20th National People’s Congress in China: Quo Vadis?

The 20th National Congress of the Communist Party of China was held this year from October 16 to 22. Every five years, the Central Committee and the Central Disciplinary Commission are elected, under the chairmanship of the President of the People’s Republic of China, Xi Jinping. In addition, the period since the last National Congress is evaluated and programmatic planning for the coming years is undertaken. Due to the extraordinary importance of China, both for the German and the global economy, Global Bridges organised a video conference shortly after the Congress on the topic “20^th National People’s Congress in China: Quo Vadis?”

The guest speakers were Jörg Wuttke, President of the European Chamber of Commerce in China and Managing Director / General Representative of BASF China; Dr. Angela Stanzel, researcher at the German Institute for International and Security Affairs (SWP); and Felix Lee, correspondent at China Table and Young Leader Alumnus of Global Bridges. The event was moderated by Katrin Otto, Head of Market Development China at Deutsche Börse Group and Member of the Board of China Europe International Exchange AG.

At the beginning of the symposium, Dr. Beate Lindemann, Executive Chair of Global Bridges, welcomed the participants and expressed her regret that the XVI Study Trip to China planned for the end of 2022 could not take place again this year due to the zero-covid policy. She also thanked Jörg Wuttke for his long-standing friendship and the many times he briefed Global Bridges members with much expertise about China’s politics and economy, both in person (in Beijing) and virtually.

After a brief introduction of the speakers by Dr. Lindemann and Katrin Otto, the first guest speaker shared their assessment of the situation with the audience: first and foremost, the National Congress has shown how consolidated Xi Jinping’s rule has become. The way former President Hu Jintao was led out of the hall showed the end of an era, the future will become more “communist”. The joint visit of Xi and the Politburo to Yan’an, the former centre of the Communist Revolution during the Chinese Civil War, was symbolic, the expert said, as Xi wants to build on the legacy of Mao Zedong.

He described President Xi as a “master politician” who has known how to expand and consolidate his power since the beginning of his term. In contrast to Mao Zedong, however, he has no advisors closely associated with him and only appointed loyalists (“yes men”) to important positions. Xi could therefore implement his personal vision of China without restriction. Xi’s rhetoric has changed little over the years and should be seen as a “road map” for China’s development. In his speeches, Xi emphasises a readjustment towards the goals of communism, i.e. he advocates for more equality among the population and the repression of private business interests. According to the speaker, he will likely remain president until old age.

The moderator then gave the floor to the next speaker, who expressed surprise at the developments in China. In previous publications on Deng Xiaoping, the course of Xi Jinping’s rule was always foreseen differently. He considered the sidelining of old rivals and the silencing of critical voices a move away from collective leadership towards dictatorship. In particular, the market reformers who held important posts under Deng Xiaoping and later government leaders are now no longer represented. This development is worrying because of the susceptibility to error of countries ruled by autocrats, as can be seen today especially in Russia under Vladimir Putin. Hu Jintao was led out of the hall because his reaction to the new composition of the Politburo, in which not a single politician close to him was represented, was not to be broadcasted publicly.

The following speaker then commented on Russian-Chinese relations, stressing that they differ from the relationship between Putin and Xi. There are important parallels between Russia and China and Putin and Xi. First and foremost, the leaders share a similar understanding of recent history and a similar view of the existing world order. For both, the collapse of the USSR was a mistake in history; Xi is guided by the desire to avoid a similar development in China at all costs. From Russia’s and China’s point of view, the USA and its allies hinder the rise of both countries, and the existing world order does not satisfy Russian-Chinese interests. The relationship between the countries has never been a “perfect friendship”, but under Putin’s and Xi’s leadership, ideological commonalities prevail.

This attitude leads to the fact that all political decisions of the Western world are seen as attempts to contain Russian-Chinese interests, making dialogue with China all the more difficult. According to the expert, this “paranoia” towards the Western world manifests itself, among other things, in the fact that international events are always embedded in this narrative. For example, Chancellor Olaf Scholz’s visit to China was interpreted in the Chinese press as a rejection of American (anti-)China policy. The Chinese public is convinced of the malice of the USA towards China in this matter.

The following speaker shared this assessment in parts, but also emphasised that China was implementing the sanctions against Russia and that Russia had serious problems with China’s unwillingness to supply, especially in the area of semiconductors. Xi had overestimated Putin’s military capabilities and underestimated the strength of the West. With the exception of Putin’s and Xi’s relatively similar world view and shared Anti-Americanism the countries do not have much in common; they are “aligned” but not “allies”.

