CHINA’S 20TH PARTY CONGRESS AND IMPLICATIONS FOR INDIA

The historic 20^th National Party Congress (NPC) of the Communist Party of China (CPC) officially began on October 16^th 2022 and concluded on October 22^nd 2022. The week-long event –held once every five years–has reshaped the Chinese political elite, bringing in new faces that China watchers must acquaint themselves with for the next five, if not ten, years.

Xi’s report to the 20^th NPC, presented in short at the opening ceremony, was telling in more ways than one with regards to the implications his third term can hold for India. This, coupled with the new leadership he has installed, bode long term challenges in the economic, military and diplomatic domain for Delhi. How do these domestic personnel changes affect India and what should Delhi watch out for?

Xi’s policy line is the only line of consequence

The unsurprising continuation in power of Xi Jinping –marked with further consolidation of his power via constitutional amendments to the Party Constitution –has brought with it some surprising changes. For instance, beyond Li Zhanshu and Han Zheng –members of the PBSC that were above retirement age –the surprising retirement of Wang Yang (who was 67 and could have stayed another year) shows that Xi’s next term is going to be dedicated towards bringing in younger blood into the core leadership. However, no successor appointment seems imminent; in such a situation, it is not improbable to imagine a fourth term in power for the Princeling, if possible, as well.

Li Keqiang’s retirement —which was largely expected —has set the stage for the almost complete expulsion of the Youth League faction from core party echelons, especially as the demotion in rank of prediction favourite Hu Chunhua dealt a major blow to the faction’s power. Beyond Hu, those who remain have their biaotai (political signalling) forcing them further away from the Tuanpai (Youth League Faction). Similarly, removal of Guo Shengkun and Han Zheng, members of the Shanghai Faction led by Jiang Zemen –have also been removed. Ultimately, this further builds on what is now an almost complete end of factional politics in the CPC. The Xi Gang remains centrally placed in all key positions, making the CPC a one-faction strong party. Such domestic political manoeuvring highlights that building and maintaining public opinion and policy implementation will also now increasingly emerge directly from Xi, with little to no opposition behind closed doors and at Beidaihe as well.

In such an instance, the continued implementation of zero-COVID policy (which will shape greatly the entry and continued stay of foreign nationals and students in China), media reportage of international events and local news as well as influence operations targeting rival powers like the US and India will be implemented by key Xi loyalists. These include  new International Liason Department head Liu Jianchao and new Propaganda Department Chief Li Shulei who has been promoted to the now 24-member Politburo. For India, these leadership changes sets the stage for a stronger push on hybrid warfare by the Chinese; the documentary shown at the 20^th Party Congress itself had scenes from the Galwan clash. Previously,  Chinese soldiers from the June 2020 LAC conflict were honoured at the Winter Olympics; these actions show a continued focus on nationalistic fervour to ensure Party support.

This nationalism-Party connect, which Xi has built on actively since the time of the centennial celebrations, continues to be detrimental for India, translating into quick anti-India sentiment upon any disturbances along the border or international diplomatic exchanges. Li Shulei is expected to lead Xi’s vision on ideology, internet, media and cinema both within China and beyond, building a global narrative that ties with the Chinese vision for ‘building a community with a shared future for mankind’. These narratives highlight not just the exporting of the Peking model of governance and the Beijing Consensus but also of the Chinese Dream. As India works to counter Chinese influence operations in the country, these domestic changes show restructuring of power in favour of loyal Xi strategists as he seeks to double-down on soft power consolidation globally, which heralds a clarion call for Delhi to protect its own national interests vis-à-vis soft power projection and counter influence operations.

A stronger and more controlled civil-military domain

Post the 17^th NPC, a ‘bifurcation’ between the military and Party in China began to emerge, highlighting the identity of the military beyond that of CPC control and more inclined towards the individual leadership power that drew from and culminated around Xi himself. The reform of the military has been shaped around Xi’s Thought; his emphasis now rests on the centennial goal of having a “world-class military” by the 100-year anniversary of the People’s Liberation Army (PLA) in 2027.

