Xi Jinping’s Theory of (Almost) Everything in China

Chinese President Xi Jinping’s status was elevated even further during a twice-a-decade gathering of the Communist Party that ended Tuesday.

Not only did he give a lengthy speech where he laid out his vision for China as a global power by 2050, his name and ideology were written into the party’s charter. Only one other leader, Mao Zedong, managed that while still in office. Others had their ideology included as a guiding principle, but after they stepped down.

With his policies permeating all aspects of the party, giving Xi a status that allows him to effectively rule well beyond the end of his current term in 2022, what does “Xi-ism” mean in a practical sense?

Xi’s ideology is “a strategy for turning the Chinese Communist party into an ideologically unified, pristine organization that, under the leadership of a charismatic leader, will bring about the economic, political, social and cultural rejuvenation of the great Chinese nation,” according to David Zweig, a political science professor at the Hong Kong University of Science and Technology. The aim is for “China to reassert its rightful place as a leader of the world,” he said.

What is Xi’s main theory?

A key phrase inserted into the constitution was: “Xi Jinping thought on socialism with Chinese characteristics for a new era.” That makes Xi the architect of a third major period for China under Communist rule since 1949, and builds on former leader Deng Xiaoping’s earlier mantra of “socialism with Chinese characteristics.”

The first era, under Mao, saw the unification of China after a protracted civil war that followed the country’s occupation by foreign powers since the Opium Wars of the 1840s. Mao established China as a Communist state with a socialist economy.

The second era is associated with Deng consolidating the party’s power with the careful introduction of capitalism into the economic structure and the pursuit of a broad goal of prosperity for citizens.

So what is “socialism with Chinese characteristics”?

Exactly that. Socialism, but with a Chinese bent. It differs from Soviet socialism in the larger role for markets in the allocation of resources, an emphasis on decentralization and a smaller role in the economy, in theory, for state-owned enterprises.

Setting out a vision for China as a global economic and military power by 2050, with a thriving middle class, strong military and clean environment, builds on what Xi has said before about achieving a “Chinese dream” of national rejuvenation.

That all points to a more expansionist China, using initiatives such as investment in countries along trade routes (known as the Belt and Road initiative) to Europe to grow clout. Xi will continue modernizing the military with a focus on projecting force outward, namely a bigger and better navy and air force. Under his rule, China is set to remain assertive on territorial claims in disputed areas including the South China Sea and East China Sea.

What else can we glean from Xi’s words?

The “new era” under Xi is expected to include a greater focus on tackling social inequality — rather than economic growth for growth’s sake — in part to guard against the risk of social unrest and threats to the party’s power. Xi’s speech and the revisions to the party charter suggest the market will still play a “decisive role” in the economy, but with the party paramount when it comes to policy.

The president has set out sign posts to be achieved along the way: build a moderately prosperous society by 2020, join the most innovative countries by 2035 and achieve a first-class military by 2050.

What does it mean for the economy?

A greater focus on quality of life reflects a recognition by Xi that along with China’s massive increase in wealth, the divide between rich and poor has widened. Failure to meet the needs of a growing middle class seeking clean air and the angst of those left behind by development risks undermining the legitimacy of the party.

Economists say this suggests policy makers have more leeway to let near-term growth slip as they focus more on environment and social equality.

The inclusion of the phrase “advance supply-side structural reform” in the constitution could suggest a greater emphasis in this area. It’s been part of Xi’s focus on cutting overcapacity and reducing leverage while boosting domestic demand. At the same time, Xi’s reference to developing an “open economy” could mean more measures to attract foreign investment.

What does it mean for Chinese companies?

There’s been a clear message: The world’s second-largest economy must achieve balanced growth that reduces inequality.

Jack Ma, China’s richest person and founder of Alibaba Group Holding Ltd., told a state publication that entrepreneurs who’ve obtained affluence have a responsibility to help others catch up. Haier Chairman Zhang Ruimin echoed those comments. Property mogul Wang Jianlin was separately cited as saying his Dalian Wanda Group Co. has mapped out its business strategy in line with Xi’s call.
Source: Bloomberg