Minxin Pei says the removal of Lou Jiwei from his post as chairman of China’s national social security fund, reflects the leadership’s intolerance of criticism and dissent. Lou – a highly respected finance minister before he was dismissed in 2016 – criticised the country's flagship industrial initiative – Made in China 2025 – as a “waste” of public money. His departure in 2016 was seen as a loss, because he was a familiar face on the global stage of finances, representing a country whose economy is one of the world’s most opaque.

The author says Lou’s recent dismissal would have “profound implications for China’s future,” because it reflects the leadership’s approach to governance under Xi Jinping and its decision-making. Lou was a prominent critic of massive government subsidies to specific industries and a “hard-charging” reformer, advocating for the market to play a greater role in the economy. Yet the leadership seems more determined to exert control over it, prompting fears that economic reform may no longer be topmost on the agenda.

While decision-making in China is rarely transparent, before Xi amassed unprecedented power, the process was collective, reached mainly by consensus, which was widely seen as an important “risk-management mechanism.” The author says the Communist Party made “no catastrophic policy mistakes” under Xi’s two predecessors, Jiang Zemin and Hu Jintao. Since Xi came to power in 2012, “decision-making processes at the top level of the Communist Party of China (CPC) have been changed beyond recognition.”

The author points out that Xi’s centralisation of power had made the collective decision-making process redundant. While “political loyalty and conformity” are widely expected, the CPC also plays a crucial role in suppressing and criminalising dissent. In the absence of “constructive opposition” and criticism, “excessively risky or inadequately considered ideas” were allowed to become “national policies.”

As a result, “several major policy mistakes” had been made on Xi’s watch in the last five years, “owing to inadequate internal debate.”

Amid the stock market turbulence in the summer of 2015, the government, without deliberation – intervened by having a state-backed financial institution buy shares and support prices. This “policy failed to stabilize prices, wasted trillions of renminbi, and weakened the credibility of China’s new leaders.“

The construction of artificial islands and the militarisation of the South China Sea had not proved “a smart strategic move.” On the contrary China’s ambition to dominate the region had contributed to “the rapid deterioration” of its relations with the US.

Xi’s $1 trillion Belt-and-Road Initiative (BRI), which aims to invest in the infrastructure in countries from China across Central Asia to Europe and Africa, has “stoked Western suspicions about China’s geopolitical agenda” and is widely seen as a form of debt trap diplomacy. Its targeted beneficiaries of the BRI are rethinking their own relations with China – “with deepening unease,” as the spectre of debt begins to loom.

With Xi tightening his grip on power, the CPC will not abandon this centralised decision-making process. The author fears that “more – and more calamitous – mistakes are likely,” harking back to the old days under Mao Zedong, whose disastrous mistakes were responsible for the deaths of tens of million people. Xi’s mistake would be to forcefully bring Taiwan back to Beijing’s fold, “risking a catastrophic war with the US.” Would there be a “bold figure” like Lou to stand up to him?