Shortly after becoming general secretary in 2012, Xi Jinping warned that the Soviet Union fell because “no one was man enough to stand up and resist” the politically destabilizing effects of liberalization. In the years since, Xi has acted with intense faithfulness to that premise in an effort to prevent the same fate from befalling China. This was no less true in 2021, as China’s political, economic, and social landscape were heavily influenced by Xi Jinping’s campaign to secure a third term as leader. But the focus of this year’s regulatory blitz appeared notably different from Xi’s first decade in power, which sought to arrest the CCP’s internal decay after years of breakneck growth. Instead, the preemptive firewall that emerged this year betrayed concerns about social instability and in the government’s calls for “common prosperity,” its cause: the specter of economic stagnation.
The Communist Party’s actions can be summarized as four preemptive strikes against instability: a renegotiation of the terms of its performance legitimacy; action, much of it potentially counterproductive, against inequality; the elimination of alternative sources of mass leadership from the business and entertainment community; and the continued usurpation of technological tools as an alternative form of governance and control.
In its restrictions on video games, social media, portrayals of effeminate men on television, and other actions, the Party continued its years-long renegotiation of the terms of its performance legitimacy from economic growth to moral arbiter and cultural defender, precluding the possibility of a pluralistic society. A polemic denouncing celebrity culture and the excesses of Chinese capitalism went viral, with its play in some official media outlets raising concerns about a return to cultural revolution.
The housing and for-profit education sectors were the focus of the government’s actions against inequality, as were labor standards at both ends of the economic spectrum. The absence of a bail out of over-indebted property builders, intended to put the economy on a more sustainable long-term footing, sent the value of developers’ shares and debt sharply lower and left a chill on consumer confidence. A ban on for-profit tutoring eviscerated share prices while inviting skepticism from parents about how this would make the country’s educational arms race any less competitive. In labor, the government sought to improve standards for delivery and tech workers alike, officially banning “996” working norms.
The government extended its humbling of business and entertainment leaders beyond Jack Ma, restricting celebrity fan clubs and ending celebrity rankings, and reaffirmed its ban on private news media. Meanwhile, the government inserted Xi Jinping Thought into the curriculum of primary classrooms. A core element of the crackdown on technology companies involved greater government access or control over data and algorithms that now shape large swathes of the economy and daily life. Pro-competitive measures intended to improve interoperability between digital platforms were also imposed, redirecting tech companies’ focus from competing against the state to each other.
The Chinese Communist Party celebrated its 100th anniversary as President Xi vowed that its people “will never allow any foreign force to bully, oppress, or enslave us.” At the sixth plenum, the Party adopted a rare resolution on history, affirming Xi’s leadership to be of “decisive significance in advancing towards the great rejuvenation of the Chinese nation.” China built new nuclear missile silos and tested a nuclear-capable hypersonic vehicle; the Pentagon expects China to quadruple its nuclear weapons stockpile by 2030. The moves have prompted the Biden administration to pursue nuclear talks with Beijing, which is believed to be pursuing an Atlantic military base in Equatorial Guinea.
The country maintained a Covid-zero strategy, swiftly suppressing occasional outbreaks and continuing to effectively close the country to foreigners. The country vaccinated more than a billion of its people; its domestically produced vaccines’ lower levels of efficacy diminished the country’s vaccine diplomacy and makes the country more vulnerable to the Omicron and subsequent variants. The government continued to rebuff a proper investigation into the origins of the pandemic.
Hong Kong’s civil society struggled as authorities deployed the national security law to shut down the opposition Apple Daily newspaper, arrest the activist responsible for the city’s Tiananmen Square vigil, and target dozens of others. Beijing imposed a ‘patriots only’ criteria on candidates for the city’s legislature, effectively ending adversarial politics. Tens of thousands have left the city and many foreign businesses, whose frustrations were reinforced by the city’s strict quarantine policies, have made plans to relocate or expand elsewhere.
Tensions across the Taiwan Strait grew ever more pronounced as China flew record numbers of sorties and Taiwan’s defense minister warned that China’s strategic calculus was shifting in favor of an attack. President Biden publicly affirmed the United States’ willingness to defend Taiwan on two occasions, although advisers stressed his comments did not constitute a change in policy. A small contingent of American soldiers were understood to have been deployed in Taiwan for at least a year, conducting training operations. America also announced plans to launch trade talks with Taipei, as exports from the island have surged in the wake of the Trump-era tariffs. Taiwan’s standing also advanced across much of Europe. Nicaragua ended ties in favor of Beijing.
