![\"Chinese](\"https:\/\/image.cnbcfm.com\/api\/v1\/image\/106904532-1625047772899-gettyimages-866097534-98142443.jpeg?v=1633504835&w=740&h=416&ffmt=webp\")
<\/picture><\/div>\n<\/div>\n<\/div>\nFor President\u00a0Xi Jinping,\u00a0dispatching his special envoy to Europe\u00a0for a three-week charm tour was just one of many acts of high-stakes damage control ahead of the 20th<\/sup>\u00a0Chinese Communist Party Congress this autumn.<\/p>\n Xi\u2019s economy is dangerously slowing, financing for his Belt and Road Initiative has tanked, his Zero Covid policy is\u00a0flailing, and\u00a0his continued support of Russian President Vladimir Putin\u00a0hangs like a cloud\u00a0over his claim of being the world\u2019s\u00a0premier national sovereignty champion\u00a0as Russia\u2019s war on Ukraine grinds on.<\/p>\n Few China watchers\u00a0believe\u00a0Xi\u2019s hold on power faces any serious challenge, but that\u2019s hard to rule out entirely given how many recent mistakes he\u2019s made. So, Xi\u2019s taking no chances ahead of\u00a0one of his party\u2019s most important gatherings, a meeting designed to assure his continued rule and his place in history.<\/p>\n<\/div>\n European business leaders understood that as the context for their\u00a0recent meetings\u00a0with\u00a0Wu Hongbo, the special representative of the Chinese government for European affairs and former UN Undersecretary General. His message was\u00a0a similar one at every stop: Belgium, Cyprus, the Czech Republic, France, Hungary, Germany, and Italy.<\/p>\n \u201cThe Chinese want to change the tone of the story, to control the damage,\u201d said one European business leader who asked to remain anonymous due to his Chinese business interests. \u201cThey understand they have gone too far.\u201d<\/p>\n The businessman described Wu, with his fluent and fluid English, as one of the smoothest, most open, and intellectually nimble Chinese officials he\u2019s met. At every stop, Wu conceded China had \u201cmade mistakes,\u201d from its handling of Covid-19, to its \u201cwolf warrior\u201d diplomacy, to its economic mismanagement.<\/p>\n His trip came as concerns in China have grown about \u201closing Europe\u201d in the wake of Putin\u2019s invasion of Ukraine.<\/p>\n The public mood has shifted sufficiently to have Finland and Sweden\u00a0knocking on NATO\u2019s door, and the European Union this week\u00a0embracing the prospect of Ukraine\u2019s membership candidacy. Wu\u2019s visit was also something of a mop-up operation following a failed visit by Chinese official Huo Yuzhen to eight central and east European countries. In Poland,\u00a0he was refused<\/a>\u00a0a meeting with government officials.<\/p>\n Germans and their political leaders \u2014 Europe\u2019s most significant target for Chinese diplomats and business \u2014 are raising new questions about everything from investment guarantees for German business in China to specific projects like VW\u2019s\u00a0factory in Xinjian province, home of\u00a0human rights abuses\u00a0against the primarily Muslim Uyghur population.<\/p>\n Though Wu addressed Putin\u2019s war in Ukraine only indirectly, his message was designed to reassure Europeans that they are preferred partners, as opposed to the United States. His bottom line: China will always be China, a country of growing significance and economic opportunities for Europe.<\/p>\n Yet lost ground in Europe is just one of many gathering problems President Xi faces\u00a0ahead of his party congress, which will determine the country\u2019s economic, foreign policy and domestic agenda for years to come.<\/p>\n The party congress is likely to provide Xi a third term, a move that follows a 2018 decision to scrap term limits. What\u2019s more likely to reveal the extent of Xi\u2019s power,\u00a0writes\u00a0Michael Cunningham of the Heritage Foundation, is whether he can put his allies in key central bodies, primarily the Politburo and the Politburo Standing Committee, as retirement norms ensure considerable turnover.<\/p>\n However the Congress turns out, there is growing talk among China experts about whether we are entering a period of \u201cPeak Xi\u201d or even \u201cPeak China.\u201d There\u2019s growing evidence that he and the country he represents (and his approach has been to make the two inseparable)\u00a0have reached the height of their influence and reputation.<\/p>\n Nothing will determine the outcome more than how Xi manages China\u2019s economy, which is the foundation for the country\u2019s far-reaching global influence as well as the Communist party\u2019s domestic legitimacy.<\/p>\n Former Australian Prime Minister Kevin Rudd, one of the keenest China-watchers anywhere,\u00a0sees<\/a>\u00a0China\u2019s economic prospects weakening due to a chain of factors. They include at least 10 Chinese property developer defaults, and Xi\u2019s crackdown on China\u2019s technology sector, which has cost it $2 trillion in market capitalization of its 10 biggest tech companies over the past year.<\/strong><\/p>\n Moreover, Putin\u2019s invasion of Ukraine has sent energy and commodity prices soaring and has snarled supply chains, \u201cterrible news for the world\u2019s largest manufacturer, exporter and energy-consuming economy,\u201d Rudd\u00a0wrote<\/a>\u00a0recently in The Wall Street Journal. Add to this Xi\u2019s insistence on China\u2019s Zero Covid strategy, which led to mass lockdowns.<\/strong><\/p>\n Rudd\u00a0concludes\u00a0that this combination of factors is enough to make Xi miss his 5.5% growth target and perhaps even grow more slowly this year than the United States. \u201cFor Mr. Xi, failing to reach the target would be politically disastrous,\u201d writes Rudd.<\/strong><\/p>\n Xi\u2019s damage control on the economic front has included fiscal and monetary stimulus and infrastructure spending to grow domestic demand. A\u00a0recent meeting\u00a0of the Politburo also suggested some coming relief from the regulatory crackdown on China\u2019s tech sector.<\/p>\n Yet none of that will be enough to reverse Xi\u2019s cardinal sin, and that was his dramatic pivot to stronger state and party controls.<\/p>\n Writing in Foreign Affairs, the Atlantic Council\u2019s Daniel H. Rosen, who is a founding partner of Rhodium Group,\u00a0argues, \u201cChina cannot have both today\u2019s statism and yesterday\u2019s strong growth rates. It will have to choose.\u201d<\/p>\n Adds\u00a0Craig Singleton this week in Foreign Policy, \u201cChina\u2019s fizzling economic miracle may soon undercut the (Communist party\u2019s) ability to wage a sustained struggle for geostrategic dominance.\u201d<\/p>\n There\u2019s not much time left for damage control before Xi opens his party Congress in the Great Hall of the People. He\u2019s likely to get the vote he wants, but that won\u2019t solve the larger problem. It has been his leadership and decision-making that have generated China\u2019s challenges, and he\u2019ll have to correct course if he is to restore economic growth at home, revive his international momentum and avoid \u201cPeak Xi.\u201d<\/p>\n<\/div>\n