If Xi Jinping is dethroned in the future, the instrument for that may well be embedded within the PLA, notes former foreign secretary Shyam Saran.
IMAGE: Chinese President Xi Jinping during the 4th plenum of the 20th central committee of the Communist party of China in Beijing. Photograph: Kind courtesy Xi’s Moments/X
The 4th plenum of the 20th central committee of the Communist party of China was held in Beijing from October 23 to 25.
This plenum was important because it adopted the ‘Recommendations for Formulating the 15th Five-Year Plan (FYP) for Economic and Social Development 2026-2030’.
The final plan document with details will emerge next year. The plenum communique contains the recommendations in summary.
More importantly, it includes an oblique commentary on domestic politics, a report on recent high-level personnel changes, significantly in the People’s Liberation Army and the leadership’s assessment of the current geopolitical environment, both its inherent risks and opportunities.
The communique declares that the 14th FYP targets had been successfully achieved and had laid the basis for a more ambitious 15th FYP, which will serve as a ‘key link between the past and the future’.
The future landmark is the achievement of ‘socialist modernisation’ by 2035. By this year per capita incomes should reach the ‘level of moderately advanced countries’.
China, it is said, is likely to face ‘high winds, choppy waters and even dangerous storms’ but it remains ‘in a phase of development where strategic opportunities exist alongside risks and challenges, while uncertainties and unforeseen factors are rising’.
In responding to this complex environment, the main guideline for the new plan is to integrate development and security objectives.
The core goal is ‘high level scientific and technological self-reliance and self-strengthening’.
The focus sectors are high-end semiconductors, becoming a global leader in artificial intelligence, expanding advanced biosciences and bio-tech, and space and aero-space.
At the same time China will ensure that it retains a vibrant manufacturing sector unlike the hollowing out that has taken place in most advanced industrialised countries.
The communique says that ‘a reasonable proportion of manufacturing’ will be maintained.
The 15th FYP doubles down on President Xi Jinping’s continued channelling of the bulk of the available resources to what he terms ‘high quality growth’ or the rapid expansion of high-tech industry.
This has meant that consumption continues to be depressed. It is around 60 per cent of GDP, which is unusually low for a country at China’s level of development.
This is why the country has experienced deflation for several years when most countries confront inflationary pressures.
There is no indication that China is about to make a significant shift from supply-side policies to a more demand-driven approach.
The marrying together of national security imperatives with a State-driven drive to win the technology game means consumers will remain at the back of the queue for the foreseeable future.
There are references to the headwinds faced by the economy as it plans for the next five years.
The issue of local-government debt is a significant financial risk. This includes debts on the books and those which are off-balance, the latter incurred by local-government financing vehicles (LGFVs).
Such vehicles were set up by local-government entities to bypass the debt limits set by the central government.
According to estimates of the International Monetary Fund, debt on the books of local-government entities is now $7 trillion while LGFV debt is nearly $8.4 trillion.
These together constitute 88 per cent of GDP while the overall debt-to-GDP ratio is estimated at 280 per cent.
The central government has announced refinancing bonds to swap high-interest, short-term debt with lower-interest, long-maturity bonds.
An initial corpus of $840 billion was announced for this scheme. The new plan will continue these de-risking measures.
IMAGE: The venue of the 4th plenum in Bejing. Photograph: Kind courtesy Xi’s Moments/X
There is also a greater stress on stricter fiscal discipline.
Infrastructure investment by local governments is being discouraged but the promotion of higher investment in what are called ‘new productive forces’, or the hi-tech areas, is pushing the provinces and local-government entities to double down on pouring resources to build their own hi-tech champions.
This is one of the reasons why there is overcapacity in areas such as semiconductors, electric vehicles, and robotics.
Such overcapacity has been described as ‘involution’, where fierce domestic competition is leading to price wars and a push to acquire external market share.
How these contradictory policy objectives will be reconciled remains to be seen.
Another striking development at the plenum was the report on key personnel changes, the most significant being in the People’s Liberation Army.
Nine dismissals at the senior-most level have been confirmed.
Most prominent among them are General He Weidong, vice-chairman of the Central Military Commission, headed by President Xi himself, and Admiral Miao Hua, member of the commission. The latter was head of the commission’s Political Work Department.
His deputy, Hu Hongjun, too lost his job. The other seven are all very senior officers, including PLA Political Commissar Qin Shutong and Yuan Huazhi, political commissar of the PLA Navy.
Since all these positions relate to political and ideological work in the armed forces, ensuring loyalty to the party and to its leader, the conclusion one may draw is that President Xi did not consider them loyal enough though corruption and ‘duty-related crimes’ were mentioned as reasons for their dismissal.
This is borne out by the commentaries in the newspaper of the armed forces, the PLA Daily, which accuses those purged of dealing a ‘serious blow to the foundation of the political ideology that forged unity and advancement of the army’.
More than this, they are also held guilty of having ‘seriously damaged the principles that the Party should command the army and that the army was accountable to the chairman of the CMC’.
It is difficult to avoid the conclusion that at the very top of the PLA, among officers appointed by President Xi himself, after a wave of earlier purges, there may be serious opposition building up against the leader.
Over the years, the PLA has been transformed into a highly trained professional fighting force with its own institutional norms.
The stress on political ideology may have become a distraction and the insistence on personal loyalty to the leader rather than to the country may go against the grain of a professional army.
If President Xi is dethroned in the future, the instrument for that may well be embedded within the PLA.
Even as strong a leader as Mao Zedong was the target of a coup by the top PLA leader and his chosen successor, Marshal Lin Biao, in 1971.
China currently appears at its strongest geopolitically but domestic political tremors are unmistakable.
Shyam Saran is a former foreign secretary
Feature Presentation: Aslam Hunani/Rediff