Macau’s tourism-centric economy continued to struggle due to the pandemic; a forthcoming regulatory overhaul of its casinos and the arrest of junket operator Alvin Chau further darkened the sector’s outlook. Pro-democracy candidates were barred from participating in the territory’s elections.
The Biden administration made good on its promise to rally other nations in its competition with China, while seeking to preserve space for cooperation on issues such as climate change and North Korea. A combative March meeting between American and Chinese diplomats in Alaska marked the apparent crest of the country’s “wolf warrior” diplomacy; weeks later Xi signaled the need for a less combative tone. A year-end virtual summit between Xi and president Joe Biden seemed to establish a tenuous bottom to spiraling ties. Both countries moved to ease restrictions on journalists.
On trade, the administration committed to enforcing the phase one trade deal agreed during the Trump administration and blacklisted multiple companies accused of facilitating Beijing’s repression of its Uyghur minority. A law banning imports from Xinjiang unless they are proven to have been made without forced labor will become a new flashpoint in commercial relations. At year-end, Ma Xingrui, governor of Guangdong province, replaced Chen Quanguo, considered to be the architect of Uyghur repression, as party secretary of Xinjiang.
G7 and NATO nations signaled a hardening stance by issuing communiques that were critical of China’s conduct; NATO also signaled its intent to expand its focus on the country. Cooperation increased among the so-called Quad nations and vice president Harris made a visit to Southeast Asia. Japanese and South Korean leaders, in joint statements following visits with the White House, made notable calls for “peace and stability” in the Taiwan Strait. The United States and United Kingdom agreed to build nuclear powered submarines for Australia, deepening their security relationship, while alienating France, which had contracted to sell conventional submarines to Canberra.
The US accused China of a broad-scale cyberattack targeting a vulnerability in Microsoft’s email software. CIA created a new mission center focused on China. Nicholas Burns and Qin Gang were named as the American and Chinese ambassadors to their counterpart nations. It was reported that in the waning days of the Trump administration, General Mark Milley, chairman of the Joint Chiefs of Staff, acting on intelligence that China was concerned about a possible military attack, made two calls intended to reassure his counterpart.
China denounced the chaos of the American withdrawal from Afghanistan as it sought stability and opportunity from the Taliban. Beijing belatedly acknowledged the death of four of its soldiers during last year’s border clash with India; subsequent talks have done little to achieve de-escalation. A suicide bomber in Pakistan targeted a bus whose passengers were mostly Chinese workers, the latest in a series of attacks targeting Chinese interests. China and Bhutan agreed to speed up talks on their separate boundary dispute; reports showed that China has built roads, villages, and military outposts in Bhutanese territory.
The United States outpaced China in donations of coronavirus vaccines, according to figures from UNICEF. New research identified 42 countries that have debt exposure to China exceeding 10% of their GDP. In a boost for climate change goals, Xi Jinping vowed to end support for construction of new coal power plants abroad; while Xi did not attend the COP26 climate conference, the Chinese and American delegations made a joint commitment to cooperation.
Huawei CFO Meng Wanzhou reached an agreement with the US Justice Department, allowing her to return to China from Canada, where she was awaiting extradition; two Canadians and American siblings that had been detained or subject to exit bans were allowed to exit China. Elsewhere in the Americas, the United States initiated its counter to China’s Belt and Road Initiative via the G7’s new Build Back Better World program. The European Union launched a similar effort.
In Southeast Asia, China sought to maintain stability in Myanmar following its coup; the Philippines restored the Visiting Forces Agreement with the United States after President Rodrigo Duterte had previously threatened to terminate it. Some manufacturers who saw promise in Vietnam as an export hub had second thoughts after Covid outbreaks disrupted production.
As Angela Merkel ended her chancellorship of Germany, Europe continued its reassessment of relations. The European Union shelved an investment agreement after China imposed retaliatory sanctions following Western actions against Chinese officials accused of human rights violations in Xinjiang.
Economy and business
The economic recovery from the coronavirus slowed due to uncertainty in the housing sector, the government’s Covid-zero policy, and energy and other supply chain issues. Third quarter GDP growth slowed to 4.9 percent over the prior year compared with 7.9 percent in the previous quarter; the IMF projected full year growth of 8.0 and 5.6 percent for 2021 and 2022. China and Taiwan both applied to join the Trans-Pacific Partnership, a trade pact, as China’s exports remained robust relative to the rest of the economy.
