Cracks may be starting to show in Xi Jinping's absolute rule over China over Trump's trade war

Reuters/Damir Sagolj

• The intensifying trade war between China and the US is causing a massive rift within China's Communist Party (CPP).
• Though Xi has been clamping down on dissent, veteran party members have expressed discontent about China's image and Xi's handling of the trade dispute.
• Several sources close to the government told Reuters that China's strong nationalist branding has only provoked the US and hurt China's economy.
• Other sources told Japanese daily Sankei Shimbun that several party elders, including Hu Jintao, wrote a letter urging a review of CCP's economic and diplomatic policy in a rare display of reproval.

The intensifying trade war between China and the US has caused a massive rift externally, but sources say tension is also rising internally among elite members of China's Communist Party.

Over the last decade, Xi Jinping has worked diligently to consolidate power and cement his rule over China, claiming control over the country' military and government and cracking down on all forms of political dissent.

In the process, Chinese propaganda has pushed hard on the portrayal of China as a strong, nationalistic country, with Xi Jinping at its core.

Several sources close to the government told Reuters that this aggressive branding has backfired, further provoking the US as it ramps up tariffs in one of the largest trade wars in economic history.

An anonymous government policy advisor told Reuters that there was a growing concern among leadership that China's economic outlook has "become grim" as its relationship with the US continues to deteriorate over trade.

"The evolution from a trade conflict to trade war has made people rethink things," the policy advisor said.

"This is seen as being related to the exaggeration of China's strength by some Chinese institutions and scholars that have influenced the US perceptions and even domestic views."

Two additional sources told Reuters that disapproval is being felt among senior government ranks, and backlash might hit close Xi aide and chief ideological strategist Wang Huning who has been widely credited for crafting Xi's strongman image.

"He's in trouble for mishandling the propaganda and hyping up China too much," a source tied to China's leadership and propaganda system said.

Reuters

China's President Xi Jinping looks at former President Jiang Zemin and former President Hu Jintao.

And discontent has echoed through the ranks of China's Communist Party veterans.

Sources told Japanese daily Sankei Shimbun that several party elders, including former president and paramount leader Hu Jintao, and former premier Wen Jiabao, sent a letter in July to Communist Party leadership urging a review of economic and diplomatic policy and noting the party's tendency towards personality cult leadership.

A veteran member of the Communist Party said to be close to Hu told Sankei Shimbun that signs of waning support for Xi's "dictatorial regime" have been emerging since June, as Xi's prominent presence in state propaganda is beginning to diminish. In July, Xi's name was noticeably absent from the front pages of state mouthpiece People's Daily - twice in one week.

Last month, Xi swiftly called for a meeting with the powerful decision-making body Politburo, made up of the party's 25 most senior members, reportedly outlining plans to stabilize the economy hit hard by US tariffs.

Xi was likely gearing up for the annual Communist Party summit at the resort of Beidaihe, where top party leaders gather to discuss party policy behind closed doors.

The retreat, which is often kept secret, is said to be underway, and Xi's leadership and US-China trade are likely to be high on the agenda, according to Taiwan News.

China and the US have kicked their trade war into high gear this week, as the US announced it will impose a 25% tariff on $16 billion worth of Chinese goods starting August 23.

In response, China also announced a 25% tariff on $16 billion worth of US goods that will go into effect the same day - though critics have suggested that China is running out of cards to play as the US imports more Chinese goods than the reverse and can deal a more fatal blow to China's economy.