Preparing Japan and the United States:
A Chastened China Girds for Conflict


President and CEO of the Long Term Strategy Group (LTSG) Jacqueline Deal

The elites atop the Chinese Communist Party know that something has gone very wrong. Covid-19 has exposed fundamental, deep-rooted weaknesses in the partyʼs governance model. Economic problems and social stability concerns loom ever larger as the fallout from the pandemic progresses. With Xi Jinpingʼs leadership being called into question, his impulse is to crack down at home and lash out abroad. This will only intensify the debate within the CCP, and as the stakes rise, Xi will find it more and more difficult to back down or concede to those arguing for an alternative course.
For the foreseeable future, policy makers in Japan and the United States should brace for a much more confrontational Beijing. Meeting this offensive with counter-pressure offers the best hope of encouraging a shift in power and a dampening of PRC aggression.
In internal conversations, party elites worry about how they will sustain employment now that supply chains have been disrupted and the world is in recession, contracting demand. As the pandemic compels tightening of borders globally, they express concern about the decision of Japan and the United States to incentivize companies to move their factories out of China, as well as about how the PRC will secure access to the raw materials it requires, from food to energy. Compounding these vulnerabilities, CCP experts acknowledge, albeit obliquely, the limits of their administration at home. They have failed to spur indigenous innovation, and their delayed response to the outbreak exposes their inability to react nimbly to an emergency. Yet this is a feature, not a bug, of a regime determined to exert centralized authority over the whole mainland. Xi is thus left to intensify domestic population control efforts while lashing out abroad. Contrarians carefully point out that these moves are likely to exacerbate the above problems. Their input is not welcome, and pressure continues to build up within the system.
The evidence for internal pressure starts at the top. Xiʼs first two trips once the coronavirus lockdown was eased in April were to Zhejiang and Shaanxi, his personal and familial power bases. The symbolism would not have been necessary if he were feeling secure, confident that the party approved of his leadership during the pandemic.