Xi’s skipping of G20 Summit may have more to do with China than with India

Chinese President Xi Jinping was born in the lap of luxury but, as his father was purged during China’s Cultural Revolution, a young Xi had to toil in the farms as a manual labourer in the countryside for 6 years. Those struggles would be nothing compared to the task the all-supreme leader now faces.

Xi is skipping the G20 Summit in New Delhi and experts have failed to pin-point the one big reason why China is sending Premier Li Qiang instead.

It is true that China’s relationship with India has been mostly frosty since the border clashes in May 2020. And it is also possible that the Chinese government decided to send Premier Li Qiang instead of President Xi to send out a signal. But the Chinese government has maintained that it was ready to work with all the parties for the global event’s success in New Delhi this week.

Also, Xi might not want to share the stage with the “tough crowd” at the G20. Many G20 member countries have “hardened their positions on China” in the last decade, said Paul Haenle, director of think-tank Carnegie China, adding, “It’s a tough crowd for Xi”.

What experts are also hinting at is that Xi Jinping’s skipping the India-hosted G20 event could be due to the mounting troubles in China itself. So, is Xi staying back home where the real trouble is?

Given Xi’s focus on domestic issues, he might be unwilling to travel abroad, Alfred Wu, said associate professor at the Lee Kuan Yew School of Public Policy at the National University of Singapore.

“Xi Jinping is setting his own agenda where his top concern is national security and he has to stay in China and make foreign leaders visit him instead,” Wu told Reuters.

Wu says the over-emphasis on security is hurting China’s diplomatic ties and the attempt to rejuvenate its economy. China’s economy is in bad shape, and it is among Xi’s biggest headaches.

HOUSING CRISIS HITS CHINA’S ECONOMY

It seems the Chinese economy hasn’t emerged entirely from the Covid blow. It is the first time in decades that China’s economy is facing pressures from multiple fronts, to an extent that the entire world is jittery.

Compared to last year, Chinese households are spending less, factories are producing less, and businesses are investing more slowly. Exports have slumped too.

In August, China’s exports dropped 8.8 per cent year-on-year and its imports contracted 7.3 per cent.

Due to the sharp increase in youth unemployment, Beijing decided to stop disclosing the data. In the meantime, property prices are falling and some major developers have declared bankruptcy, putting the real estate sector in danger.

The current economic obstacles that China faces have the potential to create a lethal mix that might spell the conclusion of its 40-year-long successful growth model.

Economists say that China’s overdependence on the property sector for years coupled with its stringent Covid-related policy has significantly hampered its economic growth.

Economists have always flagged China’s debt-fuelled growth. It is seeing an astronomical rise in debt. China’s total debt-to-GDP ratio stood at a record 279 per cent in the first quarter of 2023, according to a Bloomberg analysis.

Beijing appears to have paid a significant price for too much infrastructure spending over the years in the form of huge debt, and the housing bubble has already burst during the epidemic, beginning with the Evergrande catastrophe.

The bigger fear is the contagion to the financial market. Twenty-five per cent of China’s economy is dependent on its property market.

To compound Xi’s woes, big foreign brands that solely depend on China for manufacturing are diversifying operations under their China+1 strategy. Countries like India are the biggest beneficiaries.

From Apple and Tesla to Nike, almost all major companies around the globe have their manufacturing and supply chains rooted in China.

XI PURGES MILITARY OFFICERS, MINISTER

China’s political and economic stability, apart from rising labour costs and its trade war with the US, is one of the reasons why international giants are going ahead with the China+1 strategy.

Xi became the president of China for the first time in 2012 and has been re-elected two times, the latest in March this year. In 2018, the National People’s Congress abolished term limits for China’s president and vice president, thereby allowing Xi to continue in power as he wishes to.

Over the years, Xi’s grip on power has become firmer.

But there are concerns about a purge in China.

In August, China replaced the two top officers in charge of the People’s Liberation Army’s (PLA) Rocket Force, an elite unit. General Li Yuchao and his deputy General Liu Guangbin were sacked by Xi after their prolonged disappearance from the public scene.

The PLA Rocket Force manages China’s nuclear arsenal, and the BBC called it the “biggest unplanned shake-up in Beijing’s military leadership in almost a decade”.

“President Xi Jinping has consolidated control of the PLA in unprecedented ways, but that doesn’t mean it’s complete. Xi is still worried about corruption in the ranks and has signalled that absolute loyalty [to the party] has not yet been achieved,” Lyle Morris, a foreign policy and national security expert at the Asia Society Policy Institute told the BBC.

Then there was the surprise removal of Chinese foreign minister Qin Gang, a Xi confidant and the youngest to be appointed to that post, in July.

No reason was given for Qin’s sudden removal and bringing back of his predecessor Wang Yi but it was seen as a failure on Xi’s part.

“Since both moves are attributed to China’s leader [Xi Jinping], this episode will be seen as an embarrassing lapse in judgment at the top,” Daniel Russel of the Asia Society Policy Institute told the BBC.

COMMUNIST PARTY ELDERS SLAM XI

Troubles and uncertainties at home have piled up pressure, but the trigger for Xi giving a miss to the G20 Summit could be the recent reprimand by Communist Party elders over his policy decisions.

The turmoil over the removal of the military leaders and the minister hasn’t gone down well with the party elders, who led China to its economic dominance, according to a Nikkei Asia report.

“A precursor [to Xi’s skipping the G20 Summit] seems to have been this summer’s Beidaihe meeting, the annual get-together of incumbent and retired leaders of the Chinese Communist Party at the seaside resort of Beidaihe, Hebei Province,” according to Nikkei Asia.

The Japanese newspaper said a group of retired Communist Party of China elders reprimanded Xi Jinping “in ways they had not until now”. Xi later expressed his frustration to his closest aides, it quoted sources as saying.

The elders were worried that if the political, economic and social turmoil continued, the Communist Party could lose support of the public, which could end its rule.

The slowdown in China’s economy, the second-largest in the world, has hit its global image too. “Even Chinese companies in China have been making efforts to relocate outside of China,” Naomi Wilson, vice-president of policy, Asia and global trade at the Information Technology Industry Council, told the Washington Post.

All these economic and political rumblings make President Xi’s position a little less secure.

It is very probable that with troubles back home on economic, military and political fronts, Xi might have had an added reason to skip the India-hosted G20 summit in New Delhi.

Purav Thakur helped with the research for this article