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2022 Outlook: China’s inward turn

Robert Wihtol
We find out what China’s engagement with the world will look like in 2022, and its upshots
An interview with
Adjunct faculty at the Asian Institute of Management

We are kickstarting 2022 with short conversations with some of our regular contributors about their outlook for the new year.

Here, we speak with Robert Wihtol, who currently teaches at the Asian Institute of Management and is a former Country Director for China and Director General for East Asia at the Asian Development Bank, about China’s perceived inward turn over the past couple of years, its relations with Western powers in 2022, and some China-related trends to watch for.

Unravel: You’ve written that during the COVID crisis, China has turned inward. What has led to this shift in approach, in your view?

Robert Wihtol: The immediate cause for China turning inward is its zero-tolerance approach to the COVID-19 pandemic. This has led to tight border controls and quarantine requirements, and strict crackdowns when new pockets of infection have emerged, leaving China internationally isolated.

However, China’s turning inward is a broader trend, reflecting the nationalistic sentiment fostered by President Xi Jinping. China currently emphasises economic, political and cultural nationalism. Mr Xi’s economic policy of dual circulation, which was announced in 2020, continues to welcome foreign trade and investment, but highlights domestic consumption and seeks to insulate the domestic economy. China is reining in private companies, expanding the role of the Chinese Communist Party (CCP) in private enterprises, and delisting Chinese companies on Wall Street so that they can instead be listed on Chinese exchanges, bringing them under Chinese regulators.

In response to China’s aggression in the Indo-Pacific region and beyond, the US and its allies have stepped up their cooperation in the Five Eyes anglophone intelligence alliance, the “Quad” security alliance that includes Australia, India, Japan and the US, and the newly established AUKUS grouping that provides a framework for Australia to purchase nuclear-powered submarines from the US. These initiatives have raised China’s hackles and enhanced its isolation. 

Finally, China’s education system is turning its back on Western values. Chinese universities are cutting back cooperation with their Western counterparts, and China recently introduced “Xi Jinping thought” in the school curriculum. The world will need to come to grips with an increasingly isolated and nationalistic China.

Unravel: Do you expect this inward turn to continue in 2022?

Mr Wihtol: Yes, I expect China to continue to turn inward. This is a long-term trend that has gained prominence under Mr Xi’s leadership. This year in particular China will focus on domestic politics. In late 2022 the CCP will convene its 20th party congress, a five-yearly gathering that will appoint the party’s leaders for the next five years. The party congress is expected to extend general secretary Mr Xi for an unprecedented third term, and decide on a raft of other senior appointments. Reaching agreement on these appointments will involve much behind-the-scenes wrangling and deal-making between political factions. For most of the year, expect China’s leaders to be preoccupied with domestic issues rather than looking outward.

Unravel: Do you expect China’s relations with Western powers to improve in 2022? Why or why not?

Mr Wihtol: In 2022, I expect China’s relations with Western powers to remain fraught but stable. Given the deep differences between China and the West, there are no major breakthroughs on the horizon. The best that one can hope for is cooperation on climate change and trade. During this Party congress year, China’s leaders will be concerned to convey to their domestic audience an impression of cooperation and stability. A good example is the online summit between Presidents Joe Biden and Xi held in November 2021. The exchange was unremarkable but was used by China’s party-led media to suggest to the Chinese public that relations with the US are in good shape. In the runup to the CCP congress, expect China to avoid escalating international tensions and disagreements, unless these serve a domestic purpose.

Unravel: What are a couple of things that China-watchers must watch closely in the coming year?

Mr Wihtol: The two issues that China-watchers will be keeping a close eye on are the upcoming CCP congress and US-China relations. The party congress is expected to be held in November 2022, and will determine not only Mr Xi’s future but China’s direction for the next five years. Mr Xi is expected to be extended as party general secretary for another five years. If he gets his way, he could even be elevated to Mao Zedong’s former position of party chairman. However, if Mr Xi’s opponents prevail, his powers could also be curtailed. The congress will also appoint new members to the Politburo and its standing committee, which is the country’s top decision-making body.

The National People’s Congress, China’s rubber-stamp legislature, will convene in March 2022 and confirm senior government appointments. These will provide clues about what to expect later in the year. Mr Xi has taken a hard-line approach to domestic and international issues and put reforms on the backburner. Not all of China’s leaders agree. Throughout the year, China-watchers will be looking for signs of the behind-the-scenes power struggle and hints about the outcome of the year-end party congress. Expect a few surprise appointments.

Second, China-watchers will be following the US-China relationship. The world’s most important bilateral relationship is currently at an all-time low. In November 2021, Presidents Biden and Xi held a three-hour videoconference. The leaders aired their concerns, but achieved no breakthroughs. The countries’ annual strategic and economic dialogue is a thing of the past and has not been replaced by an effective consultative mechanism. For the world’s most important relationship, this is a major shortcoming. Meetings between top US and Chinese officials earlier in the year were acrimonious. China’s leaders will try to put a positive spin on any discussions, for their domestic audience. They are also likely to use the situation to improve relations with Russia. In 2022, don’t hold your breath waiting for US-China relations to improve.

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Robert Wihtol
Adjunct faculty at the Asian Institute of Management

Robert Wihtol has worked on development issues in Asia and the Pacific for nearly four decades, as both an international civil servant and an academic. He worked for the Asian Development Bank for 20 years, including as Country Director for China and Director General for East Asia. He currently teaches at the Asian Institute of Management in Manila and the Asia-Pacific Finance and Development Institute in Shanghai, and runs staff training programs at the ADB. He also chairs the board of Finland's development fund, Finnfund.

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