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Last month, Xi Jinping was enjoying the spotlight. He had secured a groundbreaking third term as China’s leader at the Communist Party Congress, and the only symbol of possible challenge, former leader Hu Jintao, had been literally removed from the stage.
Now, Xi is in trouble. Demonstrations erupted across the country at the weekend after a deadly fire linked to a Covid lockdown in Urumqi, the capital of China’s Xinjiang region. Three years’ worth of pent-up anger at Xi’s zero Covid policy boiled over in protests in at least five big cities; protesters in Shanghai called openly for Xi to “step down”.
So what? The Communist Party has not faced this level of public anger in decades, and the protests are seen as a personal rebuke for Xi. People may have hoped for policy change after the party congress; now, frustrations are sending them into the streets at serious personal risk. Most want out of zero Covid. Some just want out.
Voting with their feet. The congress was a tipping point for the country’s elite. David Lesperance, a lawyer who helps wealthy Chinese leave the country, said: “Literally as soon as that video [of Hu Jintao] came out, I had clients saying: ‘Right, I’m leaving. What’s my future here?’”
Xi confirmed his hold on power for at least another five years, with the possibility he could rule for life. Absent an upheaval that removes him from power, that means:
- More Covid. It’s unclear if the protests will force Xi to ease Covid controls. But he doesn’t have any easy options. Nomura, an investment bank, says 21.1 per cent of China’s total GDP is currently under lockdown, up from 9.5 per cent a month ago. But the virus is still there – China reported its fourth straight daily record of infections on Sunday.
- More taxes. In a speech to the congress, Xi called for a “well-regulated” system of wealth accumulation in China, which stirred speculation about major tax reform as part of his “common prosperity” drive to reduce inequality.
- More risk. Lesperance says his clients “don’t want to be the next Jack Ma”. There have been a number of high-profile disappearances under Xi, including that of the Alibaba founder, who went awol for three months after daring to clash with the regime over tech regulation in 2020. Billionaire Xiao Jianhua was sentenced to 13 years in prison this summer for financial crimes, five years after being seized from the Four Seasons hotel in Hong Kong.
Where next? By one estimate 10,000 wealthy Chinese will emigrate this year – the second biggest number for any country after Russia. Investment migration consultancy Henley & Partners said Chinese enquiries jumped 134 per cent in the first six months of this year.
Hong Kong, once a favourite destination for Chinese wealth, looks less attractive as Beijing tightens its grip. The US, UK, Canada and parts of Europe are other long-popular options, while in Singapore, the number of family offices that manage private wealth nearly doubled from 400 at the end of 2020 to 700 last year, according to the Monetary Authority of Singapore. The number of Rolls Royces registered there is up 90 per cent on 2019.
What next? Back home, Xi faces three urgent questions:
- Will he stick with zero Covid? The strategy has come to define his rule, but it isn’t working.
- If not, will he allow the use of foreign-made mRNA Covid vaccines? They could immunise the Chinese population sufficiently to allow a broad easing of restrictions, but so far he’s refused to let them be licenced for Chinese use.
- If not, how many elderly people can he afford to let die? A third of Chinese over 60 are not fully vaccinated, and so not protected against the most recent Omicron variants.
China’s impatience with zero Covid is serving as cover for broader frustrations. Citizens point to the World Cup, where maskless fans fill the stadiums, as proof of how their country lags behind the rest of the world in Covid recovery, not to mention personal freedom. It will take more than cutting away from crowd shots of the football to put this genie back in its bottle.