China entered 2025 amid mounting economic and social crises that have tested Xi Jinping’s leadership and fueled speculation that he may be losing his grip. With the 2027 Party Congress approaching, where Xi is expected to seek a fourth term after abolishing term limits, rumors persist that internal factions may be forming to block his continued rule. While there is no concrete evidence of such moves, the speculation is not without basis.
President Trump dealt a major blow to China’s economy during his first term with massive tariffs and trade restrictions that slowed exports and factory activity. When COVID lockdowns hit the rest of the world, China briefly surged, exporting home workstations and exercise equipment. But while other countries lifted restrictions in 2022, China extended harsh lockdowns for another year, becoming the last major economy to reopen. The damage was irreversible, and responsibility rests with Xi Jinping.
Through 2010, China’s economy grew at double-digit rates and was on track to overtake the U.S. Since then, growth has steadily declined, worsened by the trade war and prolonged lockdowns. President Biden maintained and expanded most of Trump’s tariffs while adding new trade and investment restrictions on China.
Now in his second term, President Trump has signaled a willingness to sacrifice short-term U.S. gains to inflict long-term damage on China while strengthening American manufacturing and accelerating decoupling.
Xi now faces slowing growth, barely meeting central government targets. Youth unemployment hit 17.1% in July 2025, even after Beijing changed the methodology to exclude over 12 million recent graduates. The official unemployment rate remains modest but excludes the 300 to 400 million rural migrant workers, millions of whom arrive in cities only to find factories aren’t hiring.
Bankruptcies and capital outflows have surged throughout 2025. The property sector remains a ticking time bomb with trillions in debt. Real estate investment fell 10.4% in the first 11 months of 2024. China is experiencing deflation for the second consecutive year.
Amid mounting challenges, Xi faces a critical juncture as China approaches the 21st Party Congress in 2027. That year marks the 100th anniversary of the founding of the People’s Liberation Army, a key propaganda milestone and chance to showcase military strength. Senior U.S. officials believe Xi may use the PLA’s centennial to complete his military modernization program, aiming to build a world-class force capable of challenging the U.S. and potentially capturing Taiwan.
A widely discussed theory holds that if Xi cannot revive the economy, he may attempt to seize Taiwan as a legacy-defining achievement to secure a fourth term and cement his place in Chinese history.
At the same time, overseas Chinese media have fueled speculation about leadership changes. One name that has emerged is Wang Yang, a 69-year-old reformer and former Vice Premier and Chairman of the Chinese People’s Political Consultative Conference. Wang is ideologically aligned with market reforms and gradual political liberalization, echoing Deng Xiaoping’s legacy.
Unlike Xi, who hails from the “princeling” elite, Wang is linked to the Communist Youth League (CYL), or Tuanpai, a rival faction historically associated with populism and reform. The CYL once served as a key pathway to power, producing figures such as Hu Jintao and Hu Yaobang. Under Hu Jintao (2002–2012), the faction became the core of what analyst Cheng Li called the “populist coalition,” in contrast to Jiang Zemin’s “elitist” Shanghai clique. The Tuanpai favored rural development, social equality, and continued reforms, often at odds with Xi’s centralization.
Xi has systematically dismantled the CYL’s influence. At the 2022 Party Congress, Li Keqiang, Wang Yang, and Hu Chunhua were excluded from leadership roles despite being eligible to continue serving. Li and Wang were dropped from even the Central Committee, while Hu lost his Politburo seat. In a symbolic moment widely viewed as the faction’s demise, Hu Jintao was escorted from the stage during the closing ceremony.
Despite being sidelined, reports suggest Wang may be positioning for a comeback. Known for technocratic pragmatism and experience in external economic relations, Wang could appeal to factions concerned about Xi’s economic management. Some overseas analysts argue that internal dynamics have shifted enough to make him a viable alternative as Xi faces growing pressure.
However, institutions like the Jamestown Foundation take a more cautious view. Their analysis acknowledges Xi’s vulnerabilities but dismisses predictions of a leadership change. Xi is experiencing a “dramatic truncation of power,” not a collapse of authority. His problems stem largely from purges that may have weakened his position. Since 2023, Xi has removed top officials from the People’s Liberation Army, including Defense Ministers Li Shangfu and Wei Fenghe, and senior figures in the Rocket Force and Equipment Development Department. Rather than consolidating power, the purges may indicate internal pushback, as Xi’s opponents target his protégés.
Most notably, the disappearance of Central Military Commission Vice Chairman General He Weidong, a known Xi loyalist, suggests Xi may be losing allies rather than eliminating enemies.
While speculation about Wang Yang’s return reflects real tensions and economic strain, analysts caution against overstating the likelihood of dramatic change. The 2027 Party Congress will be significant, but Xi’s position remains secure due to the lack of alternatives and China’s authoritarian political structure. The dismantling of the CYL, once a counterweight promoting reform and moderation, removed one of the few sources of internal resistance. Wang’s exclusion may reflect not future relevance but Xi’s success in neutralizing rivals. Though Xi’s authority may erode further, any shift is more likely to result in constrained leadership than outright replacement.
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