The year 2022 will be a turning point where much of the world will pivot sharply in the direction of either authoritarianism and repression or openness, and events in China will play a decisive role, said billionaire financier George Soros at a virtual event hosted by the Hoover Institution think tank on Jan. 31.
“2022 will be a critical year in the history of the world. In a few days, China, the most powerful authoritarian state, will be hosting the Winter Olympics, and like Germany in 1936, it will attempt to use the spectacle to score a propaganda victory for its system of state controls,” Soros, 91, said.
Along other political contests such as the French elections and the Hungarian elections in April, and the U.S. mid-term elections in November, the Chinese Communist Party’s (CCP’s) 20th Party Congress—an all-important twice-a-decade Party meeting —in October makes 2022 a year with few parallels in history, Soros said.
But he made a clear distinction between the CCP congress and elections in open societies with democratic legitimacy. Unlike the elections in France, Hungary, or the United States, the outcome of the CCP congress is seen as a fait accompli. Xi Jinping is widely expected to gain a third term as CCP leader through heavy-handed, coercive means.
The stakes could not be higher as tensions between the CCP and Taiwan veer ever more in the direction of a military showdown. The reason this geopolitical crisis is different from another one dominating the headlines at the moment—Vladimir Putin’s designs on Ukraine—has partly to do with President Joe Biden’s reaction to these respective crises, Soros emphasized.
“Biden has generally pursued the right policies. He has told Putin that Russia will pay a heavy price for invading Ukraine, but that the U.S. will not go to war,” Soros said.
By contrast, Biden has sent a strong message to Xi that the use of military force against Taiwan will come up against an alliance of pro-Taiwan nations including the United States, the UK, Australia, India, and Japan, along potentially with a number of not-yet fully committed nations such as South Korea and the Philippines, Soros said. But the formidable array of defenders does not lessen the gravity of the crisis given Xi’s stated willingness to assert China’s claims over Taiwan by force if necessary, Soros warned.
“He is devoting enormous resources to armaments. He surprised the world by introducing a hypersonic missile. The U.S. has nothing comparable,” Soros said.
Xi’s aggressiveness on the global stage would be quite enough by itself to make 2022 a year unlike any other. Complementing this foreign policy stance is a dictatorial approach at home that has progressively undone the tentative market reforms ushered in by earlier CCP leaders, Soros noted. Economic reforms initiated by then-leader Deng Xiaoping in the 1980s invited foreigners to invest in China and fostered economic growth that spilled over, for a brief time, into the reign of the current leader, he added.
In contrast to his predecessor, Xi Jinping has brought companies firmly under state control, come down heavily in favor of state-owned enterprises (SOEs) over private companies, and generally pursued what Soros called “total control.”
“This has had disastrous consequences. In contrast to Deng, Xi Jinping is a true believer in communism. Marx and Lenin are his idols,” Soros stated.
Chinese citizens have gotten the worst of both worlds under Xi’s rule, as authoritarianism has stifled many enterprises even while troubles in the real estate sector have swelled to dangerous levels based on what Soros called an unsustainable model. It is a system based excessively on credit, where people are now forced to start paying for apartments not yet even built, and subcontractors who have not been paid are simply ceasing to work.
Matt Pottinger, a distinguished visiting fellow at the Hoover Institution and deputy national security advisor during the Trump administration, said he agreed with Soros that Xi wants total control and is unlikely to concede power peacefully. “I think he will do everything he can to stay in power for life,” Pottinger said.