As China plays wargames in Taiwan, the true power play for leadership occurs elsewhere

China’s drawn-out wargames around Taiwan are intended for multiple audiences: its opponents in Western and Northern Asia, mainland Chinese citizens, and, perhaps most importantly right now, Chinese Communist Party (CCP) elites.

As the world’s attention is on Taiwan, one of the most crucial political games in the history of the People’s Republic of China (PRC) is being played out in the northern seaside town of Beidaihe, where the annual, informal and very secretive meetings of senior CCP cadres and former leaders and their supporters are occurring.

Commentators say it will be the most significant leadership transition since the messy aftermath of the 1989 Tiananmen Square massacre that saw leader Zhao Ziyang placed under house arrest for life and the eventual unexpected ascendance of Shanghai party chief Jiang Zemin.

At Beidaihe’s so-called summer summit, the party’s leaders disappear from public view from late July to mid-August, as they shuttle around the heavily guarded resort town while China’s supreme leader Xi Jinping is shoring up support ahead of the party’s landmark 20th Congress. The Beidaihe sessions will largely settle who will make up the approximately 300-person central committee, its 25-person politburo and its seven-person (at present the numbers have been as low as five and as high as nine) standing committee that Xi sits atop.

Xi, 69, has already secured a third term as president, a title largely ceremonial and introduced in the 1990s to mimic the United States and other republics, but which holds no real power.

At the October or November Congress, Xi is expected to gun for an unprecedented third five-year term as general secretary. His other, and potentially more difficult task, will be to ensure he can place as many of his picks as possible in the Politburo Standing Committee (PSC).

If he is successful, it will be the first time since the CCP formalised its election processes, and set a retirement age of 68 during the tenure of former supreme leader Deng Xiaoping, that they have been subverted.

Xi’s two predecessors, Jiang Zemin and Hu Jintao, both handpicked by Deng, served their two five-year terms, then peacefully handed over control. As well as head of the CCP, Xi is also chairman of the Central Military Commission that controls the People’s Liberation Army (PLA). Typically of a Leninist system, the commission is subject to the CCP rather than the state — the People’s Republic of China. 

Xi has centralised control during his 10 years in power to an extent unseen since the days of the Mao Zedong dictatorship. His original rise was a compromise between leading CCP actions — the party’s No 2, Premier Li Keqiang, 67, had originally been pencilled in for the job. On his ascension to the top job, many believed, or hoped, that the CCP had installed a true reformer who would progress economic reforms. That has been stalled by the global financial crisis that saw Beijing pour trillions of yuan in stimulus to avoid the recession that buffeted most of the globe.

Xi is the leader of the “hong ‘er dai” or “second-generation red” — offspring of original CCP revolutionaries. His father, Xi Zhongxun, was one of the CCP’s leading generals in its successful civil war against the Nationalists that saw Mao win power in 1949, as well as being a key economic reformer under Deng. 

In order to consolidate power, Xi Jinping has carried out a decade-long anti-corruption campaign that has served the dual role of trying to weed out some of the more egregious corruption in the CCP and PLA but also as a tool to crush rivals. A prime example was the arrest and removal of politburo member Sun Zhengcai, widely seen as Xi’s ultimate successor, in the lead-up to the 2017 19th Party Congress.

Corruption probes have also extended into the commercial sector where a string of wealthy entrepreneurs have been taken down, as Xi has drawn the nation’s go-go business sector closer to the CCP, including a crackdown on party cells inside all businesses — foreign companies included.

He has ramped up the country’s internal security apparatus and now pervasive surveillance systems, set up a national security commission that he heads, incarcerated Uyghurs and other Muslim minorities in Xinjiang, crushed protests in Hong Kong that have quickly been brought under Beijing’s heel, and installed his allies in key provincial party, military and government posts.

But while many observers see Xi’s third term as a done deal — there is certainly no clear successor as there has been under previous leadership changes — nothing in the opaque politics of the CCP is ever entirely certain.

There remain multiple factions, shifting loyalties and plenty of dissatisfaction with Xi inside the black box of the CCP elites. But Xi, whose own faction now holds sway, has weakened the key Tuanpai faction, officials who rose under the Communist Party youth wing under Hu Juntao and Premier Li. And the key opposition from leader Jiang Zemin, 96, and his allies in the pro-business Shanghai clique — who originally supported Xi but later became opposed — has weakened as he has aged.

So it all now appeared relatively plain sailing for Xi until the original outbreak of COVID-19 in the city of Wuhan over the winter of 2019/2020.

The decision to hew to the zero-COVID policy has engendered grassroots dissatisfaction around the country as well as within the party, particularly from Li, and put fresh spokes in the wheel of a Chinese economy already under pressure to stop its reliance on central pump-priming aimed at infrastructure and the property market. COVID also came as relations — including economic ties — between the world’s two largest economies, the US and China, were at a low ebb following the administration of Donald Trump. But COVID zero has also represented an opportunity for Xi to further tighten the control of the Chinese state on its people.

At present, inflation is running and unemployment is rising, a closely watched issue particularly among youth due to the overarching focus by the CCP on internal stability — something often lost on Western media distracted by China’s offshore military adventurism. The rising cost of living and the slumping property market have also seen an unprecedented mortgage strike by normally compliant Chinese citizens that threatens the property sector. The Russian invasion of Ukraine and China’s complicit support and Nancy Pelosi’s Taiwan visit have both been awkward timing.

In this environment, Xi’s handling of Taiwan is being closely watched by cadres, and Beijing has even issued a new white paper on “reunification” this week, emphasising its long-term intent. Here Xi must tread the line between putting on a significant show of strength to demonstrate Beijing’s willingness to take the island by force, and keeping this within tight guardrails to avoid any mistakes his rivals can lay at his feet, which could trigger a conflict with the US and upend the 20th Congress plans.