcing allies to choose between the US and China risks driving them toward the Chinese economic bloc.
• Biden faces a strategic dilemma where galvanizing domestic support by labeling the conflict a "New Cold War" undermines efforts to build a unified alliance in Asia.

The Taiwan Conflict and Future Outlook

• The status quo on Taiwan is defined by tension, ambiguity, and balancing threats between the desire for independence and Beijing's national priority to acquire the island.
• Xi Jinping views the reunification of Taiwan as an absolute national priority.
• While the goal may be achieved within 20 to 30 years, the risk of conflict within the next decade is considered high but currently managed through the avoidance of immediate escalation.
• A US failure to protect Taiwan would significantly undermine its security guarantees to South Korea and Japan, creating a cascading strategic crisis.
• The current situation is described as "uncomfortable for everybody," with high risks for all parties involved, including Xi Jinping.