China’s Xi Jinping is making policy decisions in a vacuum

Hey, everybody, Peter Zeihan here coming to you in Washington DC at the Watergate. And I thought today might be a great time to talk about leadership. 

Now I’m going to do a whole series of these while I’m in town and you’ll be seeing them over the next couple of weeks, but I wanted to start with the issue of the day. And that is Chairman of the CCP, Xi Jinping in China, is currently in the middle of his Party Congress that happens every five years. And the debate in the China watching world is whether he’s going to make himself president for a third term or just dictator for life. 

Xi Jinping, what he does is kind of besides the point here, he is a dictator for life. So the trappings of how he decides to justify or advertise that are really kind of irrelevant. And it’s more important to look at the structure of China at this moment and how he fits into that.

China is a tough place to govern. It’s a huge country with a massive amount of geographic diversity. And even though the Han super majority is over 90% of the population, the regions are so distinct that there’s a lot of identities even within the ethnicity. North on the Yellow River, you’ve got the North China Plain, which is where about half the Chinese population lives. And it has always been tight in the grip of Beijing. 

In the South, you’ve got the cities from Shanghai going down to Hong Kong, which have always been a little secessionist and more integrated with foreign zones, especially when it comes to their food supply. So they’ve always had their own identity. 

And then in the middle, you’ve got to the Yangtze River from Shanghai to Schezuen that has always been the most sophisticated and value-added and functional part of the Chinese economic system – and has usually resisted Beijing’s rule but they’re still quintessentially Chinese.

Ruling this is difficult because it means each region, each city has its own identity, its own idea of what should happen and not happen, and how to put it all together. And then in Beijing, you’ve got the emperor who has to manage all of this. 

And it means that China tends to oscillate wildly between two conflicting visions. On the one hand, there’s local autonomy. You’ve got the locals who are determining what happens. They have a saying in China that the emperor is far away. And so the Chinese system tends to spin apart and dozens of competing systems. On the other hand, you’ve got the emperor who tries to hold it all together and tends to over-centralize as a result. And combining those two themes means that China has the most war torn and internecine conflicting history of all of the major cultures of all the world. 

Now, in the leadership years before Xi, you know, not Mao but his successor, Deng Xiaoping and moving on from them, there was this idea that there had to be a degree of balance. So leadership involved the South, the Central, sections on the north – although the North was very clearly in charge, and the center was very clearly in the second position.

But by the time we got to Xi, the decision was made that it’s time for somebody who could represent all the regions, and he was brought in as kind of a compromise candidate. And then he took over.

In his first five year term, it was a massive, what he called an anti-corruption campaign. But it was really a purge of all the competing power centers throughout the party and throughout the system. And whether you had a different view of what China should be or how to get there, you were kicked out. And if you were a local regional power boss, you were brought to heel.

In the second five-year term, as you went after everyone who agreed with him, to make sure that no one was capable of independent thought in his area. And that has made him the most isolated world leader on the stage right now, arguably the most isolated in Chinese history. And he’s now more shut off from everything and all sources of information than even the Kim dynasty of North Korea. And so we are seeing catastrophic policy decisions being made in economics and trade with COVID and security. 

And for the bureaucracy, you kind of go one of two ways. Option number one is you are a true believer, and you think that Xi is the second coming and so when you see him say something, you snap to and do your interpretation of it and the most zealous way you can come up with. This is one of the reasons why the lockdowns in places like Hong Kong have gotten so extreme, and why you’ve got some idiots out there who are sanitizing airport runways, because I think that’s what Xi wants them to do to fight COVID. 

But the vast majority of the bureaucracy, knowing that if they get brought to Xi’s attention, good or bad, it could be a disaster. They just don’t do anything unless they’re specifically told. So we’re seeing a seizing up through the entire system because we have a leader that is so disconnected from everything, he’s making decisions without any information whatsoever because nobody wants to bring it to him. And that means that the Chinese system, or sorry, the greatest threat to the Chinese system, the greatest reason to expect the Chinese system to collapse in the foreseeable future, is the leadership. 

You know, we think we have a problem in the United States going back and forth from W to  Obama to Trump to Biden and all the issues and inconsistencies – that it’s nothing compared to the complete information lockdown that now exists at the very top in the Chinese system. Okay. Next time I’m sure we’re gonna have to talk about Putin because, wow. All right, everyone, take care. See you soon.