A Summarisation of Xi Jinping’s Governance of China Volume 2
OP ED Written By: @Bodhishevik Published: 24/04/2021
This article was originally published on Medium. Views are of the author
Not long ago, I had finished reading Volume one of Xi Jinping’s book, “Governance of China.” Inside I found many things that either weren’t talked about by the United States or were misconstrued by many on the left. Somehow, despite the fact this book had been out for years, no one had seemed to read or talk about it. Hoping to clear the air a little bit, I decided to share a little of what I thought was interesting about the book to both twitter and reddit. I ended up getting a mostly positive response from that and many people asked that I do a follow-up on Volume 2.
For those that are unaware, Governance of China is a series of books, composed of speeches by the president of China, Xi Jinping. The goal of the books is to demystify the policies of China and many of the goals they hope to accomplish. Since it is a book of speeches and interviews, given both to other CPC organs, foreign journalists, and foreign politicians, and only later curated and published, I think it is worth taking into account that Xi is being more or less straightforward and transparent, even if the actual curation may be biased.
If you don’t know anything about China or Socialism with Chinese Characteristics, or if you still feel like there is something you could learn, BayArea415’s video on the topic is really a prerequisite before you dive into this.
The book is actually broken into several different sections, not all of which necessarily deal with the same topic, and so I won’t be going through the book chronologically. Instead I will be grouping the relevant topics together to make the analysis flow a little easier. First up:
Socialism with Chinese Characteristics/The Chinese Dream
A Bright Future for Socialism with Chinese Characteristics
This probably going to be the most controversial chapter because it is mostly focused on Deng Xiaoping. Xi says that Deng was a beloved man with an unshakeable belief in socialism. He quotes Deng many times which I will take the liberty to provide as needed.
Here’s one telling quote of his about Marxism. “I am convinced that more and more people will come to believe in Marxism, because it is a science. Using historical materialism, it has uncovered the laws governing the development of human society… So don’t panic, don’t think that Marxism has disappeared, that it’s not useful anymore and that it has been defeated. Nothing of the sort!”
Another quote is provided about the role of the people. “The masses are the source of our strength and the mass viewpoint and the mass line are our cherished traditions. The Party’s organizations, its rank and file members and cadres must be one with the masses and never stand against them. Any party organization that deplorably loses tough with the masses and does not mend its ways is forfeiting the source of its strength and will invariably fail and be rejected by the people.”
Another quote about the wellbeing of the people. “Poverty is not socialism… socialism means eliminating poverty. Unless you are developing the productive forces and raising people’s living standards, you cannot say that you are building socialism.”
In the last volume I pointed out that “it is their direction to continuously self-improve and develop socialism. It means that China is constantly changing and as it changes, they need to constantly reform the system in order to improve.” And interestingly enough, we now get to see how this theory of reform was developed by Deng, and how it curiously relates to Mao.
“The essence of Marxism is seeking truth from facts. That’s what we should advocate, not book worship. The reform and open policy have been successful not because we relied on books, but because we relied on practice and sought truth from facts.”
Later, he said. “I haven’t read too many books, but there is one thing I believe in: Chairman Mao’s principle of seeking truth from facts. That is the principle we relied on when we were fighting wars and we continue to rely on it in construction and reform.”
The chief criterion he put forward for judging any action was, “whether it promotes the growth of the productive forces in a socialist society, increases the overall strength of the socialist state, and raises living standards.”
Deng also remarked on the rigid thinking that prevented people from taking action. “Those who suffer from it dare not say a word or take a step that isn’t mentioned in books, documents or the speeches of leaders: everything has to be copied.” And a little over a decade later, he returned to this thought. “The world changes every day and modern science and technology in particular develop rapidly. A year today is the equivalent of several decades, a century or even a longer period of in ancient times. Anyone who fails to carry Marxism forward with new thinking and a new viewpoint is not a true Marxist.” And he warned, “When everything has to be done by the book, when thinking turns rigid and blind faith is the fashion, it is impossible for a party or a nation to progress. Its life will cease and that party or nation will perish.” He encouraged, “We should be bolder than before in conducting reform and opening up to the outside and have the courage to experiment.”