Excerpts from his speech at the 20^th NPC, beyond highlighting the successes that the 19^th NPC has already had vis-à-vis military building, threw light on this continued focus on  modernizing China’s national security system is central to ‘national rejuvenation’. Enhancing political loyalty in the military, continuing with military reform and “integrated development of the military through mechanization, informatization, and the application of smart technologies” are prime vectors. Here, indigenization of arms and equipment, as well as enhancing its role as a defence exporter are factors India must prepare for. Importantly, such export of its defence market can be expected to cater to the Africa-China military ties, which will further strengthen China’s political clout in a continent with which India (and Japan) has been attempting to build stronger cross-sectoral ties. Xi has sought to encourage more people to serve in the PLA. The focus on “reform of military universities and colleges”, better honor and incentivize services in the defence forces as well as making the public more aware about national defence shows a push towards this goal. For India, which already lags behind China in terms of active military personnel by roughly 5,50,000 personnel, this incentivization drive can further tilt fighting strength in China’s favour. Moreover, the goal to “modernize military theory” in a bid to “enhance the military’s strategic capabilities for defending China’s sovereignty” indicates Xi’s continued focus on not just Taiwan, but also the Line of Actual Control (LAC) especially as Xi spoke of winning “local wars”. The promotion and removal of Chinese generals will remain Xi-controlled entirely. Since becoming Chairman of the CMC, Xi has overseen the promotion of over sixty full generals. Recent trends post 2020 have witnessed a preference for LAC focused military officials along with those specialising on Taiwan therefore preferring officials with operational capabilities in both theatres.

As the “system of ultimate responsibility” will rest with CMC Chairman Xi, the focus on combating “corruption in the military” will continue to provide inroads of the CCDI into the CMC. Here, Xi’s henchmen and Guangdong chief Li Xi has replaced Zhao Leji, with this new role catapulting him into the PBSC as well; bringing the PLA and its subsets like  People’s Armed Police and special operation troops under stronger control of loyalists becomes easier amidst a CMC-CCDI drive. Importantly, in his speech, Xi has linked anti-corruption with national security and thus shown that the CCDI will continue to be his tool of choice in not just building a modern, socialist China that but also a modern military by 2027, under the Party (and Xi’s) absolute control.

The new CMC has been termed by some a ‘war council’ focusing on Taiwan; the deduction seems misplaced —if not unidimensional. If anything, the new CMC has a strong India connection. Firstly, the appointment of He Weidong —who has been a former Commander of PLA Western Theater Command (WTC) and was also Deputy Party Secretary of PLA Ground Force during Doklam in 2017— as Vice Chair replacing retired Xu Qiliang shows Xi’s seriousness vis-à-vis the LAC. He Weidong’s new position is a double promotion and breaks with convention as he has never served in the CMC before.

Importantly, amidst a spate of personnel changes that were appointed Commander in the WTC post-Galwan, He Weidong appears to have performed well, as his next appointment was to the Eastern Theater Command (ETC) as Commander. Furthermore, his move to ETC was essentially a swap with then ETC force commander Xu Qiling, who took over the WTC in place of He. Importantly, Xu Qiling is a newcomer to the Central Committee in the capacity of a full committee member, showing that he too performed well in the WTC, resulting in a promotion.  

Li Fengbiao, who is currently the Political Commissar of the WTC, is another military leader with an India focus who has been retained in the Central Committee. Li has previously held the position of Commander of the Strategic Support Force that deals with information and cyber warfare between 2019 and 2021 spearheading hybrid warfare in the India-China military dynamic in his current role in the WTC. The remaining four CMC members – General Li Shangfu, General Liu Zhenli, Admiral Miao Hua and General Zhang Shengmin –are also key Xi loyalists. Only Liu Zhenli and Zhang Youxia having combat experience in the new 20^th CMC, while four members are from the army showing emphasis on land-based conflict. team

Nonetheless, the appointment of two Vice Chairs with direct India-dealing experience –and the presence of technocrat Li Shangfu in the CMC who is poised to be the new Defence Minister — makes it clear that the implications of the military reshuffle on the LAC and Indian national security are set to be wide-ranging. Importantly, as a technocrat, Li Shangfu can be expected to push for Chinese defence ties with partners to take on a stronger technology ambit. Herein, for India, a stronger push from China in exporting defence technology to states like Pakistan, North Korea and even Russia bodes security and economics risks.

