Amid China’s seemingly relentless economic rise, why has its ruling Chinese Communist Party (CCP) centralized power under Xi Jinping (習近平)? Answering this question requires an understanding of the sense of impending crisis that has plagued the CCP leadership in recent times.

China’s political system as a party-state has not fundamentally changed since 1949, in which the party maintains control of the state, the military and society. Party organizations permeate China, controlling all personnel and policy of the state machinery. However, it has moved towards greater institutionalization since the reform era began in the late 1970s.

Rules and conventions have been developed in regulating leadership promotions, retirement and succession. They include term limits, age requirements and performance benchmarks. Members of the Politburo Standing Committee (PBS) — the top CCP decision-making organ — began to be chosen through a behind-the-scenes internal selection process involving consultation among current and retired leaders. This process helped to develop a collective leadership at the top echelon of the party state, which is a system of checks and balances designed to limit the influence of individual leaders.

But prior to the Xi leadership, there was a growing view by China’s political and policy elites that this political structure was losing its ability to address China’s economic, social and political challenges.

One cause for concern was that while rapid growth had lifted the Chinese economy to middle-income status, China’s growth was overly dependent on external demand, investment and credit expansion. There were growing economic imbalances — a low consumption rate, excess production capacity and rising debt levels — all indicating that China’s growth pattern was becoming unsustainable.

Chinese society was also increasingly polarized by widening income gaps between urban and rural areas and the coastal and inland regions, producing a system of haves and have-nots. These gaps indicated that there were institutional barriers preventing the free flow of resources across the economy. Social equality and justice were becoming important political issues.

Deepening market-based reform — accompanied with reform to create a clean, competent and market-serving government — was needed to put the economy back on a more balanced growth path and redress social inequality. But since the mid-2000s, market-based reforms had become difficult to push through due largely to the resistance of powerful interest groups in the state sector. The state sector’s monopolistic control in certain industries — deemed strategically important — was a major source of distortion.

Rampant corruption was the most obvious symptom of malaise in China’s political system. Bribery permeated every corner of the party, the state and the military. By the 2010s, it had become an unavoidable part of daily life. It was commonplace for ordinary people to give bribes for receiving appropriate treatment when giving birth or for getting their children into good kindergartens and schools. There were implicit price tags for virtually every public position. Promotion into any government or military position was no longer possible without paying an expected sum to one’s superiors.

Corruption has economic and political costs. There were observations that the growth of China’s corruption far outstripped GDP growth from 2002–2012. In 2013, some estimated that corruption might account for as much as 10 percent of China’s GDP. As corruption almost always involves the exchange of power, money and privilege, it has been a focus of public anger and outcry. Rampant corruption was corroding the inside of the party-state as well as sapping its political legitimacy from the outside.

While the outside world was dazzled by China’s relentless rise, its enormous challenges had laid bare the fact that it was impossible to assume a business-as-usual approach to maintaining China’s old growth model and political modus operandi. China’s political and business elites had a growing sense of impending crisis — a coming train wreck that no one could do much about.

Yet intellectuals and policy advisers began to openly discuss the need for fundamental reform of the party-state. While China’s political elites were deeply divided on where China should go, the strong undercurrent in this political debate was the race between reform and revolution. When Xi became general secretary of the CCP in 2012 he put Wang Qishan (王岐山) in charge of the anti-corruption campaign.

Wang recommended party cadres to read Alexis de Tocqueville’s "The Old Regime and the Revolution." His unspoken intention was clear: the collapse of the party was as real as that of the grandiose Ancien Régime Louis XIV built more than three centuries ago. Xi worried aloud about the vitality of the party by posing a question to party members: when the Soviet Union was about to collapse, why did nobody stand up and fight hard enough to save it?

For Xi, Wang and their supporters, saving the CCP demanded a drastic revamping of the power structures of the party-state. Xi’s ascendancy signifies that power centralisation has been their chosen path to achieve this.

The News Lens has been authorized to republish this article from East Asia Forum. East Asia Forum is a platform for analysis and research on politics, economics, business, law, security, international relations and society relevant to public policy, centered on the Asia Pacific region.

TNL Editor: Edward White