The Logic Underlying President Xi’s Anti-Corruption Campaign

In 2012, people knew that China was to embark on a significant anti-corruption campaign. Xi Jinping’s “cabinet”, the Politburo Standing Committee (PSC), was reshuffled and restructured: Not only was the size of the PSC reduced from nine to seven members, the head of the Central Commission for Discipline Inspection, the top anti-corruption body in China, was moved from the 8th position in the order of precedence to the 6th. Further, the appointment of Wang Qishan, a respected trouble shooter and confidante of President Xi’s, pointed to the importance of the role in the new administration. However, nobody at the time could anticipate just how far the current campaign would go, with over 1,000 senior officials purged to date and no sign of the drive letting up any time soon. Of all of the promises and announcements Xi Jinping made upon taking office, the anti-corruption drive is the one on which he has bet his position. On this one the President can be said to have “over-delivered”, while progressing much more cautiously on many others, particularly economic reforms. Given its scale and duration, the current anti-corruption drive is clearly more than a just tool for purging President Xi’s political opponents, as many had initially assumed; it should now be clear that this campaign is a critical instrument in preserving the legitimacy of the communist party and in establishing a more efficient and sustainable growth path for the country. However, fully purging corruption from China’s political system will require implementing an even more ambitious plan than the one currently being pursued, involving revising laws and China legal system to address the systemic causes of corruption, and even reforming the communist party itself.

China’s anti-corruption campaign, now in its fourth year, has cut deeper and more widely than anyone could have predicted at the time. The numbers underlying the campaign are indeed impressive: over 1,500 senior cadres have been investigated with 959 expelled from the Communist Party of China (the Party) and 235 convicted in courts of law. What is more impressive, the campaign has met President Xi’s promise to focus on both “Flies” and “Tigers”, with over 150 top officials at the deputy provincial secretary level or above indicted, including former PSC member Zhou Yongkang and the vice chairman of the Central Military Commission, Guo Boxiong. The impact of this crusade has been significant. The campaign, launched concurrently with a comprehensive austerity program for government officials (known as President Xi’s “Eight Rules” cutting travel, food and beverage expenses, the accepting of gifts and other former perks which Chinese officials have traditionally availed themselves of) has been sufficiently sustained and comprehensive to have an impact on whole industry sectors, with the restaurant trade witnessing a slowdown as officials eschew hosting and accepting invitations to lavish banquets, as well as a big dip in the sale of luxury goods.

The Extent of China’s Corruption Problem

The statistics on purged officials raise questions about the extent of corruption in China and whether the current efforts are making a significant dent into corrupt practises or not. Corruption in China is widely recognised as ubiquitous and endemic, and the country ranks 83rd (out of 167 countries) on Transparency International’s Corruptions Perceptions Index, on par with countries such as Liberia and Benin. To provide some idea of the potential scope of corruption in China, prosecutors handled approximately 18,000 ‘major’ cases annually before the corruption drive, while studies indicate that only 3% of all cases of corruption are ever uncovered. The economic, social and political cost of this corruption is significant. Corruption is universally understood to be a drain on growth and productivity, and leads to decay of both institutions and infrastructure as witnessed in countless examples across the world. In China however, there are a number of structural and to a lesser degree cultural factors that make its corruption problem, particularly with regards to graft, somewhat unique.

The Historic and Cultural Problem

In addition to the structural factors driving corruption in China it is worth noting its historical and cultural context, too. Corruption has been recorded and documented since the time of the first emperor in the 3rd century B.C. In China’s more recent history too, corruption was endemic in, and a key factor in the downfall of both the Qing Dynasty (1644-1911) and the KMT in 1949. Large scale corruption in other words has been a fact of life in China for centuries. While the presence of corruption, however entrenched, does not imply that it is considered to be a “good thing” by society, there are a number of cultural factors that may lead to the acceptance of corruption. Traditions colour Chinese views of what is reasonable behaviour, these include the giving of gifts as a means of giving face; banqueting and the importance of shared meals; guanxi, the importance of personal relationships and the reciprocal favours they enable. As a result, many customs considered acceptable in parts of China, such as parents giving expensive gifts to their children’s teachers, are widely considered to be bribery elsewhere. Despite Chinese society’s defining the boundaries of low level corruption differently than the West however, the public outrage over the more egregious corruption cases remains vociferous and very real.