Nationalised economic policies will impact bilateral and regional trade

Chinas gross domestic product (GDP) improved by 3.9 percent in the July-September quarter. This data has surpassed the 3.4 percent growth otherwise predicted and gained momentum from the 0.4 percent growth recorded in the second quarter. A 6.3 percent rise in industrial production —with strong improvements in mining, electricity and manufacturing —has been spearheaded by high-tech manufacturing, justifying the importance of technocracy to Chinese economic leadership. However, Beijing’s economic growth has nonetheless been impeded by the persistence of COVID-19 restrictions, the escalating real estate crisis, and the worldwide economic downturn. Moreover, export growth has reduced to 5.7 percent, marking its first such decline in over two years spearheaded by both a weakening demand and impact of COVID-19 protocols.

The absence of career economists like Li Keqiang, Liu He, Wang Yang, Yi Gang and Guo Shuqing from the new team will certainly be felt by Xi. Even as economic reform and zero-Covid will continue to be implemented, albeit struggling for balance, the direction of Li Keqiang’s economic model will stay another year or two. New members will be more focused on demonstrating their commitment to Xi, which indicates a continuity of older policies as they are not economists and will likely follow in steps of the previous models.

Focus on common prosperity —more specifically, dual circulation strategy— is vital to predict implications for India. The cementing of common prosperity as the core economic agenda has seen the constitutionalizing of dual circulation at the 20^th Party Congress. The self-reliance driven focus of the Chinese economy via dual circulation can provide opportunities to India. China’s decision to concentrate on more advanced industrial production could speed up the country’s withdrawal from more labor-intensive manufacturing sectors, a process that had already started as wages started to rise demographics. India has lagged behind in attracting these businesses, but there is still time to benefit from a significant exodus of labor-intensive manufacturing from China.

Over the next ten years, there will be two concurrent shifts: deglobalization and a transfer of supply chains away from China. Here, the latter will increase while the former will shrink the Indian export market. Furthermore, as India works with Japan and Australia on the Supply Chain Resillience Initiative (SCRI) to create non-China dependant sustainable supply networks, the renewed focus on dual circulation in China can be utilized to Delhi’s benefit. In order to minimise China’s economy’s reliance on fixed asset investment, which has demonstrated dwindling returns, dual circulation also emphasises the importance of private consumption and services. Yet, as per the third quarter report, fixed asset investment increased by 5.9 percent for China, which can spearhead a slight shift in economic goals.

As China focuses on domestic economy via the lens of “more secure” development, Xi’s emphasis on security appears to overshadow focus on market reforms. In this case, China’s favorable balance of trade with India, which despite self-reliance models has now surpassed USD 72.9 billion during 2021-2022, is a cause of immediate national economic security concern. Furthermore, as trade agreements like Regional Comprehensive Economic partnership (RCEP) and even the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) –which China has applied for – come into fruition without India’s participation, the security driven economic development model of Xi Jinping can further increase Chinese economic clout in Asia, challenging India’s regional power. The inclusion in such multilateral economic frameworks while implementing dual circulation allows Beijing to maintain market access to key advanced economies despite bilateral frictions.  China’s trade ties with ASEAN (Beijing has remained ASEAN’s top trade partner) and BRI countries (trade crossed an eight-year high in 2021) continue to limit Indian economic prowess in the region and in the India-China bilateral.

A hard-line Foreign Ministry

The retirement of top diplomat Yang Jiechi has set the stage for a new Foreign Ministry helmsman. Herein, the inclusion of Foreign Minister Wang Yi (69 and above retirement age) to the Politburo indicates him as the potential replacement to Jeichi. It also shows that age norms for respecting retirement are a thing of the past when it comes to ensuring Xi’s policy line. Nationalist Chinese —and much of foreign media — have termed career-diplomat Wang a “silver fox” while he remains one of China’s most seasoned ‘wolf-warrior’ diplomats. Owing to his years of service as foreign minister, Wang’s repertoire has made him adept in dealing with the international challenges that China has faced over the past ten years. Inclusion of other hard-line diplomats like Qin Gang —who is currently ambassador to the US and is slated to take over as FM from Wang —shows continuity in wolf warrior diplomacy in the coming years.

