Two fronts
Amid a trade war, Xi Jinping may be purging China’s armed forces
Why the tariff confrontation is not the only thing on his mind
In Beijing, springtime warmth has drawn queues to restaurants offering al-fresco dining; trendy shopping districts are crowded.
Mr Jia, a 36-year-old investor, says he is not bothered by America’s tariffs.
Standing outside his friend’s cupcake shop, he says Donald Trump’s levies are a sign that America feels threatened by China’s rise.
America’s power is declining, he says.
“What you feel in today’s world is that hegemony is very hard to achieve.”
The trade war is everywhere.
State media trumpet President Xi Jinping’s support for “multilateralism and international trade rules”.
Newspapers have shown Mr Xi on a visit to South-East Asia, “creating development opportunities” and supporting “regional economic integration” in the face of maga protectionism.
China has warned countries it will retaliate if they buckle to American pressure to impose tariffs on China.
There is some evidence the charm-and-harm campaign is working.
On April 22nd it was reported that Mr Xi will be presented this week with a letter from Ishiba Shigeru, Japan’s prime minister, aimed at maintaining stable trade links.
Yet for Mr Xi, what matters more is the domestic picture.
Relations with America and the world are “not top of the list for the things that might keep him awake at night”, says a former senior American intelligence official.
Part of that calculus relates to the economic consequences within China of the trade war.
The other is less noticed, but critical.
Just as the economy is battling serious headwinds, Mr Xi’s campaign to drive out corruption and enforce loyalty in the top ranks of the Communist Party is generating turbulence.
Officials have seized on data that appear to show China’s ability to withstand tariffs.
On April 16th they declared first-quarter growth of 5.4% year on year, better than predicted; the full-year target is “about 5%”.
The figure was buoyed by stimulus and a front-running of exports ahead of tariffs: the volume of shipping containers processed rose by 10% year on year in the week to April 20th, says Bloomberg, a news and analysis firm.
Still, economists expect a sharp slowdown.
Freight-activity indicators suggest a drop is coming, says a survey by Goldman Sachs, a bank.
Before “liberation day”, ubs, another bank, predicted growth of 4% in 2025.
It now says 3.4%, if the levies remain.
Party leaders are paranoid about social stability and Mr Xi will be watching how an export and industrial slowdown might filter through into fragile public confidence.
There are signs of nervousness.
A survey by Morgan Stanley, another bank, after tariffs soared this month found that 44% of 2,000 respondents in cities across China were worried that they or family members might lose their jobs, with many citing the levies.
This was the highest share since the bank began conducting such polls in 2020.
In terms of the relative negotiating hand China has with America, a weakening of domestic confidence has to be weighed against the carnage in the United States.
On April 22nd reports emerged that Scott Bessent, the treasury secretary, had reassured investors in a private meeting that a trade deal with China would eventually be struck.
Also that day, Mr Trump said his tariffs on Chinese imports would “come down substantially” if a deal is reached.
But for now Mr Xi is likely to stimulate more in order to prop up consumers.
“We have the ability…to address external challenges,” according to a statistics official.
A Politburo meeting in late April may be the moment for more measures to boost housing, consumption and industry.
At that Politburo meeting Mr Xi’s other domestic obsession may be visible: a never-ending purge of the armed forces.
One of the Politburo’s members has not been seen in public since early March.
He is General He Weidong, one of two vice-chairmen of the Central Military Commission (cmc) and number three in the military hierarchy.
He was absent from a tree-planting activity in Beijing in early April attended by Mr Xi and other cmc members.
State television did not show him at a conference on diplomacy on April 8th and 9th.
If General He has been purged, he would be the highest-ranking uniformed member of the cmc to be dismissed since 1967.
That would show Mr Xi’s military purges are not over.
Li Shangfu, then the defence minister, was targeted in 2023.
Miao Hua, the admiral responsible for enforcing loyalty to Mr Xi within the pla, was placed under investigation in 2024.
In March a senior member of the military commission’s anti-graft unit, Lieutenant General Tang Yong, lost his job as an adviser to the national legislature.
Such shake-ups are not a sideshow: the pla is a core component of the Communist Party itself and purges may have weakened its combat effectiveness, according to American intelligence.
The interplay between the economic consequences of the trade war and signs of turmoil at the top of the party are crucial to understanding China.
In one scenario the trade war forces it to liberalise its economy, boosting consumption rather than state-led investment and easing up on entrepreneurs.
But in a more paranoid environment it could make a more nationalistic pivot to rally the public.
This is visible already.
On April 15th China’s spy chief, Chen Yixin, warned that China must “resolutely win the comprehensive war against hegemony”.
Grey-zone activities intimidating Taiwan are operating at an intense pace.
That will be decided in 2027 at the next party congress, when many analysts expect him to seek a fourth term as party boss.
The next couple of years may be his biggest test yet.
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