The State-Led System Problem

China is in the rare position that its corruption problem has spiraled during a multi-decade economic boom in which graft and growth have gone hand in hand. For one thing, the creation of private ownership of land and production assets during "To get rich is glorious"
Former Supreme Leader Deng Xiaoping
China’s reform and opening up in 1970s provided not only the basis for economic growth, but also a currency for corruption where none had existed before. Deng Xiaoping’s alleged quote, “To get rich is glorious”, was taken up “Corruption is the oil that makes this deeply defective machine possible … it is the backbone of the economy of the country”
Frank Dikotter, University of Hong Kong
enthusiastically not just by ordinary citizens but by government officials too. The transition phase between planned and market economies has created significant corruption in other countries too, as witnessed in the former Soviet Union. However unlike the Soviet Union where the economy subsequently fell apart and the corrupt cut up the remains, China’s state driven growth model, driven by visionary leaders with a strong grasp of systems engineering, has until recently flourished. However, and importantly, the model of state led growth itself facilitated the growth of graft: In a system where promotions are made on the basis of achieving economic growth targets dictated by the state, government officials are incentivised to seek to deliver growth at any price, and their incentives are aligned with economic actors dependent on their licenses, project approvals and support. The fact that all of the major building blocks of China’s growth model, including banks, enterprises (particularly SOEs), regulators and local government are linked to and controlled by the Party ensures not only close coordination between institutions but also increases the opportunities for graft for the individuals in them. In a system where government officials making less than $500 per month have discretion over billions of dollars of investment projects, the opportunities for enrichment even for low to mid-level bureaucrats is enormous. China’s demand for growth across all levels and institutions of the state created a ‘virtuous-vicious’ cycle in which government officials approved and initiated ever larger projects, enriching both the enterprises involved as well as themselves, and contributing meaningfully to the over-investment, particularly in infrastructure, that China is now facing. While the country’s investment led growth model has clearly run its course, it has created vested interests across all levels of government, from the lowest to the top-most ranks, that benefit from corruption and are likely to fight for its preservation.

The Predatory Collusion Problem

The prize from China’s sustained growth of c.10% per annum has seen the economy grow 15x from US$730 billion in 1995 to US$10.8 trillion in 2015, and has created 568 billionaires and 1.3m millionaires. It has led China’s traders to dominate the world’s commodities, energy and consumer markets, as the largest consumer of commodities, the second largest “In order to fight against corruption, a person’s life and death, personal praise or blame, do not matter,”
President Xi Jinping
consumer of oil and the second largest consumer market globally. To facilitate this massive value creation, there has been a parallel growth in lawyers, accountants and bankers. As any foreign firm doing business can attest, China works to China’s rules. The process by which companies are created, grown and listed is a machine to make money for so many of the participants: the entrepreneur, the employees, the unions that make sure people behave, the lawyers that set up the businesses and help sign up its local and foreign partners, the accountants that attest to the validity of its reports, the government officials approving the ability of the business to function, the regulators, the banks that list the company and the community of shareholder-investors that benefit from its share price rise. The employees may get the smallest share of the massive value generated by the process but until recently, the ability to escape poverty was enough. Each of these participants has a vested interest in its success. Is this any different from the rest of the world? What made it different in China was that it happened in a state led system which injected US$1.7 trillion of capital in only 5 years (1996-2000) and over the next decade and a half kept the system well fuelled with over US$28 trillion of capital invested. This created the incentive to create collusion between what, in most parts of the world, are legally and culturally separate entities. It also created a predatory system where some party leaders, regulators, provincial leaders, business leaders and families amassed power at the expense of others. It also created an unequal and unfair relationship between domestic players and the more than US$1 trillion that came from foreign investors into the country.