Next Xi uses Deng’s words to elucidate what and where the “Opening up” of the “reform and Opening up” comes from. “The present world is open… Reviewing our history, we have concluded that one of the most important reasons for China’s long years of stagnation and backwardness was its policy of closing the country to outside contact. Our experiences show that China cannot rebuild itself behind closed doors and that it cannot develop in isolation from the rest of the world.”
There are many leftists who still question Deng’s approach to China after Mao, to which Xi offers a quote from Karl Marx himself. “Men make their own history, but they do not make it as they please; they do not make it under self-selected circumstances, but under circumstances existing already, given and transmitted from the past.”
This Xi says, is what makes socialism in China, Socialism with Chinese Characteristics.
Surprisingly Xi quotes Deng a great deal where he uses language and terminology used by Mao himself. Deng talks about the mass line and maintaining connection with the people, seeking truth from facts, and not relying on book worship. It doesn’t seem at all like Deng abandoned Mao at all. On the contrary, Deng uses Mao’s own theory to insist on leading the country in new directions. He almost sounds like a Maoist. Boldness and experimentation are emphasized frequently, which is where the reform part of the expression “Reform and Opening up” comes from. The experimentation and reform can then be tied directly to Mao’s own work “Oppose Book Worship!”
Deng connects China’s years of stagnation to its history as being incredibly closed off from the outside world. So Deng reasons that in order to progress, China must pursue the opposite path that was taken by the various emperors. This is a point that is incredibly unique to China’s history and is a very dialectical approach.
Xi again states that they are still in the primary stage of socialism. Deng was quoted even earlier saying that it was the goal of socialism to eliminate poverty. So, it would follow that with poverty now being eliminated, it is entirely possible that Xi will be the one to lead the CPC into the next highest stage of Socialism. What followed from Lenin’s NEP was the five-year plans and collectivization of agriculture.
The Chinese and continuing the long march forward
Xi clarifies that the second of the two centenary goals is “to build China into a modern socialist country that is prosperous, strong, democratic, culturally advanced, and harmonious and achieve the great rejuvenation of the Chinese nation by the middle of the century”
Xi says that they will never abandon Marxism, and that if they did, they would lose their soul and direction. Xi says that prosperity for the people is the basic political position of the CPC and it is what distinguishes them from other political parties. In addition, their goal is to guarantee the status of the people as the masters of the country.
Xi marks the reform and opening up as their new long march. He emphasizes that the party must use dialectical and historical materialism if they hope to develop correctly.
He recites a proverb, “The same water that keeps a ship afloat can also sink it.” And explains, “This is something we must never ever forget. The people are the skies above us and the earth below us. If we forget the people and become distance from them, we will lose their support, like a River with no head water or a tree with no roots and achieve nothing. Therefore, we must uphold the CPC’s principle of relying on and serving the people, preserve our close ties with the people, readily subject ourselves to the criticism and oversight of the public, remain mindful of the difficulties ordinary people face, an search constantly for means of bringing prosperity to the people, so as to ensure that the CPC always has the trust and support of the people, and ensure that our cause has an inexhaustible source of strength to carry it forward.”
Xi elaborated elsewhere about the party’s centenary goals, “He said the party will first lead China to “basically realize socialist modernization” by 2035, when, among other things, the nation will have narrowed its wealth gap and improved its environment significantly… the second stage will last from 2035–2050, during which China will become a leading global power and the Chinese people will basically enjoy “common property.” By then, Xi said, “the Chinese nation will stand with a more high-spirited image in the family of nations.”
CPC Leadership, Democracy, and reform
Many of the themes that Xi comes back to again and again are that of being innovative and connected to the people. He also emphasizes that the party needs to be united, and that without the authority of the central committee, the party would fracture and become a big club where nothing was accomplished.
Xi states that they shouldn’t blindly copy any political system and says that doing so would have the potential to destroy China.
