In a new analysis published in Foreign Affairs, former National Security Council and CIA expert Jonathan Qin examines the policies of Chinese leader Xi Jinping and draws parallels between the United States and China. The analysis emphasizes the economic interdependence between the two powers and the risks that arise from the modern global trade and economic system.
Thirteen years after Xi Jinping ascended to the top of China’s leadership hierarchy, observers in Washington remain deeply confused about how to assess his rule.
For some, Xi is the second coming of Mao, amassing near-total power and bending the state to his will; for others, Xi’s power is so fragile that he is constantly at risk of being overthrown by disgruntled elites in a coup.
Xi’s China is either a formidable competitor with the intent, resources, and technological prowess to surpass the United States or an economic failure on the brink of implosion. Depending on whom you ask, China’s growth model is either vibrant or moribund, relentlessly innovative or hopelessly stuck in the past.
Attempts to analyze Xi’s project have become even more complicated since China’s slow recovery from the COVID-19 pandemic. When Xi abruptly ended China’s draconian pandemic measures and reopened the country in late 2022, Wall Street was not debating whether the Chinese economy would rebound sharply, but rather which letter of the alphabet—V or W—the graph depicting the upward path of recovery would resemble. When the economy collapsed, some in Washington came to the opposite conclusion: that China had peaked, its governance structure had failed, and that it would begin to decline relative to the United States.
This analytical confusion shaped U.S. policy toward China. Early in Trump’s second administration, officials argued that China was the greatest threat to the United States, but they seemed to believe that China’s economic strains were so severe that they would immediately collapse in a trade war—a view reminiscent of Mao’s famous declaration that the United States was a "paper tiger" that looked threatening but was actually weak and fragile.
The attempt to pressure China with tariffs failed.
Beijing responded to Washington’s trade escalation in April 2025 by imposing retaliatory tariffs and halting shipments of rare-earth magnets from the United States. The Chinese economy’s ability to withstand trade shocks has given Beijing newfound confidence.
Since the weight of a closed, illiberal system dragged down the Soviet Union, the United States has attributed much of its own resilience to the ability of its political system to recognize problems, propose solutions, and correct course.
The painful irony for the United States is that under Xi, China’s opaque politics, in which officials have every incentive to obfuscate rather than admit mistakes, has proven adept at frankly acknowledging many of its weaknesses and taking steps to address them—perhaps even more adept than the supposedly flexible and adaptable American system. China’s rise under Xi is a challenge not only to American power but also to a founding principle of America’s open society—that openness to debate and inquiry is the foundation of a self-correcting system.
For Xi, China’s most glaring weaknesses are the side effects of four decades of economic reform. Rapid growth has brought wealth and power, but also indecision, corruption, and dependence on other countries. Regardless of how one evaluates his leadership, Xi has identified many of China’s vulnerabilities and mobilized resources to try to make the country more resilient. Beijing’s success in fending off Washington’s trade war suggests that Xi’s strategy is working.
A Course of Counter-Reform
When Xi took the reins of the Chinese Communist Party in 2012, many observers in China and abroad were disappointed by the stagnation of his predecessor Hu Jintao’s reforms. They embraced Xi as a potential savior who could save the CCP’s ailing “reform and opening up” project that Deng Xiaoping began in the late 1970s. These observers, mostly with more liberal instincts, hoped that Xi would push through market-oriented policies, further reduce state intervention in the economy, and potentially even allow more political contestation.
Xi had the makings of a reformer: he had held leadership positions in three of China’s most prosperous coastal provinces, which were among the main beneficiaries of the transition to a market economy. Many thought that Xi, the descendant of a respected revolutionary and advocate of economic reform, would have the clout and will to implement changes that his predecessor lacked.
In reality, however, Xi’s ascension marked the beginning of the end of the reform era. What Xi saw when he returned to Beijing in 2007 as Hu’s successor was not endless prosperity and a stable leadership structure, but deep-seated dysfunction. Hu rose to power by deferring to party elders and promoting a collective leadership that prevented him and others from acting decisively.
Even if Hu wanted to assert himself, his predecessor Jiang Zemin left him surrounded by bureaucrats loyal to Jiang. Without full control over many of the key nodes of power in the party, Hu’s attempts to reorient his policies—including efforts to address the glaring inequalities he saw emerging from China’s modernization—largely failed to gain momentum. Meanwhile, corruption became endemic, permeating even the police and military, which were supposed to be the bastions of the party’s control over power.
