The main result of the first three months of 2018 was the final institutionalization of XI Jinping's monopoly on political and ideological power, which was authorized by the constitutional amendments passed at the March session of the NPC.
Temporary restrictions on the tenure of the presidency in the PRC were lifted. Xi's ideas about «socialism with Chinese peculiarities in the new era» were included into the Constitution, after they had been incorporated into the Chinese Communist Party Charter at the 19th Party Congress which was held in late 2017. «In a new era» are the key words of the document. Xi is aware of the fact that by abandoning restrictions on the tenure he violates the precepts of Deng Xiaoping, the patriarch of reforms. However, he, first, shows his commitment to Dan’s ideas about «socialism with Chinese peculiarities» and second, he speaks about a new era: the former Dan’s era’s tasks to revive the economy have already been solved; nowadays the country faces more ambitious tasks, such as the transformation of China into a world leader, which, according to the present Chinese leadership, involves the concentration of power in the hands of the chief executive for a long period of time.
Another important change into the Constitution was shifting the point about the «leading role of the party» as well as the Preamble of the document into its body, which legally is more important than the Preamble itself.
Symbolically, it was the first time after Mao Zedong Xi had been officially named the «shipmaster» of the nation (though without the epithet «great» which was applied with reference to Mao). That is in addition to the existing party title «the core of the party» which has not been used for the last two decades.
From the point of view of the staff arrangements, Xi has carried out quite logical reshuffles, pushing up people who are devoted to him personally (e.g. the main corruption fighter Wang Cishan, who had resigned from his position of a member of SC of PB of the Central Committee of the Communist Party of China because of age, became the Deputy President of the CPC) as well as young staff who owe their promotion personally to Xi. In order to avoid possible inner-party struggle for real power Xi, as Alexander Lomanov, professor of the Russian Academy of Sciences believes, tried to keep the balance between the main traditional inner-party factions (two people from each faction) in the Standing Committee of the Politburo of the Central Committee of the CPC. The balance is achieved through:
• the so-called Komsomol members (who came to power through work in the Komsomol League — Li Keqiang and Wang Yang; though the powers of the Prime Minister Li, according to Chinese analysts, will be in decline.
• the so-called «Shanghai» (who used to group around the former Chinese leader Jiang Zemin-Han Zheng (Deputy Prime Minister) and Wang Junin (today’s chief ideologist of the party);
• and Xi’s nominees (Zhao Leji (the head of the Central Disciplinary Commission of the CPC) and Li Zhanshu).
Foreign critics of China are sure that the constitutional changes signal final departure from the democratic character of the Chinese reforms as well as formation of the personality cult of Xi Jinping in Mao’s style; it also proves the desire to build the so called «party state» though having the market economy and being incorporated into the world economy. Chinese critics of the constitutional changes who are, to be frank, not too loud, speak about the backtrack on Dan’s precepts as well as on the former policy aimed at separating the party from the state; they also point to the usurpation of power and premature extolling of Xi, who has not worked enough to procure such a significant role in Chinese history for himself.
Supporters of the constitutional reform both within China and among foreign scientists note that Xi «has not violated anything». Dan’s precepts are not legally binding, and throughout China's history the position of the President of the PRC has always been rather ceremonial. Xi is now striving to give real power to this post.
On the other hand, at the session of the NPC, Xi stressed the need for a bigger force of the law and set up a special Supervisory Commission, which took over anti-corruption powers from the Central Committee of the CPC. The Commission is authorized to exercise them on all levels, including the lower ones, throughout the country rather than just within the CPC. The role of the Foreign Minister has been enhanced which reflects the global aspirations of Beijing. In order to solve the trickiest economic and financial problems (debts of the local authorities and state enterprises, low efficiency of the public sector, financial stability in the conditions of a steady movements towards financial transparence and total currency liberalization, etc.), authoritative experts who were educated in the United States were invited to take the key positions of the Chairman of the Central Bank of China (the people's Bank of China) and the chief economic adviser to Xi.
The emerging change in the balance between party and state power in favor of the party and, which is more important, in favor of Xi’s personal power, poses, in our opinion, considerable risks. The thing is that, sooner or later China is likely to face a natural decline in the economic growth as the economy expands. Chinese party elite as well as Chinese society will blame Xi himself for this since he is the holder of superpower in the country. Both Xi’s personal position and inner-party as well as political stability in China will depend on how efficient Xi will prove to be in finding acceptable compensations at the expense of «quality of life» (ecology, medicine, education, etc.) and the external factor (China is the world leader).
The economic background to the constitutional reforms has been favourable so far. The rate of GDP growth in 2017 was 6,9%, which is 0.4 percentage points more than it had been planned; the target rate of GDP growth in 2018 is 6,5%. In value terms, China's GDP exceeded 12 $ trillion in 2017 (which is about 15% of the world GDP); it means that China's contribution to the global economy growth, according to Chinese estimates, constitutes 30%. It allows China to increase its military budget by 8,1% — up to 175 $ billion (which constitutes about a quarter of the USA’s level).
The budget deficit for the year 2018 was set at an internationally acceptable rate of 2,6% of the GDP, which is 0.4 percentage points lower than in 2017.
As the military expenses grow attention is drawn to a new so-called «aerospace faction» whose influence has been growing. The faction appeared within top Chinese leadership and includes experts, scientists, managers and military experts, who are engaged in the development of peaceful and the so-called military space and receive maximum political and financial support from the top leadership of China.
