A new risk to add to your analyses and strategic planning: A succession crisis in China.
- By removing term limits on his stay in office and by not naming a successor, Secretary General Xi Jinping ‘has pushed China towards a potential destabilising succession crisis, one with profound implications for the international order and global commerce,’ writes Richard McGregor of the Lowy Institute and Jude Blanchette of the Center for Strategic & International Studies
Let’s start with a very possible scenario: Xi dies.
- ‘If Xi passed away in office [through natural causes or assassination], or became seriously ill – without have a named successor in place - the transition process, on paper, at least, is straightforward.’
- ‘According to the party’s constitution, the general-secretary is chosen during a full session of the Central Committee, and from the existing members of the Politburo’s inner circle.’
‘In practice, the choice of a new leader would be decided through a process of informal consultation and horse trading, before being approved by the Central Committee.’
- But also likely in this power vacuum, the process could break down into infighting and a power struggle within the Politburo, a nightmare scenario for the Chinese Communist Party.’
Depending on how fast the process goes, China could be without a leader for some time, with all the uncertainty that implies.
- If modern Chinese history is a guide, the new leader may not be in power very long.
- This means that we won’t know how to factor China into geopolitical analyses until we have some assurance that he is there to stay.
The Party elite may see Mr. Xi’s death as an opportunity to change course.
- They could pick a new leader who would mend fences with the U.S., the EU, India, and other countries with whom China has clashed.
- One who would dial down tension in flashpoints like Taiwan and South China Sea.
- A new leader who would provide a level playing field to foreign companies and abide by the letter and spirit of the international trade regime.
More likely, they would pick a new leader who continues along Mr. Xi’s path with a few tweaks.
- While the many in the Party elite may feel that Mr. Xi went too far, the general direction from the start was set – and tacitly or explicitly - supported by them.
A much less likely and potentially vastly more destabilizing scenario would be a coup that ousted Mr. Xi.
- ‘Plots to overthrow Xi and his administration are not the product of fevered imaginations but rather have been widely spoken of by senior Chinese officials, including Xi Jinping himself.’
‘It is true that Xi has a host of enemies in the party.’
- ‘It is equally true that the barriers to organising against him are near insurmountable.’
- ‘So the chances of a coup being mounted against Xi at the moment, absent a systemic crisis, are exceedingly small.’
But as small as the chances are, it is worth considering outcomes absent a new leader quickly and firmly put in place.
- Xi, thanks to a magnificent and ongoing PR effort, is popular with the people of China who could mount massive, widespread protests and demonstrations.
- Xi’s supporters among the political elite and the military could mount a countercoup to put Mr. Xi back in power.
- The plotters themselves could splinter, fight among themselves, and be unable to put a new leader in place or in place for very long.
- And the plotters and the establishment could face off in a civil war that could lead China into another fragmented, 1920s-style, Warlord period.
In the face of these dire possibilities is a more optimistic outcome suggested by Roger Garside in his new book, China Coup.
- I just finished reading China Coup and loved it.
- I also recently spoke with Mr. Garside for more than an hour and a half and will post an edit version of our conversation soon.
The book’s premise is a coup that replaces Xi Jinping as China’s leader and introduces democracy, transparency, and human rights.
- Unlikely? Sure. But by posing a provocative ‘what if,’ Mr. Garside expands the terms of our debate on China.
In the same way the ‘Longer Telegram’ suggested that the U.S. and its allies should encourage the replacement of General Secretary Xi, Mr. Garside, calls for supporting the officials backing a complete regime change toward a freer and more open China.
- It is difficult to argue that whenever Chinese elites aspire to the country’s becoming, in Robert Zeollick’s words, a ‘responsible stakeholder,’ we shouldn’t support them.
Beyond death, incapacitation, or coup, is the possibility that Mr. Xi will name a successor and in five or ten years turn over his titles (while, no doubt like Mr. Deng, remaining a major force.)
- 'Given Xi’s extensive purges, whomever he selected as his replacement would have to be steadfastly and publicly loyal.'
- 'Only with such reassurances would Xi feel that he, and his family and associates, will be safe in retirement.'
Which scenario plays out will have an impact - or not - on global business and markets.
- Each should be factored into your risk analyses and strategies.
- Be prepared.
And be sure to have a look at the upcoming online Flash Talk by our friends at Trivium China (info below) - and register!