Signs of China's vigorous anti-corruption campaign have appeared in Canada, most recently when Vancouver businessman Mo Yeung (Michael) Ching was identified as one of several Canada-based fugitives Beijing hopes to repatriate to face corruption charges. Some view this anti-corruption campaign, which has been ramped up considerably under the leadership of President Xi Jinping, as the key to restoring the Chinese Communist Party's (CCP) strength and legitimacy. Others see it as having the opposite effect because of the scale and opaque manner in which it is being carried out, and because it is striking at the core of the patronage networks that hold the political system together. In addition, the party's escalating crack-down on rights activists and civil society may in fact be emboldening rather than reducing public dissent. The net result is that the party is creating a source of vulnerability for itself rather than eliminating it.
China's regime stability: Two views
Observers of the CCP under Xi's leadership tend to fall into one of two camps. The first views Xi as China's strongest ruler since Deng Xiaoping (the architect of China's reform program more than 35 years ago) and precisely the type of leader the country needs to balance competing interests in the push for tough economic reforms. They point to his anti-corruption campaign as creating a much-needed political culture within the corruption-ridden party as an attempt to bolster the party's legitimacy and prevent it from fading into oblivion. In addition, They also judge his strength and effectiveness by his ability to consolidate his personal power by getting rid of his enemies and potential contenders, and concentrating his institutional power by chairing various "leading small groups"  in charge of formulating key economics, security and foreign affairs policies.
The second camp views the Communist regime, which has been known for its adaptability, as showing signs of cracks that have only widened under Xi's leadership. One of the most prominent converts to this view is David Shambaugh, a long-time China-watcher who is normally known for his sanguine assessments of the regime's adaptability. Shambaugh recently switched perspectives in a provocative Wall Street Journal article that got considerable attention. According to this group, slower economic growth, coupled with a high level of social inequality and massive environmental problems, have raised the degree of discontent among the populace. To be sure, incidents of social unrest in China are now estimated to top at least 180,000 a year.
While the party projects an outward appearance of strength, it is actually weakening itself from withinThese observers also see a distinctly negative side of Xi's hard-hitting anti-corruption campaign: by going after both "tigers" and "flies" (that is, both high-ranking leaders and low-ranking officials), Xi has struck the very patronage networks that hold the party system together at every political level. In that sense, while the party projects an outward appearance of strength, it is actually weakening itself from within through its own actions.
Attacking within the party: The anti-corruption campaign
Right from the beginning of his tenure, Xi made combating corruption within the party a top priority. During the CCP's founding years of the 1930s and 1940s, frugality of party cadres and close relations with the masses were the governing philosophy. These practices and principles were also instrumental in winning the hearts of the masses from the rival Kuomintang (Nationalist) Party.
But what the CCP has come to symbolize today cannot be further from these principles. Today, the party conjures up in people's minds the image of corruption, red nobility, and abuses of powers and public funds. In this sense, Xi is right that graft poses an "existential threat" to the party's rule.
Moreover, insofar as party factions are vested interests in the existing system, Xi's graft fighting can be seen as constructive in that it is weakening those who have incentives to obstruct reform. For example, Zhou Yongkang, a former Politburo Standing Committee member and the highest-ranking party official brought down thus far, presided over the vast network that controls the energy companies, which are some of the largest state-owned enterprises (SOEs) in the country. They are also among the most strident voices against economic reform given these SOEs' existing monopoly control over vital areas of the economy. In this respect, fighting graft by removing people like Zhou can be a positive force in clearing the way for much needed economic reforms.
But there are also growing concerns with how the campaign is being carried out. Observers point to several worrying aspects.
