China’s Leader Xi Jinping Secures Third Term As His Rivals Fall Away

China’s President Xi Jinping did what everyone expected. He extended his rule as the country’s leader for a precedent-breaking third term, while promoting more of his allies into the party’s top leadership positions and maneuvering his rivals into retirement.

Xi, 69, was re-elected as the general secretary of the Communist Party on Sunday, following China’s national congress that opened a week ago, confirming his status as the country’s most powerful leader since Mao Zedong. His appointment means that he will be in firm control of the world’s second-largest economy for at least another five years at a time when it increasingly finds itself on a collision course with the U.S.

On Sunday, Xi said the country “will strive harder to achieve the Chinese dream of national rejuvenation,” a term that largely means transforming the nation into a global power with higher standards of living and advanced technologies comparable with those in the West.

He made the comments after introducing the new seven-member Politburo Standing Committee, the country’s most powerful decision-making body, to a room filled with carefully selected journalists at Beijing’s Great Hall of People.

It’s a lineup that reveals Xi has surrounded himself with allies by promoting close associates such as Beijing’s top party official Cai Qi and Guangdong province party chief Li Xi to the Politburo.

The elevation of Shanghai Party Secretary Li Qiang is particularly noteworthy and speaks volumes to Xi’s consolidation of power. Li, who has never held a senior central government post, appeared right next to Xi before the leader addressed reporters on Sunday. Li is most well known for overseeing the bruising month-long lockdown of Shanghai earlier this year, which triggered widespread public anger and raised doubts as to whether he might still earn a much-coveted promotion.

Observers say Xi values loyalty above everything else, and he’s willing to break from the political norms of the past. For example, the name of Chinese Premier Li Keqiang did not appear in the 205-member central committee, which is a prerequisite for joining the Politburo, even though he is still a year away from the usual retirement age.

The 67-year-old Li is known to have at times issued views on the economy that contradicts those of Xi. And in a rare display of drama at an otherwise highly choreographed event, Hu Jintao, the 79-year-old predecessor to Xi, was unexpectedly escorted out of yesterday’s closing session of the party congress.

Although Hu appeared to be reluctant to leave, the official Xinhua News Agency later reported via Twitter that Hu left due to health reasons, and he is feeling much better after resting. But the event does not appear on China’s highly censored internet, with searches for Hu Jintao on the country’s Twitter-equivalent Sina Weibo yields zero mentions of his sudden departure.

Xi, however, did give some reassurances to market watchers. He said on Sunday that China would continue to open up, and resolutely deepen reform. The country’s economy has shown perseverance and great potential, and its strong fundamentals “will not change.”

Xi’s consolidation of power comes as China faces countless difficulties. This week, Beijing delayed the publishing of the nation’s third-quarter gross domestic product (GDP) data, adding further to investors’ anxiety over an economy that’s been battered by a spiraling real estate crisis and Xi’s unrelenting Covid policies. In his opening address of the party congress, Xi again praised his Covid-Zero policy as a “people’s war” that has prevented fatalities and protected lives, although he didn’t acknowledge the repeated city-wide lockdowns, food shortages and lack of medical supplies that resulted.

Shen Meng, managing director of Beijing-based boutique investment bank Chanson & Co., says going into the next five-year period, the leadership would continue to take a rather conservative stance in steering the economy.

“China would probably continue to crack down on the disorderly expansion of the private-sector economy, and state-owned economic powers would be effectively strengthened, ” he said, adding that this means private enterprises would work in second place to state-owned companies.

And there is a strong likelihood that the crackdown on the real estate sector will continue. Xi didn’t mention his slogan “housing is for living in, not for speculation” in his opening speech, which had renewed hopes among some that support for the troubled real estate sector may be forthcoming. Xi had rolled out his campaign for more affordable housing in 2017, which set off a wave of policies aimed at taming skyrocketing housing prices and reining in the excessive borrowing that had become common among Chinese property developers. But a transcript of proceedings distributed later repeated the housing slogan, signaling that there would be no let up in the cooling measures in the foreseeable future.

China’s real estate market is estimated to account for as much as a quarter of the country’s gross domestic product. The real estate slump combined with Covid Zero is expected to drag China’s 2022 GDP growth to just 3.2%, well below Xi’s previous goal of around 5.5%