After ignoring a request from the Chinese government to delay its initial public offering, ride-hailing firm Didi ran into a regulatory storm that inaugurated a new era of scrutiny for overseas listings. At year-end, Didi announced its plans to delist from the New York Stock Exchange in favor of Hong Kong. Major corporations and their leaders committed significant sums to advance the country’s “Common Prosperity” agenda.
China Evergrande, a property developer, entered into a government-assisted restructuring of its $300 billion liabilities. Attempts to impose a property tax encountered resistance; the reemergence of a “dual-track” system of government and commercial housing appeared likely. China banned cryptocurrencies as it continued preparations for its own digital renminbi. Goldman Sachs assumed full control over its in-country operations and BlackRock raised $1 billion for the first foreign-run China mutual fund.
Semiconductor shortages constrained automotive sales. Multiple incidents of severe flooding raised concerns about the country’s resilience to climate change. Energy shortages led to power cuts as China and other nations stumbled in their transition to cleaner energy; this year, the country launched the world’s largest emissions-trading program.
TikTok topped one billion monthly users. Shein, a Chinese fast-fashion label, filled youth closets the world over, notably except for China itself, while H&M was shut out of China’s market after the brand decided to stop sourcing from Xinjiang. Pinduoduo surpassed Alibaba as the country’s most popular e-commerce site. Xiaomi’s smartphone sales benefited from Huawei’s struggles with American sanctions. Clubhouse briefly flourished as a forum for dialogue before being blocked; Microsoft’s LinkedIn exited the country as censorship pressures became unsustainable.
Society and culture
As China’s youth “lied flat” in exasperation before the socioeconomic pressures that confront them, Beijing pushed for more births, increasing the permissible number of children per family to three, calling for a reduction in “medically unnecessary” abortions, and restricting access to vasectomies.
The disappearance of tennis player Peng Shuai, after accusing a former top official of assault, invited international outcry, and was compounded by her apparently managed reappearance. The Women’s Tennis Association suspended tournaments in the country in a rare demonstration of principle over profit by a Western organization. China’s MeToo movement was subjected to other setbacks throughout the year as a court ruled against a woman who had made a high-profile accusation against a CCTV host. Authorities also dropped a case against a former Alibaba manager accused of assault; the woman who made the allegation was later fired.
A Chinese spacecraft successfully landed on Mars, its first independent mission to the planet; astronauts were launched to China’s new space station for the first time. China’s athletes earned 88 medals at the Tokyo Olympics, delayed a year due to the pandemic. In February 2022, Beijing will host the Winter Olympics, which the United States and limited group of allies have announced they will diplomatically boycott. A freak storm killed 21 ultramarathoners in Gansu province, one of the deadliest accidents in modern sports.
Chloe Zhao became the first Chinese to win an Oscar for best director; her victory was ignored by state media, likely due to past comments made about the country. Hi, Mom, which shone a light on mother-daughter relations, Detective Chinatown 3, a comedy, and Battle at Lake Changjin, the portrayal of a defeat of the United States during the Korean war, were China’s highest grossing films for the year. Notable books included a history of China’s diplomats; an assessment of its leaders’ grand strategy; an insider’s account of the corruption of China’s elite; and the Chinese-American history of mahjong. The Chinese-Australian artist Badiucao, best known for his satirical cartoons of China’s leaders, made his first solo exhibition.
Hu Xijin, provocateur, propagandist, and editor of the Global Times, retired. Ying-shih Yu, a scholar of Chinese thought, died at 91; Yuan Longping, a Chinese agronomist whose hybrid rice varieties helped feed his nation, died at 91; Zuo Fang, a founder of Southern Weekly, a newspaper which was once at the vanguard of accountability journalism in China before being constrained in the Xi era, died at 86; Jonathan Spence, author of the Search for Modern China, died at 85.
With Xi Jinping’s third term as China’s leader assured, speculation will focus on the rest of the country’s senior leadership and the emergence of the Communist Party’s next generation; prediction markets suggest premier Li Keqiang’s replacement on the Politburo’s Standing Committee and the likely ascension of Chen Min’er and, potentially, Hu Chunhua. As the Omicron variant races around the world, the reopening of China’s borders and Xi Jinping’s resumption of foreign travel becomes ever less likely. But even if both were to come to pass, it would only belie the country’s trajectory towards self-isolation.
This article has been updated based on news developments.