The foreign policy background at the beginning of the new term of Xi Jinping's presidency has become more complicated.
China's relations with the United States have entered a new stage of escalation. Apparently, the USA have detected new challenges in China’s ambitions to build a party state with market economy and become a world leader, that were declared de facto at the last session of the NPC of China. It is no coincidence that Trump should have named China one of the «challenges to American interests, economy and values».
US pressure on China has become of trade and military-political nature. Washington has announced the introduction of additional tariffs on Chinese exports which amount to 60 $ billion. In the political and doctrinal context, the USA have put forward the concept of the Indo-Pacific region as an alternative to the Chinese strategy of the Sea Silk Road. In order to develop it the United States introduced the so-called SQUAD format (quadrilateral security dialog) — four-party dialogue on the security issues which involves the United States, Japan, India and Australia. Beijing considered the naval cooperation between the USA and Vietnam which started at the beginning of the year to be a serious challenge (American nuclear aircraft carrier «Carl Vinson» entering the Vietnamese port of Danang). The traditional irritation of Beijing was caused by a new decision of Donald Trump to allow high-level contacts between Taiwanese and American officials. Washington's claims to Beijing on North Korean issues remained the same, although the possible meeting between Trump and Kim Jong-Un has made them less acute.
However, Trump will not burn bridges. His public support, amid the criticism from the West, of Xi’s decision to lift restrictions on the terms of his rule was highly appreciated in Beijing.
China's reaction to Washington's renewed pressure has been controversial. Before the session of the NPC, China had been trying to soften the trade dispute with the United States, giving signs that Beijing understands that Trump is entering on a new political campaign of Congressional elections in the autumn of 2018 and is eager to convince his voters that the policy «America first» has been successful.
After the Session, Xi had to prove his power as an undisputed long-standing leader of China. Beijing, while continuing to look for the ways to mitigate trade disagreements with the United States, declared that it was ready for the so-called «trade war», threatening sanctions against American products in such vulnerable, from China’s point of view, areas as tourism, car industry and agriculture (the sphere of interest of Trump’s electorate), exports, etc.
In response to American-Vietnamese naval cooperation, Beijing has made certain steps to enhance naval cooperation with France (joint naval exercises in Hong Kong region which involved French frigate «Vandemer»). As far as Korea goes Beijing, after the NPC Session, is willing to meet the North Korean leader; however it does not presuppose any breakthrough achievements concerning the nuclear disarmament of Pyongyang, though it is supposed to demonstrate China’s ability to influence the situation to the USA. The statements of the Chinese leadership on the Taiwan decisions of Washington were traditionally tough, but without any practical consequences.
Today, it is difficult to predict how exactly Chinese-American trade relations will develop, but a real reduction in bilateral trade can, as a compensation for Chinese losses, boost China’s interest in economic ties with Europe, Russia, as well as in new markets in Latin America and Africa.
As for China’s relations with the EU the NPC Session intensified Brussels’s growing discontent with the Chinese economic presence and influence in Eastern Europe by ideological factor — China is criticized for backtracking on the democratic traditions in the issue of tenure for Chinese top leadership. Beijing avoids discussing its domestic political policy but responds to the new proposals concerning trade and investment cooperation with the EU in general rather than with the Eastern European countries. China comes up with the ideas about cooperation in climate change issues, environmental protection and the ideas about combining Chinese Silk Road strategy with the long-term economic programs of the European countries. In 2018, the priority is again given to France.
The relations with India are entering upon a new phase of naval rivalry that was triggered by Indian-Iranian agreement on the lease of the Iranian port of Chabahar by India; the port is 90 km from the Pakistani port of Gwadar — the location of a new Chinese naval base. China responds to India's military and political activity, including within the framework of the SQUAD, both by increasing its military presence in the Indian Ocean region, and by naval cooperation with Europe (the above-mentioned France), as well as with Russia.
After the last session of the NPC and against the background of China's foreign policy problems, the relations between Beijing and Russia are beginning to take a new shape. China does continue its policy of political and economic cooperation with Moscow. Growing trade frictions with the United States, ideological problems with Europe and military disagreements with India may in the short run heighten China's interest in Russia.
On the other hand, China is developing new strategic approaches to our country. In conflict relations with the US, the EU and India, Beijing chooses to rely more on solving emerging problems within the framework of bilateral relations with these countries, rather than opposing them to the pressure of an «comprehensive strategic partnership» with Russia. Beijing relies on its own understanding of Russia’s interest in the east — it regards Russian concept of the so called «Big Eurasia» to be an additional, apart from SQUAD, alternative to the Silk Road. The practical policy of Moscow is not only characterized by the desire to cooperate with China, but also to curb Chinese influence on Russia’s economy at the expense of Japan, South Korea and India.
Such vision does not stall Russian-Chinese relations; however it may eventually change their configuration. In its striving for global leadership, Beijing will less consider the Russian factor but seek more compromises through bilateral ties with the world's major players — the USA and the EU.
It may both hinder Russian-Chinese cooperation, especially in the sphere of economy, and encourage Russia to rely less on China in the future, and to give more leeway to Russia in the spheres where Chinese interests are present. Such zones will expand after the 19th Congress of the CPC and the last session of the NPC which gave Xi Jinping full freedom of action as well as full support of the Chinese ruling elite. Now Xi can fully concentrate on ensuring global leadership for China — as a new strategic goal of China in the modern after-Deng Xiaoping era.