• The process is too selective and non-transparent: The Central Discipline Inspection Commission, which is responsible for carrying out the anti-corruption campaign, is a party organization that stands above the law. Its investigations are shrouded in secrecy and its procedures are inherently non-transparent. We know that a few thousand officials have been investigated over the past two years, and some of them have been publicly humiliated as part of this process. But we do not know why them and not others. This has led many to believe the anti-corruption campaign is as much about Xi getting rid of rival factions as it is about eradicating corruption on a systematic basis. One prominent example is Xu Caihou, previously one of China's highest-ranking military leaders whose recent downfall for accepting "'extremely large' amounts of bribes" conveniently helped Xi consolidate his power over the military.
Every public official is likely to have a skeleton in the closet that could potentially be exposed• The ultimate results of the campaign will not be conducive to economic reform and growth: This non-transparent and selective manner in which officials are investigated is instilling fear and uncertainty among the rank-and-file. No one knows who's next on the list or when the next axe will fall. This is antithetical to the reformative environment that Xi is trying to foster, and that the country needs to sustain its growth momentum. Any grand economic reform requires local implementation. However, in the current political environment, party officials across all levels of government have an incentive to lie low. Any outstanding performance could attract the attention of one's rivals and encourage them to report any past misdemeanor to the anti-corruption agency. Every public official is likely to have a skeleton in the closet that could potentially be exposed. This not only hampers implementation of economic reforms, but is also harmful to local innovation and growth promotion.
• The scale and swiftness with which officials are being taken down are destabilizing the system: Political promotion in China, as in other countries, is based on a combination of meritocracy (specifically the ability to deliver economic growth) and patronage. The higher one ascends the party ladder, the more important the patronage network is in determining promotion. In an authoritarian system like China's, the system's foundational stability comes not from officials having been chosen by people's votes, but rather from patronage networks. Autocrats garner support by promising to share spoils with their followers, which is what holds the political insiders together. Undermining this system is thus highly disruptive to the party's grip on power. What's more, some high-ranking party leaders have been publicly humiliated and made to give televised confessions. Such incidents are like moments of the "emperor's new clothes" that do the opposite of shoring up the party's legitimacy in the eyes of the people.
Attacks outside the party: "Stability preservation"
Shortly after Xi assumed the presidency in 2012, he shifted the locus of power to the newly created National Security Commission, which is tasked with overseeing both foreign affairs and domestic security. Xi chairs this powerful commission himself, which allowed him to concentrate his control over internal security resources and of removing any potential powerful contender within the upper echelons of the party in charge of this portfolio.
The result has been an increase in the scope, targets and intensity of political repression of society. The party's coercive apparatus, or "stability preservation" (weiwen), to use the official rhetoric, expanded significantly under Hu Jintao, though its origins date back to the post-1989 crackdown. But the scope of the coercive apparatus has widened even further to include Internet monitoring and censorship, the Public Security Bureau, the policy and state intelligence agencies, the People's Armed Police, the paramilitary forces, local "stability-maintenance units," and urban patrols or chengguan. In addition, Xi inherited a budget for "stability preservation" that reportedly increased more than five-fold between 2002 and 2012, from 132.8 billion yuan (US$16.2 billion) to 702 billion yuan ($111 billion), exceeding the officially published military budget.
A recent Freedom House report notes that a wide range of groups have experienced an increase in repression since 2013, including grassroots rights activists, online opinion leaders, internet users, business people, party cadres, labour leaders, scholars and professors, print and television journalists, Christians, Tibetans and Uighurs. And Document No. 9, issued by the Central Committee in 2013, ordered all relevant institutions to stem any endorsement of universal "Western" values, such as media freedom, civil society and judicial independence.
Ordinary Internet users across the areas of businesses, academia, and journalism have lamented that the Internet in China has largely become an IntranetThe harsh crackdown has also been applied to commercial media and social media. The Central Internet Security and Informational Leading Group was set up in 2014 to coordinate work on cyber security and internet censoring. Internet censoring used to be largely outsourced to Internet companies that keep an eye on their users. This new leading group, also headed by Xi, indicates that information control is a high priority. The filtering and management of content is now increasingly centrally controlled and coordinated. The once-fiery Southern Weekly, which had served as the leading example of commercialized media pushing the envelope of press freedom, has largely lost its luster. Online opinion leaders, such as blogger Murong Xuecun, who had millions of followers on social media, saw their freedom of speech significantly curtailed. Sina Weibo, the equivalent of Twitter in China, which was once a platform for raucous discussion of social issues, has also quieted down. Ordinary Internet users across the areas of businesses, academia, and journalism have lamented that the Internet in China has largely become an Intranet.