He says that the best way to see if a country’s system is democratic is whether the succession of its leading body is orderly and in line with the law, whether all people can manage state affairs, social and economic and cultural affairs in conformity with the law, if the public can express their requirements without hindrance, whether all sectors can efficiently participate in political affairs, if decisions are made in a rational and democratic way, whether professionals in all fields can be part of a team of national leadership and administration through fair competition, whether leaders govern in accordance to the constitution, and if the exercise of power can be kept under restraint and supervision.
Xi says that if people are only awakened politically for elections and go into hibernation afterwards, then that is a token democracy.
Reform should be people oriented and give them a strong sense of gain. Reforms should be implemented till there are achievements.
This may come as a shock to people unfamiliar with the Chinese system, but they do have elections and do consider themselves to be a democratic country. There are some key differences between their system and ours. Elections are held at the local level, and it is not necessarily required for you to be a member of the CPC in order to run and get elected. Where the system differs is that the higher rungs of political office are chosen through elections within the CPC itself, usually based on the performance of a politician on the local level. So if you do well as a local politician, chances are that you will get promoted. There is no chance that someone can burst onto the scene with no political experience, wow the people for a minute or two before the election and then somehow come away with a huge amount of power. The Chinese political system functions more like an actual meritocracy where only the very best are able to get elected to higher offices.
Many citizens are also actively engaged on the local level. The Atlantic reported that China has almost 500 protests a day. The reason why China is able to remain stable is because the Communist Party, see the protests and then immediately get to work to address their concerns as quickly as they can.
While reform in the US is stigmatized and any measure taken to support the people is taken extremely trepidatiously, and only if it can make others rich as a result, China is willing to reform anything and everything until they produce tangible results for their people.
United Front and Social Organizations
The united front is under the direction and leadership of the CPC. To improve the work of the united front, they must befriend non-CPC individuals.
Social groups should place themselves under the direction of the CPC. They should pay attention to and care for the people.
The United Front is a collection of other, much smaller political parties that work alongside the Communist Party of China. They are dedicated more to serving special interests. They are not however, allowed to be openly subversive or to become more powerful than the CPC.
Despite other political organs and social organizations having to place themselves under the leadership of the CPC, the relationship is meant to be collaborative rather than combative. This rules out any social uprising like many that occur or at least had previously occurred in Hong Kong. Social organizations exist because of the high expectations of the CPC for new members. If you don’t get in, you can always organize on the grassroots level and work with the CPC.
Socialist Rule of Law and the rule of virtue
Xi places enormous importance on advancing the rule of law. He says that any mistake will create rage and division and those with ulterior motives will exploit that to stir up trouble. He explains that they must demonstrate both confidence and resolve.
1st They must uphold the leadership of the CPC. 2nd Uphold the principle position of the people. “China’s socialist system ensures that the people assume the principle position as Masters of the country it also ensures that the people are the primary actors in advancing the rule of law. This is a strength of the system and the fundamental distinction between the socialist rule of law and capitalist rule of law.”
The law must benefit and protect the people. They must represent the people’s interests, reflect their wishes, protect their rights, and improve their wellbeing, not just in the laws but also in their enforcement. The authority of these laws must also be maintained by the people. He says that the people should be devoted advocates and defend the rule of law.
3rd, they must uphold the principle that all are equal before the law. Xi emphasizes that no individual is above the law, and those who break it will be punished. Officials in particular must set a good example.
4th, integrate the rule of law with virtue. He says that laws are ethics that are written down and ethics are laws that we follow in our hearts. Xi says that emphasis must be placed on both in order to promote good and welfare.
5th, work must be based on the conditions of China. They can learn from the experiences of other countries, but they should never outright copy.
Xi says they need to establish a system of socialist rule of law.
They should coordinate their efforts to exercise law-based governance. Law enforcement must be carried out in a strict, standardized, impartial and civil manner. They should also establish means to Review the legality of major decisions made by government departments and agencies; introduce a system of government legal councils codify governmental institutions functions powers procedures and responsibilities into law; and promote the procedure and law based exercise of power by governments at all levels. We need to comprehensively promote transparent government; Strengthen checks on and scrutiny over the exercise of administrative powers; and put in place a system of law-based administration that balances powers with responsibilities and that is both authoritative and effective.