From Xi Jinping’s perspective, the unstable model of collective leadership that Deng Xiaoping bequeathed was the source of many of the party’s ills. With power dispersed among top leaders and their allies in the bureaucracy, party discipline was lax. Xi Jinping seems to have further assessed that China’s prosperity had made the party’s cadres weak. Opening up to the outside world had boosted China’s economy, but it had also created vulnerabilities in the form of liberal values that threatened core communist beliefs. China was also becoming increasingly dependent on other economies, particularly that of the United States, whose tightening trade restrictions on many Chinese goods since 2018 had made clear to Xi the very real risks of economic interdependence.
In response, Xi has not only tried to address the symptoms of the problems that arose during the reform and opening-up era. He has also tried to cure what he sees as the underlying disease by reversing liberalization altogether. Xi’s tenure can be described as what scholar Carl Minzner calls a counter-reformation—a stripping of the party to its Leninist core of political and social control and a reorientation for a disciplined march toward techno-industrial and military power to strengthen China’s geopolitical position.
To most outside observers, this counter-reformation is dangerous because it rejects the tried-and-true playbook that brought China from poverty to power and introduces new political risks of strongman rule. But Xi’s actions are rooted in his recognition of the most pressing weaknesses that party leaders see as threats to China—most notably domestic corruption and the unwieldy role of China’s chief rival, the United States, in supporting China’s prosperity.
Instead of pushing for greater economic openness, Xi is focusing his considerable political power and resources on increasing China’s resilience to threats that stem in part from past reforms. It is these deep-rooted problems, rather than excessive state intervention or authoritarian policies, that Xi sees as hindering China’s progress in catching up with the United States.
Burnt balloons
Many elements of China’s current dysfunction are pathologies of its own prosperity. After Mao’s death, the CCP leaders had no roadmap for how to lead China toward openness without abandoning its commitment to communism. They had made bitter sacrifices in the Chinese revolution and were still suspicious of capitalism and its ravages. But at the same time, they did not want to return China to the chaos of the Mao era. Many of the party leaders who led China in the 1980s, including Xi Jinping's father, Xi Jinping, were themselves ousted in the power struggles that erupted under Mao.
After more than a decade of vacillating between opening up and tightening, economic reform triumphed. After the military crackdown on Tiananmen Square protesters in 1989, Deng—who was fortunate enough to outlive other party elders determined to limit liberalization—led China toward a more open economy.
Deng's so-called "Southern Tour", in which he delivered a series of speeches advocating a greater role for markets, revived economic reform initiatives that had been shelved after the Tiananmen Square crackdown. To cement his legacy, Deng personally selected not only his immediate successor, Jiang Zemin, who took control of the party in 1989, but also his successor's successor, Hu Jintao.
In a new political environment in which none of the new leaders could claim to be a revolutionary founding father, Deng's blessing sanctified Jiang and Hu and helped ensure that each would survive the vicissitudes of succession politics. Both Jiang and Hu stepped down peacefully, setting a fragile precedent for a transfer of power.
This stability of leadership and the accelerating pace of economic reform produced astonishing results. In the 1990s and early 2000s, China regularly recorded double-digit GDP growth, averaging over ten percent per year from 1992 (when Deng began his Southern Tour) to 2012, the year Xi came to power.
China’s rapid modernization was palpable everywhere: new skyscrapers dotted the skylines of cities like Shanghai, and roads penetrated deep into the countryside to connect previously isolated villages with the rest of the country. Deng also pursued a successful foreign policy that avoided geopolitical confrontation to give China time to develop its economy, issuing... instructions for China to "hide its capabilities and bide its time" - an approach better known as "hide and wait".
The reform brought economic growth and geopolitical freedom, but also corruption, lawlessness and inequality. No single sector more vividly illustrates China’s intertwined political and economic dysfunction than real estate, where prices soared to unprecedented heights but have since plummeted.
