Xi Jingping dream set to shape China for the future

At the close of the 19th Party Congress on October 25, it was confirmed that Xi Jinping will remain head of the Communist Party of China (“CPC”) and of the country for a second five year term. The meeting cemented Xi as the most powerful leader in China since Mao Zedong with his name written into the Party Constitution with a reference to “Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era”. No other living leader has had his name added to the constitution since Chairman Mao.

President Xi’s predecessor, Hu Jintao, sought to rule as first among equals and his two terms at the top of the Party were defined by consensus driven leadership. Five years ago, Xi quickly obtained all key titles and positions. Since then he has systematically consolidated power and added titles. A year ago, he was anointed “core” leader of the Party, signalling that he stood above his peers.

Last week’s ascension into the constitution confirms Xi is now unequivocally above any other person in the country.  President Xi Jinping broke with decades of precedent by stacking the top leadership with staunch allies and acolytes, declining to elevate an obvious successor and enshrining his name in the Communist party constitution. Since the revolution in 1949, only Mao Zedong was able to achieve that honour while still in office. On the surface Mr Xi now looks like the most powerful Chinese leader since Mao’s death in 1976.

Challenge Xi, challenge the foundation of the Party. In addition to confirming Xi Jinping as the head of the Party, China’s new leadership team was unveiled on October 25 at the end of the First Plenary Session of the 19th Party Congress. The meeting saw the promotion of five members of the previous Politburo into the seven person Standing Committee and the appointment of 15 new members to the 25-person Politburo.

Xi Jinping is now the most powerful leader since Mao Zedong and the Party is more firmly than ever at the centre of China’s development. No heir apparent has been appointed into the Politburo Standing Committee, breaking with precedent dating back to 1992.

Based on age, there are three contenders in the Politburo, but the break with precedent adds fuel to speculation that Xi may remain for a third term. Mr Xi’s consolidation of power is important for the rest of the world because he has defined himself in opposition to the “hegemonic” west and, again for the first time in decades, put forward China’s autocratic system as a model for other countries to follow.

Initiatives over the past five years have been driven by Xi Jinping’s Chinese Dream: the rejuvenation of the Chinese nation. A dream that sees the country standing tall on the world stage. This vision and dream will continue to drive the next five years. Now Mr Xi believes the west is declining as China rises and it is time to redouble efforts to boost Chinese influence around the world.  

While building a vast and powerful military that can “fight and win wars” and lavishing large sums on infrastructure projects along a “new Silk Road”, Mr Xi’s government is also intent on enhancing China’s “soft power” — its ability to attract and convince others without resorting to coercion.

 Xi unveiled a new development plan that sets a vision for China in the year 2050 when the People’s Republic of China turns 101. Expect Xi’s second term to push through bolder reforms. Initiatives taken in the first five-year term will continue (e.g. fighting corruption and expanding the Party’s role in the country), but expect the anti-corruption focus to become ‘reform while fighting corruption and wrongdoing’.

Do not expect Western political reform or any reform that undermines the Party’s position. Xi committed to providing equal treatment to foreign investors and rolling out a negative list nationally to govern investment – unless a sector is in the list, it is considered open for investment. Yet, expect continued contradictions between on-the-ground experiences and central statements in the near-term. Sectors deemed sensitive in terms of national security (e.g. technology) or ideology (e.g. content) will remain challenging.

Economic development shifting from rapid growth to “high-quality development” with quality put first and a priority on performance. To achieve, will require continued reform including changing officials’ KPIs.

The reinforced role of the Party, and Xi’s grip on it, will provide domestic political stability to drive reform. But, with reform comes change—if we see limited change, reform is not working. Over the next five-year period expect the middle class to grow significantly and with it disposable income and domestic consumption.

State Owned Enterprise (SOE) reforms will continue and will play an integral role in the economy. Mixed-ownership, or the introduction of private capital into SOEs, will be promoted. Expect state capital to also flow into private business. Xi reiterated support for building global Chinese businesses and encouraged Chinese companies to continue going abroad.

With foreign affairs, expect China to continue to increase its assertiveness as the global diplomat, and to extol the virtues of its own development model. The west is well used to the “panda diplomacy” which has seen the worldwide symbol of conservation used as an instrument of China’s soft power. But more significant are the now-ubiquitous Confucius Institutes established in more than 500 university campuses around the world, through which the Chinese state is also trying to control international academic discourse on topics related to China.