Law making should be conducted through well-conceived procedures and that justice should be impartial. Laws should be observed by all. He elaborates that they must ensure that the law is being enforced in a standardized, civil manner.
Party organizations and officials at all levels are required to show unequivocal support for the lawful and independent functioning of judicial authorities and are under no circumstances permitted to intervene in the administration of justice Confucius once said people will obey you if you promote righteous men and suppress evil men they will disobey you if you do the contrary.
Education of the rule of law must begin in the national education system. Improve the mechanism to reward people for abiding by the law and punish them when they break it.
Xi asserts that the fundamental solution to institutional roadblocks is to reform and that simply making piecemeal changes won’t solve their problems.
Law must be improved by providing sanctions against unethical behavior, including illegal profit seeking.
It isn’t outright stated, but I believe Xi is beginning to formulate a premise for the Social Credit System as we know it in the west. Incentives are provided for good conduct and punished for bad conduct. Under our forms of capitalism, laws are made that enforce the dictatorship of capital, and are also incredibly racist. A similar system couldn’t work in this environment. The difference is that Xi stresses many times that the law is for the people and to improve THEIR wellbeing. So, this appears to exist in contrast to the capitalist way. Xi appears to want to foster not just “good behavior” but perhaps to create a tighter knit and more harmonious communities, this is something that really comes across in the writing but can’t really be summarized without quoting huge paragraphs. I’m reminded of Engels’ writing in “The Origin of Family, Private Property and the State,” where he says that ethics and justice changes under different systems of production.
CPC Policies on Ethnic affairs and Religion
Xi says that China’s 56 ethnic groups are one of its greatest strengths
Xi says that while making sure that laws are followed, they must also allow their autonomous regions to exercise autonomy and provide them support and help solve their problems. He also says that no regional ethnic autonomous area belongs to one ethnic group.
In order to do their work well, they must implement policies allowing freedom of religion, manage religious affairs by law, let religious groups manage themselves, and encourage religions to adapt to socialist democracy.
The goal of policies on freedom of religion is to unite believers and non-believers. He says that to in encouraging religions to adapt to socialist democracy, that means that believers should love and support the country and its people.
NOTE: This was written before China began receiving any heat for what is taking place in Xinjiang. This was a speech given to his own people, not to foreign press outlet for a puff piece. I don’t think that this is the language someone would use if they wanted to systematically exterminate religion or a specific ethnicity.
For those that are interested in learning more, here are some additional sources:
Address the people’s most immediate concerns
Work must never proceed at the cost of human life. Workplace safety must be fully enforced, and rule-breakers punished. Safety must be improved in dangerous industries and target root causes. Inspections should take place both regularly and irregularly.
Crime must be addressed according to its root causes. There should be an all-out effort to fight terrorism, ethnic separatism, religious extremism and strengthen international cooperation. Xi places great emphasis on only using legal means to fight terrorism.
In this chapter Xi also affirms that housing is for living in, not for speculation. They are going to curb real-estate bubbles from forming and prevent drastic rises and falls in prices.
This feels particularly potent now in the age of covid when we can see the extent that China went to in order to keep people safe. Now their economy is growing again because they took those steps. I can’t help but contrast their approach to that of the US which failed to lock down and has an enormous rate of infection and death, and whose economy has suffered none-the-less.
It is notable to me how time and time again Xi stresses the importance of solving social problems while remaining within the bounds of the law. This is particularly relevant in the case of terrorism and ethnic separatism because Xi’s approach stands in stark contrast to the US which launched illegal wars and military activities, specifically under the guise of fighting terrorism, while in actuality, seeking to destroy, rape and plunder the middle east.
Again, I have to point out how different China is from the US. The US is in the midst of an eviction crisis, and home ownership is only a dream for most people. Only 20% of millennials own a home in the US. In China on the other hand, rent is incredibly cheap, public services are subsidized, and 70% of millennials in China own a home.