In the late 1990s, Chinese leaders began allowing urban residents to secure long-term leases for properties that they could sell on the private market as part of liberalizing reforms designed to stimulate economic growth. This policy shift unleashed a flood of pent-up demand for property and sparked a national real estate boom, one of the largest in history. Local governments, which legally own all of the city’s land, sold their land to developers to fill their coffers.
When Hu abolished China’s two-thousand-year-old agricultural tax in 2005—a policy that eased the burden on China’s poor rural farmers but eliminated a major source of revenue for local governments—officials relied even more on land sales to balance their budgets, in many cases forcibly evicting farmers to reap the profits.
A massive housing bubble formed in the years that followed—and with so much of the country’s wealth tied up in it, other leaders hesitated to stop its growth. But in 2020, after stalling efforts during most of his first two terms to gradually rebalance the market, Xi burst the property bubble by imposing restrictions on loans to real estate developers that undermined the core of their business model. Property sales fell from 18% of GDP in mid-2021 to 7% in 2025, and new home construction has fallen by 70%. The collapse is a leading cause of China’s sluggish economic growth, wiping out much of the wealth of many Chinese families and dampening consumer sentiment at a time when the economy desperately needs more consumption. Yet Xi, wary of the costs that a bloated housing sector could bring, remains reluctant to intervene to prop up the market.
The development of China’s real estate sector illustrates the dynamics underlying China’s reform efforts. Even when Chinese leaders successfully enact much-needed reform, such as commercializing the real estate sector or abolishing the oppressive century-old agricultural tax, they create almost as many problems as they solve. Endemic corruption in the system only makes the challenges more difficult, as local officials resist reforms or find new ways to govern themselves. Since Xi came to power, he has prioritized cleaning up the mess he inherited from his more liberal predecessors, regardless of the cost or potential backlash. These unprecedented moves have generated much discontent and consternation, but little real political consequence for Xi, which speaks to the strength of his position.
In Search of Sustainability
Political analysts since Aristotle have noted that oligarchies tend to oscillate between attracting centrifugal forces, in which power is shared and distributed widely, and centripetal forces, in which governance is centralized. Indeed, for Xi and many party leaders, the dispersion of power in China’s political system has weakened Hu’s leadership and threatened the party’s ability to govern effectively. Concentrating power in Xi’s hands has been the obvious corrective. Xi has used his centralized power to move away from policies that would further liberalize China’s economy and toward efforts to improve China’s economic and political stability.
The military and security services have been crucial to Xi’s centralization of power and his counter-reformation. Xi has used his aggressive anti-corruption campaign, which began in 2012, to subdue the military and security apparatus. Xi has weeded out powerful officials and their networks and, to eliminate any doubt about his complete control, has often purged the successors he has chosen to replace them. This campaign has reduced some of the widespread corruption in party institutions; more importantly, it has kept leaders insecure and docile, increasing Xi’s influence over them.
Despite the purge of military and internal security leaders, Xi, like his predecessors, continues to generously fund these institutions. China supports the police and security forces at almost the same level as the military.
Xi has encouraged them to use new technologies to systematically build up their surveillance and repression capabilities. In his early years in power, Xi circulated “Document 9,” an internal memorandum warning of the dangers of Western values. The leaked document reversed the party’s trend of increasing tolerance for outside ideas and ushered in an era of crackdowns on civil society. Xi made it clear that he was seeking to protect China from what he saw as foreign subversion—and thus address one of the problems created by previous decades of reform.
Reform and opening-up also led to dependence on foreign economies, and Xi made it a priority to insulate China from global economic instability. In 2020, Xi proposed the idea of a “dual circulation” strategy: China would structure most of its economy around domestic markets—the “internal circulation” of goods, services, and technology—while promoting the “external circulation” of international trade and investment.
Taking advantage of China’s colossal domestic market, Xi’s strategy seeks to minimize dependence on the outside world while increasing international dependence on the Chinese economy. The brief trade war in April and May 2025, at the start of US President Donald Trump’s second term, suggests that China has successfully hardened itself against US tariffs. Xi has managed to refrain from offering expensive stimulus packages, instead providing the minimum support needed to prevent the worst effects on the economy and the export-oriented industries that have borne the brunt of the tariffs.
Beijing has also figured out how to weaponize Washington’s dependence on China for critical materials, such as rare-earth magnets, which many US manufacturers need for their products.