Given that the ensuing result was just what the state wanted, one of the world’s fastest economic growths at a sustained c.10% per annum, and the political clout unmatched by almost anyone but the US, many thought there was no incentive to address the issue. However, if one plays out the current model fully, it leads to an oligarchy not too dissimilar to the modern Russian one created after the fall of the Soviet Union, not too dissimilar to the nationalist one that was overthrown in the 1949 Revolution and not too dissimilar to the imperial ones overthrown by so many revolutions.

These factors - structural, cultural and systemic - have impacted not just the development of corruption in China, but also the shape and execution of President Xi’s anti-corruption campaign.

Why is the Anti-Corruption Drive so Important to President Xi?

So, why is addressing corruption so important to President Xi? The answer is partly based on the lessons from the Soviet Union and partly on China’s own imperial and nationalist past.

The lessons from the break-down of the Soviet Union hold enormous sway in the thinking of the Chinese leadership. Following the break-up of the Soviet Union in the wake of Perestroika and Glasnost, the transition from a planned to a market driven economy created one of the greatest explosions of corruption in history. “Why did the Soviet Union disintegrate? Why did the Soviet Communist Party collapse?”
President Xi Jinping
With virtually all capital, land, corporate assets and means of production under state control, the country’s slipshod privatisations quickly concentrated massive wealth among those in control of state assets, creating a first generation of oligarchs wielding tremendous power and influence. During this period, the Russian economy collapsed and government control over the country sank to an all-time low, barely weathering an attempted coup. To reassert control over the state, among other reasons, incoming president Vladimir Putin imposed strict censorship and hollowed out the independent judiciary to enable the prosecution of key oligarchs and the expropriation of their assets. By this time Russian GDP had declined by 40% and male life expectancy had dropped from 63 to 58 years, despite the country’s highly educated workforce, industrial base and natural resources. The lessons from Russian misappropriation of assets, consolidation of power and the draconian steps required to reassert the state are one of the keys to understanding the pre-emptive, and it may already be late, move by President Xi to conduct the anti-corruption drive.

China itself has seen two revolutions in the 20th Century. The need to avoid a further one is a major motivation underlying the anti-corruption drive. At the end of its life-span the imperial bureaucracy of the Qing Dynasty had become hopelessly ossified and highly corrupt, leading to a breakdown of effective central government control, a situation that was mirrored during much of the Kuomingtang’s rule of China, who never fully consolidated control of the country and remained reliant on warlord allies of dubious reliability. In the KMT’s case, this lack of central control was exacerbated by the loss of popular support and credibility the government suffered for its corruption.

Both the calamity that befell the last communist country that eschewed communism and the revolutions that befell rulers who allowed excess and corruption to spin out of control in China’s history provide the impetus for President Xi to embark on one of the most far-reaching state led attempts to squash corruption, a pre-emptive strike before something worse happens to the model of China’s modern ruling order, the Party. While President Xi is clearly pursuing multiple objectives with regards to his current campaign, all of these ultimately are tied to the maintenance of stability and the continued rule of the party. To this end, it also seems likely that the party is seeking to further a series of interconnected political, social and economic objectives with the initiative, including:

  1. Maintaining Political Legitimacy.30 years ago Deng Xiaoping shifted the Party’s claim to political legitimacy from one based on revolution and Marxist theory to one based on the delivery of economic growth. With the high growth phase clearly at an end, China’s slowdown underway, the Party will need to shift its legitimacy to more solid ground. One of the key policy areas that President Xi’s government has focussed on is improving governance, from strengthening the rule of law (however foreigners may perceive its credibility) to putting an end to China’s system of extra-judicial detention. The current anti-corruption drive plays a key role in establishing the Party’s commitment to sound and just governance as the source of legitimacy to govern 1.3bn people.
  2. Re-Establishing Trust and Credibility.Corruption has clearly tarnished the reputation of the Party and eroded public trust in the government. The government’s crack-down on corruption is a first step in re-establishing public credibility. In this regard, the campaign is walking a fine line: while it needs to show its commitment to cracking down on corruption and share its successes, it also needs to manage perceptions of the scale of corruption, lest a too successful campaign only serves to convince the public that corruption is everywhere and the Party rotten to the core. This may partly explain why the government is highly selective about releasing details of official’s offenses and invariably seeks to portray the cases it does disclose as outliers, backed up by details of official’s private lives and their moral turpitude.
  3. Overcoming Resistance to Rebalancing.As outlined above, 30 years of investment led growth has created entrenched networks of entrepreneurs with their financiers and advisors, state owned enterprises and government entities that have amassed concentrated wealth and power. China’s economic rebalancing represents a potential threat to these interest groups as a consumption driven economy will be driven by the incremental spending of China’s 450m households, not by the large scale government investments upon which the groups’ wealth are based. China’s slow progress in terms of economic rebalancing has been attributed to resistance from the vested interests that will see their own wealth and power decline (relatively) in the shift. By clearing out these interests, President Xi is clearing the path for continued economic reform. It is uncertain that this is the reason for slow progress, however, given that it takes a lot more freedom to create the value adding service sectors that China aspires to, but that stands in line behind the bigger priority of clearing out the obstacles.
  4. Eliminating Factions for Institution Building.Single party states, where power flows uninterruptedly from the top without checks and balances, are prone to factionalism and patronage networks. These networks pose a potentially significant impediment to the efficient functioning of government, particularly when these are left to grow unchecked as they did the Hu Jintao era. In that era, for example, disgraced standing committee member Zhou Yongkang’s network exerted significant control and influence over the petroleum industry, the state security apparatus and the province of Sichuan, an empire more powerful than many independent countries. By tackling these networks President Xi has sought to re-establish more centralised control and oversight over key institutions and strengthen the national government. Further, dismantling patronage networks strengthens and empowers the institutions themselves, freeing them from the control by individuals and their networks of obligations and this is one of the potential outcomes that China needs to become more equitable.
  5. Consolidating Power.While not the main driver of the current campaign, President Xi is clearly also using the drive to consolidate personal power. Given that President Xi himself almost surely belongs to a faction within the Party, the elimination of other factions benefits not just the central government but also his own network of interests. It is telling that to date none of the more than 150 senior officials indicted had ties to President Xi or his network. Since the start of the campaign, President Xi has successively taken on (and out) some of the most powerful factions in the country including his rival Bo Xilai and his ally Zhou Yongkang, the Communist Youth League faction aligned with Hu Jintao and more recently the military.

While winning the public’s trust and support is clearly important, the main constituency of the Party are not China’s citizens but its own bureaucracy. The unexpected scale and duration of the campaign prompted former president Jiang Zemin to remark that, “the footprint of this anti-corruption campaign cannot get too big.” Contrary to speculation, this was likely not based on the former president wishing to protect his own network, which to date has largely remained unscathed, it was in recognition of the fact that a campaign that cuts too deeply risks losing the support of the 90m members of the Party, whose dissent would undermine its control of the country. Given that political purges following power transitions are common in China, many rank and file members of the party at least initially accepted the anti-corruption campaign as a short term inconvenience, expecting the status quo ante bellum to be quickly restored post consolidation of President Xi’s power. Three years and over 150 ‘tigers’ into the current campaign however, China’s bureaucrats are surely waking up to the fact that there will be no going back, forcing President Xi to tread a thin line in terms of the speed and vigour of the continued campaign.

