Willy Lam on Chinese Politics in the Era of Jinping

Xi Jinping, the President of China and head of the Chinese Communist Party, is a "bundle of contradictions", a man who was put in charge of the most populous country in the world in November 2012 with few outstanding achievements on his resume, but who has turned into the most forceful leader of China since Chairman Mao. "Xi is a master dissembler, a very good actor," said Willy Lam, author of a recent book Chinese Politics in the Era of Xi Jinping. "For 20 years he came across as a good guy, a team player who was very good at massaging the egos of the party elders." But Lam told a Global Café breakfast meeting of LAWAC on Tuesday that Xi has emerged as a "very savvy, very Machiavellian figure," and once he got the top job he was very quick to consolidate power and sideline any opposition. "After two and a half years Xi has centralized all major decision-making."

So far Xi enjoys high levels of popularity inside China, where he models himself as "a man of the people". To the outside world Xi has presented a strong and aggressive face of China, expanding its power in East Asia and beyond - "I am sure many of us were surprised to see the recent joint naval exercises between the Chinese and the Russians in the eastern Mediterranean," said Lam.

Xi "is resorting to the old method of the carrot and the stick - but the stick is playing a much larger role, intimidating its neighbors with relentless expansion of China's military power." China is thought to be building two or three new aircraft carriers, and "Chinese submarines are everywhere now," said Lam. The carrot, for China's neighbors, is the newly founded Asian Infrastructure Investment Bank, founded with $50 bn of Chinese money, that will fund major infrastructure projects in China's neighbors. Xi believes if he funds South East Asian countries enough to become dependent on China, he can drive a wedge between them and the US. "The Chinese think for the long term. They believe after the global economic crisis and the wars in Iraq and Afghanistan the US is on the road to decline, and the momentum is going the way of China."

But even as Xi has spent a lot of energy on projecting China's power overseas, Lam says that the most crucial question facing China is the economy. "The economy is the key. Most of my friends in China are totally obsessed with money." The prime minister, Li Keqiang, has said China needs at least 7.2% annual growth to ward off large-scale disturbances. Already China has some 150,000 smaller riots and protests a year - "that is a mind-boggling number." So far China's growth has been shored up with government spending when it needed to keep the GDP figure high, but that has led to massive debt - the current ratio of debt to GDP in China is about 300%, which is higher than the US. "It is not sustainable - they are building bridges to nowhere, 15 to 20 new airports a year, and the debts are ballooning."

To make things worse, the environmental damage from industrial pollution is costing China between 3% and 5% of GDP per year, according to the World Bank. "I have a friend in the Ministry of the Environment, who told me he will never eat a fish in China" - because of the pollution in China's waters. This has had the indirect effect of causing a brain drain in China, because many of the more affluent families are emigrating to escape the pollution. "How long can it last?" asked Lam.

Xi has resisted the economic reforms and the shift of resources from state-owned enterprises to the private sector that many economists say China needs, largely because he doesn't want to lose control. He has reorganized the power structure of the government by creating super-agencies in charge of the economy, domestic security and cyber security which Xi chairs personally. In doing so, Xi has "totally sidelined" the economically-savvy and English speaking prime minister, Li Keqiang, who is known for his dictum "let the markets do what the markets do best." And so inefficient state-owned monopolies continue to get bank loans while private companies have to struggle to get funds.

"Xi is obsessed with the sudden collapse of the Soviet Communist Party, which he says is because they lost control of the police and the economy," said Lam. Xi is also a super-nationalist, and although he understands the need for China's economy to be integrated in the global economy, it is also the case that "the investment climate in China for foreign companies has been consistently deteriorating due to government interference" since Xi came to power. Large multinationals have been harassed and even fined for allegedly fixing prices or tax evasion: "the business climate is not as hospitable as it was five years ago."