Xi has also sought to increase resilience by deliberately focusing his economic policy on building China’s high-tech manufacturing capabilities. Xi has boosted China’s technology and industrial sectors, pouring resources into them while ignoring the macroeconomy. The process has not been efficient, but it has been effective. According to a Bloomberg analysis of 13 key technologies, China is a global leader or competitive in 12 of them.
If anything, China has been very successful in areas such as green energy, where the proliferation of Chinese companies using these emerging technologies has led to fierce price wars that have contributed to deflationary pressures on the economy.
Xi has also abandoned Deng’s low-key “hide and seek” foreign policy in favor of what might be called a “show and go” approach. This shift also stems from the perceived failures of Western-led economic models since the 2008 global financial crisis.
Because China had been able to handle the crisis more effectively than Western powers, many CCP leaders believed that China should take a more prominent global role. While Hu avoided calls for a major shift in foreign policy, making only partial concessions, such as adding that China should "actively achieve something" to Deng's formulation of "hide and wait", Xi exploited China's growing self-confidence when he took power. He asserted his nationalist beliefs in his first term, aggressively asserting China's territorial claims on its periphery - most notably by reclaiming more than 3,000 acres of land in the South China Sea.
This gave him political cover when he purged leaders from the military high command and insulated him from domestic criticism when the demands of diplomacy demanded a more conciliatory approach. But Xi may have sincerely believed that the time had come for China to embrace its great-power status. This reflects a natural generational shift and a reframing of what really ails China: Xi is the first Chinese leader to begin his political career in the era of reform. His career trajectory coincides with the unbridled economic growth—and the difficulties of growth—of the post-Mao years.
Trust in Entourages
In the process of fixing the problems he inherited, Xi has created new problems for himself and the party. Most notably, he has reversed one of the emblematic achievements of the post-Mao era: the institutionalization of a process for the peaceful transfer of power to a successor. Xi has removed term limits for the president and transformed the vice presidency from a de facto apprenticeship to the top job into a sinecure for retiring officials. He also refused to allow any other civilian to serve on the party’s top military body. Without the ability to cultivate supporters in the military by serving on that body, Xi’s eventual successor will have a hard time maintaining his hold on power, and his tenure is likely to be short-lived.
Autocratic regimes are particularly vulnerable to succession crises. The Soviet Union never solved the succession puzzle: previous Soviet leaders either died in office, were removed, or, in the case of Mikhail Gorbachev, led the system to its collapse. The central challenge for Xi is how to empower a successor enough to survive in office after Xi leaves without giving the successor enough influence to threaten Xi while he remains in power. Even if Xi names a potential successor at the next party congress in 2027, finding the right balance will remain a difficult challenge. Nor is it guaranteed that his choice will survive as leader-in-waiting. Before Hu, many of the supposed successors were exiled, arrested, dismissed, or ultimately dead before they could reach the top of the CCP.
The succession challenge will be difficult, but it is unlikely to lead to the collapse of the CCP, which has experienced much deeper crises such as the Cultural Revolution and the Tiananmen Square crackdown in 1989. The real question is whether Xi’s counter-reformation has undermined the party’s ability to learn from its mistakes. The CCP has a dark history of extravagant, disastrous mistakes, such as the “Great Leap Forward” industrialization campaign that led to widespread famine from 1959 to 1962. But in the post-Mao era, the party has proven to be an incredibly effective learning institution. While it still makes serious mistakes, such as failing to prepare its health infrastructure to handle a surge in infections after the widespread lifting of COVID-19 restrictions, it rarely makes the same mistake twice. Party leaders were caught in a bind when Trump launched a trade war during his first term, forcing them to rush to respond. When Trump unveiled his so-called Liberation Day tariffs at the start of his second term in 2025, however, Beijing was ready with a series of countermeasures it could deploy in response.
While personalizing power may limit China’s ability to correct its mistakes, Xi’s centralized system of control has so far been able to change course when necessary. Part of Xi’s legacy as the son of a revolutionary leader seems to be an intuitive understanding that everyone around him has an incentive to tell him what he wants to hear. This may be why he has appointed officials he knows and trusts to positions at the top of the party hierarchy: these confidants can tell him the truth in discreet ways that don’t challenge his authority. Somewhat counterintuitively, the dangerous political climate Xi has created offers another potential avenue for getting accurate feedback. As other effective authoritarian leaders have done, Xi can use the distrust he has instilled among his subordinates to oppose his aides and to obtain accurate information from otherwise unreliable sources.