One of the defining characteristics of the campaign to date has been the tight control of the process by the party itself. The entire process appears to be managed top down by the central government, reminiscent of the economic central planning of the Maoist era. Unlike in other countries, such as India, where anti-corruption movements often have grass-roots origins, the public is being vigorously excluded from participating in the government’s current campaign. China’s leaders know from the experiences of Europe’s former communist countries that once the genie of civil movements are unleashed they are difficult to get back into the bottle. Having seen countless governments swept away following the fall of the Berlin Wall and more recently in the Arab Spring, the party will guard closely against any attempted civil participation in its governance. “Fight corruption too little and destroy the country; fight it too much and destroy the Party.”
Chen Yun, former Vice-Chairman and one
of the “Eight Immortals” of the Party
Accordingly, the largest anti-corruption drive in history has been accompanied by a no less ambitious anti-anti-corruption initiative which has seem many of China’s most prominent activists detained or arrested. This initiative has been closely linked to tightening media control, in which the party has sought to both control the flow of information over the status of its investigations as well as revelations over new incidences of corruption. The New York Times website for example has been blocked in China since publishing an article exposing the alleged illegal business dealings of former Premier Wen Jiabao’s family, which perhaps not entirely coincidentally has remained untouched by the campaign. Whether true or not, the New York Times may have unwittingly benefitted the former premier and his family as the Party may now well seek to avoid the potential embarrassment of having had a foreign news source uncover massive corruption that the Party’s own investigative organs had apparently missed. Unsurprisingly, Bloomberg has been blocked in China since running a similar article on President Xi’s own family. The Party’s focus on control of the process also impacts China’s own media coverage of the drive, which is often sparse on details and lagging in terms of timing. Officials under investigation are typically accused of “serious violations of party discipline” and the proceedings against them are held behind closed doors, often under Party rules without due process rather than under China’s civil law. While a highly select number of cases, such as the Bo Xilai’s, are run as carefully orchestrated show-trials, many others are barely disclosed at all. The largest ‘Tiger’ caught to date, Zhou Yongkang, for example was sentenced to life in prison before the public even knew there was a trial.

What is Left to Do – Perspectives on the Future

Despite the successes to date, there is are clearly much more left to do, both in terms of scope and scale. It’s clear that the current campaign is still just touching the tip of the iceberg. As an example, in an operation dubbed “Fox Hunt”, over 750 fugitives with US$1.5bn of “ill-gotten gains” between them were captured overseas and returned to China in 2014. While this sounds impressive it pales against the fact that the total number of officials who have fled overseas exceeds 18,000, and reportedly having stolen US$120bn between them. “Despite the campaign’s inroads to date, China still has powerful patronage networks that can throw a spanner in the works of reform and President Xi's own political power”With mind-boggling numbers like these, the campaign clearly has to be highly ambitious in scale to be meaningful. There is also clearly more to do in terms of scope: the campaign has just started to take on some of the most deeply entrenched power structures in the Party, e.g. the People’s Liberation Army (PLA), and the business community. Widely considered to be a law unto its own, the military lacks effective civilian and even Party oversight as a self-governing entity. While leadership of the armed forces through the chairmanship of the Central Military Commission is one of the three positions held by China’s top leader , the actual level of control over the military has varied over time, enabling the build-up of significant political and economic power in the PLA. Arresting two of the most senior former leaders in the People’s Liberation Army in 2015 was clearly just a first step and an indication of more to come. Despite the campaign’s inroads to date, China still has powerful patronage networks that can throw a spanner in the works of reform and President Xi's own political power. If President Xi is to realise his vision for the transformation of China, he will need to clear out these factions or bend them to his will.