Observe Discipline and rules
Workplace culture in the CPC is extremely important to follow, even though it is not written down. No factions are allowed in the CPC. Gossip is also discouraged. To observe discipline, they must do several things. They must uphold the authority of the central committee and shouldn’t feign compliance while acting in opposition. Safeguard the unity of the party and refuse to form any private cliques. Abide by the organizational procedures and never act beyond their authority. Obey decisions of the party. Never allow family or immediate staff to meddle or intervene in work, influence policy, or use connections for personal gain.
Keep in line with the central committee/ Study is the prerequisite and action is the key
Whenever someone joins the Communist Party, there is an intense training process where they are basically schooled in Marxist theory, and this is what the next section pertains to.
Party schools must abide by Party discipline. Some teachers spread western capitalist values or practice misconduct, which is prohibited and must be reported and “must not be seen at party schools.” Despite this, they encourage freedom of thought and expression, as long as it is rooted in party principles.
Two studies one action” is an education campaign asking all party members to study the constitution, the rules and the speeches of Xi Jinping. This is meant to promote party discipline. It is part of a bigger education drive meant to promote party values amongst the majority and change the education paradigm from short and intensive to long term and regular. This is going to strengthen the grassroots party organs and make them stronger.
Discipline inspection tours and the standards for party members
Discipline inspection tours are a method to scrutinize within the party. They check for political discipline and evidence of misconduct. Nationwide coverage of the discipline inspection tours serves as a deterrence. Inspection teams should find root causes of corruption and offer their suggestions and urge party organs to close institutional loopholes.
Anyone that is corrupt or tries to seek personal gain will be punished and removed from the party.
Party leadership is the unique strength of SOEs
SOEs serve as the material foundation for socialism. SOEs are governed by the CPC, serve production and operation, the leadership is appointed by CPC, builds strong grassroots party branches, and builds in tandem with the party.
SOE governance system is unique because the CPC leadership is incorporated into all aspects of corporate governance.
Management should be improved with democratic workers congresses as a basic element, providing open access to affairs.
Leadership is appointed by the party and can also be removed by the party.
Ian Goodrum published a wonderful series of Twitter threads about CPC involvement in both State-Owned Enterprises as well as private enterprises and a separate thread also on Workers Congresses. I’ll link those here & here
They must be alert to the possibility of color revolution. The military must follow the guidance of Marxism-Leninism and promote the rule of law. Armed with the party’s theories the military should become a new generation of revolutionary forces. The Military should practice the principles of the Party and conduct criticism and self-criticism. Political work cannot be separated from military capability.
Create a system of checks and balances for military leadership. Military power should also be regulated and supervised. New ideas and strategies should be promoted.
The military should use and advance Marxism. Troops should be trained and educated in Marxism.
In general, Xi places a huge emphasis on Marxism in the military. Thomas Sankara once said, “A soldier without any political or ideological training is a potential criminal,” and I think Xi’s idea is that if the military is trained not only in combat, but also in Marxism, they will not have any potential criminals. Again, this stands in sharp contrast to the US, where soldier’s only ideological training is ‘might makes right.’
The Centenary goals
Xi recalls that Deng coined the phrase “moderately prosperous society” and that the goal was basically reached in 2002.
Xi emphasizes that development must be both efficient and high quality. To do this, investments must be productive, and not bad. Products must be marketable, which will determine success. Enterprises must make profit, and if it doesn’t or underperforms, the effects will reverberate throughout China. Employees must make higher wages, but not so high that it hinders the profits of an enterprise and prevents it from growing efficiently. The government must also collect taxes. In addition to this, they must also seek to transform the economy to one that fosters innovation in new technology.
They must also address imbalanced development. The “in all respects” of “a moderately prosperous society in all respects” means development that is balanced, coordinated and sustainable. In order to meet this, they must seek economic, political, cultural social and ecological progress. They must ensure a better developed economy, more complete democracy, advanced science and education, more thriving culture, and a higher standard of living. These things must also not be separated from ecological development. The environment must be protected and allowed to restore itself.
Poverty alleviation does not mean that every individual will experience the same amount of prosperity, but they must be significantly improved, otherwise it will have been a failure. Additionally, welfare programs must be significantly expanded and improved.
The urban and rural development gap must be addressed, and not just in gdp. They should also view it as a narrowing in the gaps of residents’ income, in addition to things like living costs.
