Xi Jinping’s Foremost Focus
This approach may sound reasonable enough on paper. But the problem for the CPC is it’s trying to micromanage a vastly complicated country of 1.4 billion people. The beauty of the market, of course, is it allocates resources in many economic sectors more efficiently than a relatively small number of distant, politically motivated policymakers ever could. In an ideal system, the risk-tolerance of banks or investors wouldn’t really be Beijing’s problem. Beijing presumably recognizes the trade-offs of centralization. But since the party can’t tolerate the risks of instability that come with liberalization without jeopardizing its control – and, in its view, risking a return to China’s historical vulnerability to disintegration – perhaps the only option is to focus on implementing a highly responsive state-led system of governance that operates as close to market efficiency as possible.
Thus, as illustrated at the recent plenum, “reform and opening” has tilted heavily toward the former. Indeed, improving governance and eliminating systemic risk have been President Xi Jinping’s foremost focus since taking power. This was a major driver of his sweeping anticorruption campaign, which in turn paved the way for his staggering reorganization of the Chinese government a year ago. The widespread conclusion among party elites that a strongman was needed to push through these sorts of reforms is why Xi was able to consolidate power in the first place – and why any hints of major dissent in Beijing can be so alarming.
It’s clearly still a work in progress. Xi is constantly griping about “entrenched interests” blocking reform, the need to enforce political discipline and the importance of ideological purity. In July, he said China’s main problems were not structural economic woes or, say, imperialist U.S. trade tactics. Rather, according to the president, the biggest issue is that “rules are not followed and implementation is ineffective.”
This may sound like an overmatched college football coach blaming his players – humans who are prone to exhaustion and the temptation to take shortcuts or put personal interest ahead of the good of the team – for struggling to execute a convoluted scheme that works only with infallible players. Maybe, with the right amount of technocratic tinkering, disciplinary tools and ideological indoctrination, Xi really can implement the sort of efficient, corruption-free, stability-ensuring system of governance that has eluded every country in the region save for Singapore (a geographically blessed city-state that doesn’t have an existential fear of recessions) and Japan (a socially cohesive rich country that doesn’t have an existential fear of recessions). It’s a tall order, especially given that Xi’s own grip on power is not guaranteed. Just as likely, China will end up lacking the market-bred dynamism and/or the flawless governance needed to fulfil the extraordinary pledges the party had made to the Chinese people. Either way, to Xi, throwing out the playbook at this point isn’t really an option.
Phillip Orchard is an analyst at Geopolitical Futures. https://geopoliticalfutures.com