Ultimately, however the drive will need to do more than identify and prosecute the corrupt, it will need to root out the causes, rather than just the symptoms of corruption. Purging corrupt officials helps fight corruption but does not eradicate the factors that cause it to come up in the first place. Addressing these issues will require developing a much broader vision and plan, including among other things, the involvement of a fully independent judiciary, the development of “We must uphold the fighting of tigers and flies at the same time, resolutely investigating law-breaking cases of leading officials and also earnestly resolving the unhealthy tendencies and corruption problems which happen all around people”
President Xi Jinping
clearly defined rules and regulations to eliminate the grey areas within which corruption has flourished, and most importantly the implementation of government accountability and transparency. The role of openness and accountability in successfully rooting out corruption cannot be understated and both are closely linked to a country’s civil and political rights. With the exception of Singapore all of the top ten countries in terms of anti-corruption rankings are also in the top 15 in terms of their democracy ranking, which indicates that authoritarian regimes seeking to stamp out corruption have their work cut out for them. If President Xi is serious about reforming China’s corruption problem, the country’s leaders will need to develop and execute a new and long-term roadmap that will transform China’s economic model, governance and the Party itself.

Executing China’s Long Term Governance Roadmap

Wang Qishan, China’s anti-corruption czar, has described the campaign as a three stage process: The first involves instilling fear in the corrupt and potentially corrupt, the second requires strengthening the rule of law to make it harder to be corrupt in the first place and the final stage changes the political culture to eliminate even officials’ thoughts of corruption. Measuring the current drive against this framework, Wang has clearly delivered against the key metric of first phase. As an example, government bank deposit balances are up almost 30% year on year as even honest officials are now holding off on starting new projects, for fear of being seen as corrupt. However this fear has come at a cost: it is estimated that the anti-corruption campaign has knocked between 1-1.5% off the country's gross domestic product (GDP) annually over the past two years due to investment impairment and reduced consumption, indicating that it is clearly time to kick-off the next phase. President Xi has repeatedly stressed the importance of laws and regulations in the anti-corruption process as well as the need to strengthen anti-corruption laws, but execution in this regard has been lacking. Phase Three on the other hand is a much longer effort and one which will involve not just the Party changing political values but the participation of civil society to change the boundaries of morally accepted behaviour. A more comprehensive blueprint for eradicating corruption in China would need to include all of the currently envisaged elements and more, including the following:

Conclusion: The Great Opportunity and the Perverse Threat from the President’s Campaign

Looking at the current status of the anti-corruption campaign and the recent announcements by its leaders, it remains to be seen how far President Xi and his team can go given the pressure of waning economic performance. For now, the President and his team continue to pick up the pace of their campaign. Wang Qishan has recently prioritised three categories of corrupt officials for targeting: those who have continued corrupt activities since President Xi’s coming to power; those who have “serious problems” and have sparked a “fierce reaction” from the public; and those who are in line for promotions to party leadership positions. This signals a level of determination to move beyond the first wave where a significant portion of the “Tigers” taken down to date included retired officials of the “old guard” active under Hu Jintao and included almost no officials with even indirect ties to President Xi. The sacking of Su Shulin, the first incumbent governor to be indicted for corruption in China, is a potential sign of more to come. What is more important is that he is from Fujian province, formerly run by President Xi himself, which had largely escaped the attention of the campaign until now. These recent moves add credibility to the drive against charges of opportunism on President Xi’s part but also raise the stakes for him personally as he will need to both appear to be completely impartial as well as emerge totally untarnished from the campaign. Further, the leadership with need to be ready for the countermoves of opponents as the campaign widens.

In plotting the trajectory of where the campaign goes next, three scenarios, or options, stand out:

  1. Scenario 1: Declare Early Victory. Under this scenario President Xi would declare victory before the half way mark of his term having made a valiant attempt to purge the most obvious corrupt officials and reducing some of the most blatant opportunities for corruption. The campaign would have achieved the minimum required to maintain government efficiency and Party legitimacy, and the purges would have removed some of the opponents of the next phase of economic reform in the process. The ultimate effect of this campaign would be similar to Zhu Ronji’s anti-corruption campaign in the 1990s, removing the most egregious excesses of corruption while allowing its long-term drivers to remain in place and guarantee its eventual resurgence. Under this scenario, China might be able to successfully reform its economy away from investment led growth, but not reposition effectively for the next stage of innovation driven growth which requires a more open, meritocratic system of enterprise and governance.
  2. Scenario 2: Core Governance Reform. Should the government push ahead boldly and execute the third phase of the anti-corruption campaign, eliminating even the thoughts of corruption, President Xi would achieve something comparable with Lee Kuan Yew in Singapore, namely a fundamental clean-up across all levels of government, the consolidation and centralisation of power, and the reform of laws, institutions and government agencies. Under this scenario President Xi would successfully walk the tightrope between directive governance and democratic reform, transforming China’s economy and repositioning it for future post-industrial growth while maintaining the authoritarian control of the Party.
  3. Scenario 3: Fundamental Political Transformation.The greater accountability and transparency required for the long term success of the anti-corruption campaign will increase demand for and the pressure to deliver civil rights and ultimately political freedoms, too. China’s leaders have the option to continue to resist these demands or attempt to manage an orderly transition led by the Party. 30 years ago, Deng Xiaoping shifted the CCP’s claims of political legitimacy from being based on Marxist theory to one based on the delivery of economic growth, and set in motion a multi-decade economic transformation under the stewardship of the Party. President Xi is currently shifting the party’s legitimacy yet again, towards being based on sound and just governance. Under this scenario, President Xi would complete the job of cleaning up the interlocking element of corruption in the system and, having held a tight rein over civil rights and personal freedoms, would then make the shift to initiating a decade long political transformation, one that drives the party to the ultimate source of political legitimacy, namely, the approval of the people on whose behalf it governs. This is a long way from reality and may well be the remit of a future president. However, given the legitimacy that President Xi will have earned should he complete the clean-up of China, he would be the best positioned to engineer this inevitable phase.

While President Xi is widely seen as having accrued more power than any one since Deng Xiao Peng, the path he has chosen will align powerful enemies against him. A reading of the“When the students poured into Tiananmen Square, the Chinese government almost blew it. Then they were vicious, they were horrible, but they put it down with strength. That shows you the power of strength. Our country is right now perceived as weak.”
Donald Trump, Interview, 1990
power struggles of the Soviet Union provides examples of leaders who seemed invincible but disappeared in the wake of overstretch. The map of where President Xi can overstretch - the “points of pain” - are emerging very clearly and include its economy, its international territorial disputes and claims, the internal fractious disputes with its diverse indigenous populations and its relationship with the US, in addition to the centralised control of the Party itself.

With the domestic economy weakening and the potential resistance to President Xi’s political agenda building up, foreign policy may well become the tipping point that pushes him over the edge.

The actions of the international community, and particularly the US, therefore have the potential to be critical to the success of President Xi. At its peak, the US was able to work with its allies to engineer the containment and eventually the collapse of its enemy, the Soviet Union. A similar strategy employed towards China by a hawkish incoming US president has highly disruptive consequences not only for the immediate anti-corruption campaign but also for the future of its leader. This would likely only happen if the US perceived China as it did the Soviet Union during the Cold War, namely as a threat to the American way of life. One peaceable way for President Xi to forestall this risk is by engaging in pre-emptive dialogue with the US on his campaign, the implications for China’s future and the positive impact it could have on the world. The best chance of this dialogue succeeding is under a scenario where the two countries’ visions of the future and political models move closer together. In this sense it is ironic that the long term success of the China’s most powerful leader in recent times may well depend on his willingness to relinquish that same power over time.


1.    See appendix for definitions and sources

2.    As of Dec 2015, Source: Center on U.S.-China Relations at Asia Society

3.    Chair professor of humanities at the University of Hong Kong and historian of 20th century China

4.    Between 1991-1998 and 1990-2000, respectively

5.    People's Bank of China

6.    Alongside the general secretary of the Party and the presidency

7.    2015 Corruption Perceptions Index, Transparency International, 2015 Democracy in the Wold Index

8.    Described at the 18th Party Congress as the Three Nos: “say no to corrupting others, say no to succumbing to corruption yourself, and say no to thoughts of corrupt behavior.”

9.    Merrill Lynch