Yet, the intensified Internet censorship and crackdown on social media have not intimidated the Chinese netizens. An increasing number of Internet users in China are using Virtual Private Networks and other circumvention tools to scale the "Great Firewall." Xiao Qiang of the China Digital Times at the University of California at Berkeley argues that the crackdown has emboldened Internet users to seek alternative ways to express their opinions, rather than injecting fear among them. The crackdown has also increased resentment against the censorship apparatus.
Freedom House has observed civil society resilience amid the crackdowns. Some civil society organizations might have been pushed underground, but they are not giving up the fight for their causes. Repression has strained state-society relations and led to declining regime legitimacy. Although citizens may not have the resources or mobilizing structures to organize large-scale collective action, it is nonetheless significant that the grievances that motivate them to do so are now stronger than ever before.
Reaching a turning point?
After the Tiananmen incident in 1989, there was an implicit social contract in which citizens agreed to political acquiescence in exchange for the regime's delivery of economic prosperity. So far, the regime has largely held up its end of the deal: Real income for the urban middle class has been rising, though housing affordability is a major concern, and wages of migrant workers have risen sharply in the last decade, making them significantly better off than a generation ago. However, with slower economic growth, the regime's ability to maintain performance legitimacy now comes under increased scrutiny. This scrutiny, coupled with the falling regime legitimacy from the intensified crackdown, seems to be bringing the populace closer to the breaking point than any period after 1989.
In essence, Xi is implementing harsh repression within as well as outside the system. Thus far, he seems to have the support of the other members of the Politburo Standing Committee, the apex of the party's power. But, the anti-corruption campaign is having chilling effects on bureaucrats, party rank-and-file and leaders across all levels. They constantly live in fear under the current political climate. The fact that some of them have become disenfranchised with the party leadership was not unforeseeable. Yet, they are also the very implementers of Xi's repressive actions on those outside the system. This makes the simultaneous timing of both repressive measures unwise, at least from the perspective of party preservation. If there is a common cause or interest around which those within and outside the system could cooperate, threats to the regime will mount. Freedom House's interviews with activists suggest some security agents have decided not to enforce their superior's instructions strictly out of sympathy or conscience.
Implications for Canada
China has now extended its anti-corruption campaign beyond its national borders to countries such as Canada, Australia and the US, which are likely housing some wanted fugitives. Canada is among the most common destinations for fugitives from China because Beijing and Ottawa do not have a formal extradition treaty. Formal charges against anyone on the wanted list will strain bilateral relations, as the protracted case of Lai Changxing has amply illustrated.
China remains an attractive place for Canadian businesses to invest, given the sheer size of its economy and population, even though its economic growth might have plateaued. However, given the increasingly repressive macro-environment, foreign businesses will continue to face political uncertainty in various respects, from obtaining project approvals from the government, to enforcing property rights to resolving disputes. China is a country that lacks the rule of law. Xi's hard-hitting anti-corruption campaign exacerbates this.
Lynette H. Ong is an associate professor of Political Science at the University of Toronto. She is the author of Prosper or Perish: The Political Economy of Credit and Fiscal Systems in Rural China published by Cornell University Press in 2012. She is currently researching on social stability and authoritarian durability in China.
 Leading small groups are informal groups that "advise the Party Politburo on policy" and "coordinate implementation of policy decisions made by the Politburo and supervised by the Secretariat." See Alice L. Miller, "The CCP Central Committee's Leading Small Groups," China Leadership Monitor, No. 26, September 2, 2008.