Aly Song / Reuters A magazine featuring Xi Jinping sits on a newsstand in Shanghai, October 2017.

Why Xi's Power Grab Will Hurt China's Prospects for Reform

Good Policy Will Be Tough for the "Chairman of Everything"

Since the conclusion of the 19th Party Congress—China’s quinquennial leadership transition—and its First Plenum on October 25, a widespread consensus has emerged that Xi Jinping enters his next five-year term as General Secretary of the Communist Party of China (CCP) as the most powerful Chinese political leader since Deng Xiaoping, arguably even Mao Zedong. 

Although there is less agreement on what he plans to do with that power, many believe that a newly empowered Xi will now focus his attention on the Chinese economy. In particular, the Western business community is optimistic that Xi could begin a push for long-awaited reforms.

According to Moody’s Investors Service, Xi’s power grab “could advance the process of economic reform and rebalancing, because one obstacle to reform has been the misalignment of incentives between the central leadership and other officials.” In a research note, Danske Bank argued that “markets are increasingly pricing a further push for reforms in 2018, as Xi Jinping is likely to have more focus on the economy following five years when a lot of focus has been on ‘cleaning up’ the party and strengthening his power base.” And in June, the investment firm PIMCO speculated that after the Congress, Xi might “use his enhanced stature to end policy paralysis and embark on a major reform agenda that improves the economy’s efficiency.”

The underlying logic of the “power-for-reform” bargain is straightforward: despite the CCP’s control over the commanding heights of the economy and its top-down Leninist structure, China’s is a “fragmented authoritarian” system, wherein subordinate actors, who enjoy local-level autonomy, often ignore, misinterpret, or subvert orders from the top if they are deemed detrimental to their interests. This diffusion of power throughout the system stands as a major obstacle to change. 

Nguyen Huy Kham / Reuters Xi Jinping drinks a glass of wine at a state banquet in Hanoi, November 2017.

Given the realities of China’s system, many argue that what the country needs is a leader who can accumulate enough power to ram through painful measures, including property tax reform, debt reduction, and an

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