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Xi Jinping is digging in Anyone who thought Xi Jinping was a reformer should think again

China Watch

There had been much speculation about President Xi Jinping’s long-awaited speech in the Great Hall of the People marking the 40th anniversary of ‘Reform and Opening Up’. Although the recent detention of Huawei’s CFO undoubtedly upset China’s leaders, Beijing looked as though it was warming to compromise following the temporary trade war truce agreed at the G20 in Buenos Aires last month.

Yet, expectations that Xi would use the speech to commit again to market-oriented economic reforms, many of which have stalled or been diluted since first getting an airing in 2013, were disappointed. His 90 minute speech was a defiant and political assertion of the just and correct role of the Communist Party’s sole political authority in the past, present and future. Anyone who thought that Xi Jinping was a closet reformer waiting for the right moment to shed one skin and reveal another should now be disabused of any such notion. And it will be to China’s cost.

Forty years ago to the month, the newly appointed vice-premier, Deng Xiaoping, exhorted Party cadres to ‘seek truth from facts’ and liberate their thinking as they looked to ‘reform and opening up’ as the key to unlocking economic stagnation in China. Agricultural and land reform, private enterprise experiments, special economic zones, new forms of ownership and more inclusive forms of governance all followed. In 1979, Coca-Cola became the first foreign firm allowed into China since 1949, and Chinese leaders and academics engaged in extensive engagement with the rest of the world to learn, absorb and implement new policies and practices.

This China, and the one that evolved in the following 35 years, became renowned for its economic policy pragmatism and capacity to manage change well. Xi Jinping’s China is something else.

It pays lip service to ‘economic reform’ and to ‘encouraging, supporting and guiding the development of the non-state economy’, but there is no question about its priorities. Xi insisted that China must rely on Party rule and reform to meet ‘unimaginable perils and dangers ahead’, and that the number one lesson the last 40 years is that China must stand firmly by the leadership of the Party, which is the fundamental characteristic of ‘socialism with Chinese characteristics’ – a phrase with which he is strongly associated and which has become enshrined in the Party and State constitutions.

While not surprising, some China watchers and commentators had nevertheless thought that change might be afoot. A new campaign to punish theft of intellectual property had been announced. The government had stepped up purchases of US agricultural goods and natural gas, and said it would reduce at least temporarily the punitive 25 per cent tariff on US auto imports back to the previous rate of 15 per cent.

Importantly, the government had also dialled down the rhetoric surrounding its assertive industrial and technology policies amid suggestions that new initiatives about forced technology transfer, foreign ownership limits, cyber-theft, SOE privileges and the opening up of service industries might be forthcoming.

Even if China did make some incremental changes in policy, though, Xi’s speech did not suggest that the government is even close to serious reform or concessions in these key areas. In the next few days, the annual Central Economic Work Conference is due to take place, but this is more of a year-ahead policy-setting forum.

China Watch

About George Magnus

George Magnus

George Magnus is a research associate at SOAS in London, and Oxford University’s China Centre, and the author of the just published 'Red Flags: Why Xi’s China is in Jeopardy'.

Articles by George Magnus

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