Asked whether a military annexation of Taiwan by the People’s Liberation Army of China was imminent in view of Russia’s war of aggression against Ukraine, another expert replied that there were parallels in both cases, but also major differences. Xi was the first Chinese leader to link the annexation of Taiwan to a date, namely the year 2049, when Xi’s “Chinese Dream”, which includes the annexation of Taiwan, will be completed. Therefore, the closer this date gets, the more likely an invasion becomes. According to the speaker, an invasion in the short term is unlikely. Instead, China has been trying to undermine Taiwanese democracy in recent years through military pressure, political and economic isolation and disinformation campaigns in order to incorporate Taiwan by non-military means. However, due to the aforementioned end of collective rule, the omission of critical voices in the Politburo and the inclusion of ideologues instead of pragmatists could lead to such political and military missteps.

The following speaker offered a different perspective on the topic: Instead of Taiwan’s Kuomintang elite of the past, which had developed relations with China and benefited greatly from the rise of the Chinese economy due to large-scale investments in it, today there is an increasingly strong Democratic Progressive Party (DDP). This party excludes any rapprochement with China and is elected in particular by the democratic younger generation. This younger generation is more politicised than previous ones, and the “Chinese idea”, i.e. that Taiwanese are also Chinese, is now rejected. China could therefore also be guided by the idea that Taiwan may completely separate itself socially from China over time and that China could only put a stop to this through rapid military intervention.

Another expert said on the subject of Taiwan that although the rhetoric of the People’s Republic of China is very bellicose, it is also understood that an annexation would not only be difficult or impossible to implement militarily, but would also be a disaster economically. China is dependent on Taiwanese semiconductors. This entire branch of industry would either be destroyed or migrate in the event of an invasion. Moreover, after an annexation, one would have to deal with a hostile population of more than 20 million inhabitants. However, the speaker did not rule out an invasion in the years after 2030.

Olaf Scholz’s visit to China was viewed relatively positively in the discussion group. Scholz was able to penetrate Xi’s echo chamber after years of covid-related isolation. Among other things, one speaker emphasised that Scholz had also addressed critical issues such as the Ukraine war or the treatment of the Uyghur population in Xinjiang. Dialogue with China, especially face-to-face dialogue instead of dialogue via video conference, is indispensable, and although the timing of the visit may have been wrong with regard to Germany’s allies and the already very tense situation in the Western world, the Chancellor was able to get a lot out of the visit.

The following expert countered that this unilateral action by Germany was sharply criticised by the German people as well as by many allies, especially the USA. While he thought much of dialogue with China and considered the “decoupling” debate, i.e. economic disengagement from China, to be illusory, the negative aspects of the state visit ultimately outweighed the positive. Also, against the background of China’s recent acquisitions in Germany, which include almost 25% of the port of Hamburg, it was a mistake to visit China.

On the often-mentioned topic of Germany’s dependence on China, the next speaker said that although there were about 20 to 30 products that were not substitutable for Germany in the short term, one could certainly work on a partial supply chain shift to Latin America or Eastern Europe. China is also dependent on Germany and Europe, both in terms of industrial products and technology. According to the expert, large European companies want to stay in China, but medium-sized companies are already looking for other locations in South and Southeast Asia.

In response to a member’s question about the ideologisation of China, the expert said that, on the one hand, Xi’s speech, in which he was very open about his communist ideology and goals, was a clear indication. On the other hand, the speaker said, it was also clear from the resolutions of the National Congress that the Chinese private sector would be severely restricted, which could lead to a reduction in Chinese innovative power in the medium term. Autarky is also being pursued as a goal; this would particularly affect foreign companies in China.

The following speaker answered a member’s question in the negative as to whether a German crisis plan existed in the event of an invasion of Taiwan and considered this a serious problem. Another expert affirmed that an invasion was unlikely in the next decade and that it was therefore necessary to support Taiwan as long as possible. In the event of an invasion, as in Russia, the European economy would most likely migrate completely.

The speaker considered Chinese influence in Europe on decision-makers and public opinion a minor threat. China no longer has the same power of attraction as it did a few years ago, and the takeover of the port of Piraeus in 2016 was only possible under German pressure. But China must be obliged to show more reciprocity, not only in terms of infrastructure, but also in terms of market freedom. Chinese companies in Europe still have great advantages over European companies in China. According to him, this will not change in the medium term because of the dismissal of reformers like former Premier Li Kequiang.

At the end, the moderator, Katrin Otto, wished for a new edition of the video conference in order to answer still open questions and to deal with other focal points. Beate Lindemann agreed with her and suggested a follow-up meeting for early April 2023. She also warmly thanked the speakers and the audience for their participation.