The United States’ inability to perform even the most basic functions of government, such as passing a federal budget on time, supports Xi’s confidence in his counter-reform. The Trump administration, like Xi’s, argues that executive power has become too diffuse and has made aggressive efforts to centralize and personalize executive power in the hands of the president. The increasingly unchecked and unbalanced executive branch in the United States resembles that of other troubled and polarized populist-led republics that ruled Latin America for much of the 20th century. But while Trump’s project deviates from the way the U.S. system is designed to work, Xi’s consolidation of power is in line with the CCP’s operational DNA, which tends to empower rather than constrain the supreme leader. The result is that Trump has generated political instability and political turmoil that have undermined U.S. capacity, while Xi’s centralization has bolstered Chinese resilience.
These developments have not gone unnoticed by Xi and his colleagues, who, like Lenin, have come to view the United States as decadent and in decline. The party’s chief ideologue for the past quarter century has been Wang Huning, a political theorist whose visit to the United States in the late 1980s inspired him to write a book titled “America vs. America” about the contradictions he observed. Wang discovers what he calls “undercurrents of crisis” in the United States, and emphasizes the destructive effects of American individualism and the isolation it produces. Xi shares many of these concerns and has described Western countries as suffering from "chronic diseases such as materialism and spiritual poverty". These concerns underlie what Xi sees as the pathologies of the reforms he seeks to address.
Chinese officials and analysts also have an increasingly rich body of evidence to draw on in their assessment of U.S. dysfunction and decline. Since the end of the Cold War, the United States has handled nearly every national crisis it has faced poorly. Each has eroded public trust in the United States, both at home and abroad.
In response to the September 11 attacks, the United States launched, under false pretenses, a destructive and costly war in Iraq that sapped the country’s appetite or ability to deal with more formidable future rivals like China. During the 2008 financial crisis, Washington bailed out the financial sector but not its victims, exacerbating inequality and fueling public disillusionment. And in the face of the COVID-19 pandemic, despite having some of the most highly regarded public health institutions in the world, the U.S. government has failed to respond, further fueling suspicion and undermining public trust.
Despite its repeated mistakes, the United States remains a global superpower. But they rely on the luxury of inherited privilege: like a spoiled child, the United States can afford to make epic mistakes without suffering the devastating consequences that other countries would face if they acted in a similar way.
While strategists in Washington debate whether China has peaked, their counterparts in China are having a similar debate about the United States—and reaching strikingly similar conclusions. Chinese state media has diagnosed the United States with "hegemonic anxiety," suggesting that Washington cannot cope with the prospect of a multipolar world.
And while American thinkers like Hal Brands have argued in their analyses of China that a power at its peak is likely to attack the United States violently, China observers have independently concluded that it is Washington that is concerned with maintaining its position—and is increasingly willing to use any means necessary to maintain its supremacy.
In the early years of the Cold War, strategist George Kennan worried that the United States might lose confidence in its own system if European democracies succumbed to the Soviet Union. Today, the challenge is the opposite: declining American confidence in its own system may be a cause, rather than a result, of the United States losing its competition with China. In contrast, Xi’s counter-reform—including the ongoing purges and the aftermath of the property collapse—has not led to a crisis of confidence in China.
Instead, if nothing else, Xi has gained credibility because he can point to tangible results in the form of technological breakthroughs. And Xi Jinping can afford to be patient because his project is long-term and he does not face the fickle fluctuations of an unstable political system swinging from one extreme to the other.
Indeed, a growing number of officials in Washington use Cold War-style rhetoric when discussing China, but show little appetite for the difficult and expensive tasks, such as upgrading the defense industrial base and strengthening key supply chains, that would help the United States stay ahead of China. If this dynamic continues, the United States will be forced to pursue what might be called a "reverse Roosevelt" strategy: talking big about American power while wielding a smaller stick.
While Xi Jinping has been disciplined and methodical in his efforts to strengthen China's strategic position, the United States has been distracted and inconsistent. Xi Jinping's misreading is ultimately part of a failure to address the problems facing the United States itself.