(Bloomberg) — The sudden ouster of Xi Jinping’s handpicked foreign minister is the latest example of how the Chinese president’s strengthened grip on power has failed to insulate him from setbacks on some of his biggest policy priorities.
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Qin Gang’s removal after just seven months on the job is widely seen by China watchers as a blow to Xi, who elevated the official over more experienced contenders. While there’s no sign the Chinese leader faces any serious threat to his rule, the diplomatic turbulence adds to a long list of challenges facing China that can be traced, in part, back to Xi’s signature initiatives.
His ideological fight with the US has fueled a global campaign to block China’s access to high-tech chips, while his declaration of a “no limits” friendship with Russian President Vladimir Putin has drawn widespread criticism from key trading partners. China’s economic growth has trailed estimates as the after-effects of Xi’s stringent Covid Zero strategy and policy swings linger.
The nation’s stock market is among the worst performers globally, despite a government messaging campaign to shore up sentiment.
“This is all problematic and not an auspicious start for his third term, especially considering all the fanfare that accompanied his unprecedented appointment,” said Bates Gill, executive director of the Asia Society Policy Institute’s Center for China Analysis.
The Qin situation “is one indicator that maybe Xi is having some difficulties in managing lingering political tensions that appear to exist at the upper reaches of party and government leadership,” he added.
Xi’s grip on power was first questioned just weeks into the third term that made him China’s most powerful leader since Mao Zedong. During nationwide protests against Covid restrictions last December, some participants even called for Xi’s downfall.
Almost overnight, China dumped key aspects of its zero-tolerance approach, which required mass tests, snap lockdowns and closed borders — a rare U-turn for the Communist Party, which had said controls were vital to prevent the mass deaths seen in the US.
After that decision, one of China’s most populous provinces saw cremations surge by 72.7% year-on-year in the first quarter, local media reported this month, in data that was later deleted.
“The Covid policy used to be one of Xi’s examples to show his government is successful, but it’s quickly turned out to be a quite disastrous thing,” Dongshu Liu, assistant professor specializing in Chinese politics at the City University of Hong Kong.
The scarring effects of Covid controls combined with years of abrupt policy swings mean the world’s second-largest economy is now facing a confidence crisis among consumers and the private sector, as both universes pull back on spending.
With Beijing’s official growth target of about 5% at risk, and amid concerns China is teetering on the verge of deflation, Xi has embarked on a massive messaging campaign to woo private investors bruised by years of his regulatory campaigns.
Beijing this month also signaled an end to a crackdown on the tech sector that wiped out billions in market value and derailed the world’s biggest initial public offering.
Another possible sign Xi is changing course is the appointment this week of Pan Gongsheng as governor of the People’s Bank of China. Last October, Pan was removed from the Communist Party’s Central Committee, raising expectations Xi was preparing to appoint a loyalist to replace the outgoing Yi Gang.
Pan is now the first Chinese central banker since the 1990s not to be a member of that elite committee on appointment. That suggests Xi is prioritizing “expertise over loyalty” as the economy continues to lose steam, said Neil Thomas, a fellow for Chinese politics at Asia Society Policy Institute’s Center for China Analysis.
“In recent months, Xi has adopted a notably more cautious approach,” Jeremy Chan, a China and Northeast Asia consultant with the Eurasia Group. “Xi’s not being the silver-back gorilla that we expected him to be after his behavior last fall.”
As Xi confronts economic risks, he also faces fresh geopolitical instability. A brief uprising against Moscow last month, for example, laid bare the gamble he took on a friendship with Putin.
Qin had tried to moderate that position, last year saying there was a “bottom” to Beijing’s backing of Moscow and that China would have tried to stop the war, if it had known in advance. One of Qin’s last public engagements before dropping from public view was with Russia’s deputy foreign minister.
Xi hasn’t spoken publicly to Putin since that challenge to the Russian’s rule.
The Chinese leader has, however, restarted high-level dialogue with the US, hosting three senior Biden administration officials in the past six weeks. Last month, he told US Secretary of State Antony Blinken his trip had been “very good,” although bilateral ties remain frayed on everything from Taiwan to trade.
Qin’s disappearance only adds to Xi’s problems, with Beijing’s reluctance to explain his absence unlikely to reassure investors and governments about the reliability of China as a partner.
Chinese Foreign Ministry spokeswoman Mao Ning evaded some 20 questions over Qin at a press briefing in Beijing on Wednesday. Asked whether his ouster was over corruption or heath issues, she repeated: “I have no information to offer.”
Theresa Fallon, director of the Brussels-based Centre for Russia Europe Asia Studies, said the foreign ministry’s decision this week to scrub readouts mentioning Qin from its website recalled a Stalinist era.
“At a time when Beijing wanted to reassure foreign investors that the PRC was open for business,” she said, using an acronym for the People’s Republic of China, “these opaque political maneuvers and increased unpredictability add to the sentiment of growing risk.”
–With assistance from Jing Li, Kari Lindberg, Tania Chen, Charlotte Yang and Martin Ritchie.
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