Importantly, China faces mounting international pressures ranging from rivalry with the US to strained bilaterals with India, Australia and the EU. The retention of Wang Yi despite him reaching retirement age shows Xi’s focus to ensure experienced leadership that can deftly sway global public opinion. In the United Nations, China’s leadership of the Coffee Club continues to limit advances of the Group of Four towards permanent membership of the Security Council is a trend that will remain. Concurrently, the recent refusal of China to blacklist Pakistan-based terrorists has yet again reiterated Beijing’s closeness to iron-brother Pakistan and rejection of India’s national security interests.

Unlike Yang Jeichi, who maintained a lower international profile despite being senior in position to Wang Yi in the last decade, Wang can be expected to keep his international presence more active. He has become one of the most recognizable faces of the Chinese government to the public worldwide, and built strong professional and personal camaraderie with China’s allies and partners. Simultaneously, his core understanding of manoeuvring tensions with rival powers yet again indicates his continued presence on the international stage. For India, presence of both Wang Yi and potential FM Qin Gang will mean a continued push by China on unilateral attempts at justifying LAC changes, limiting India’s role in the UN, opposition to Delhi’s membership bid for the Nuclear Suppliers Group (NSG), attempts at tilting allegiances at multilateral forums like the Shanghai Cooperation Organisation (SCO) and the Russia-India-China trilateral as well as statements interfering in India’s internal matters like Kashmir. Approval of conference visas for think-tank or academic engagements will continue to remain minimal, owing to the tense bilateral and COVID-19 restrictions. Furthermore, as Chinese citizens remains barred from international travel, a gap begins to emerge in multi-track diplomacy as engagements between academicians, policy-makers and businessmen stay limited if not non-existent.

What should India prepare for?

Making projections is difficult because the security environment is in a constant geopolitical flux. A lot will depend on how things play out and develop on a case-by-case model. Nonetheless, certain appointments –like that of Wang Yi, He Weidong and Zhang Youxia –being unconventional vis-à-vis age and experience norms highlight a strong India undercurrent in Xi’s cabinet planning. Even as strategists predict Taiwan, domestic economic woes and power consolidation as main focuses for Xi, it is critical for Delhi to observe the shift in leadership posturing that China has undertaken as it shows Xi’s gameplan for engaging with India for the next five years —and beyond.

In such a situation, India must prepare for a consistency, if not an increase, in China’s assertive actions vis-à-vis the LAC and regional power politics. Wolf-warrior diplomats at the helm of the foreign ministry will posit continued pressure on India in international forums as well as in bilateral engagements. Yet, as Indian diplomacy gets more in-tune with its own nationalist sentiment and power —as seen with Delhi’s steady position on the Russia-Ukraine conflict despite Western pressure —it becomes well-placed to handle Chinese wolf-warrior diplomacy. Furthermore, long-term engagement with Wang Yi makes his diplomatic leadership style somewhat predictable; herein, focus on understanding the next FM (potentially Qin Gang) and their history with South Asia is critical. On the military domain, Delhi must begin preparing for future skirmishes along the LAC especially as China appoints strong India-focused generals to the CMC. Herein, influence operations and drone warfare both continue to be dominating security threats that will see a stronger push in the coming months.  Importantly, a key area that Delhi needs to build management strategy for is the onset of the succession process for the 14^th Dalai Lama.

Economically, while a continuity can be expected in India’s bilateral trade with China despite attempts at reducing dependence, Delhi must actively build on the SCRI with Japan and Australia. Restructuring of supply chains to be more sustainable and less-China driven is crucial; herein, improving India-Taiwan ties especially with respect to semiconductor trade is important. Moreover, focus on Taiwan will allow India deeper synergy with the West, wherein is remains somewhat diplomatically alienated due to its stand on Russia. As Xi settles in with a team that is less economically-inclined as before and remains more focused on continuing implementation of policies like dual-circulation, India must use the momentum to tap into manufacturing markets that have erstwhile been dominated by Beijing.

The interlinking of military, economics and domestic politics with foreign policy is a trend that is clearly visible in Xi’s speech —and in his candidate selections. India must proceed on its bilateral with China keeping these changes in mind.