Measures against poverty
epending on what conditions of poverty the people live in Xi says they should adopt these measures. 1st by boosting the economy with local resources and job opportunities. 2nd relocate those that absolutely cannot escape poverty. 3rd provide ecological jobs to the poverty stricken. 4th improving education. 5th improve social security for those that cannot work or can only partially work.
Xi also emphasizes that there needs to be transparent management of funds in order to reduce embezzlement and misuse. He also emphasizes that the poor need to rely on their own hard work.
Poverty alleviation is explained in even greater detail. Xi starts by pointing out how the hierarchy works. Central leadership makes the plans, provincial authorities take the responsibility and municipalities and counties take charge of implementation.
Xi points out that they need to set reasonable goals. Areas of extreme poverty are unlikely to catch up to the cities, but they are guaranteeing basic needs will be met, including: food, clothing, safe housing, medical care and education.
2nd, increase input. Government investment should play a guiding and coordinating role in encouraging investment from other financial sources.
3rd, concentrate all strength to fight poverty. Not all poverty can be fought the same way and so poverty alleviation must proceed from the material circumstances of the area. Xi wants to upgrade run-down villages with infrastructure, and develop their economies, in addition to relocating people, create eco-jobs like forest rangers, provide more healthcare and support, and guarantee social security for those that can’t escape poverty.
4th, targeted poverty alleviation is the major mission of regional development. Xi notes that not all development will actually eliminate poverty but do the opposite by increasing the wealth gap of rich and poor. Accordingly, they must be careful to only give support to businesses and development that does eliminate poverty.
5th, get all sectors to give more support for poverty alleviation. This is more or less Xi’s advice to the different areas of China on how they can support poverty alleviation. The specific advice isn’t relevant to the larger picture.
6th, motivate the impoverished to eliminate poverty. This almost sounds like Xi saying they should pull themselves up by their own bootstraps, but he explains what he means. There are some people that just wait for handouts, but Xi affirms that while the government is willing to help, they will ultimately remain poor if they rely solely on external aid. He says that they should be trained to develop skills to find employment or to open businesses. Xi says that they should change their approach from simply handing out funds to handing out subsidies for hard work
7th, improve organization and leadership. When fighting poverty, they must stress actual results.
8th, enhance supervision of poverty alleviation. This sort of ties into the last point, but they are not going to allow fake poverty reduction or “reduction only in figures.” Fraud, falsification, embezzlement and misappropriation will be punished.
Xi concludes by saying that if what they are doing does not work, that they must study the problems and work out new solutions.
Guide development with new concepts
Xi says that development will change in accordance to changing material realities. Five kinds of development are put forward: Innovative, green, coordinated, Open and inclusive.
Xi asserts that innovation is the driving force of growth, and so they must build an environment that fosters innovation or risk lagging behind.
Coordinated development means that they must solve imbalanced development. If ignored, it will increase social conflict.
Green development, as the name implies, aims to conserve resources and protect the environment.
Open and inclusive development prioritizes interactions between china and the international community. They are open to the world, now the priority is to increase connectivity. The Belt and Road initiative serves as a prime example.
Shared development underpins social equality and justice. The benefits of development must be shared by the people and social inequality must be addressed.
A deeper understanding of the new development concepts
Xi asserts again that innovation is the driving force of development. From here he begins to run through the history of the world and explains that the US managed to obtain hegemonic rule of the world because it led in science and industrial progress.
Next, he emphasizes the importance of coordinated development by quoting Mao’s metaphor of playing the piano with all ten fingers.
In regard to green development, Xi cites Engels’ Dialectics of Nature. The conclusion he draws from this is that protecting the environment is equal to protecting the productive forces. All officials must discard plans that damage or destroy the environment.
Speaking about opening up, Xi recalls the history of globalization, first from its earliest form in colonization and concludes at the end of the cold war and the fall of the soviet union. He compares this global development to China’s own history. What he draws from this is that if China continues driving global trade liberalization, they will grow stronger and will be able to lead global development.
From here: Xi pivots to several risk factors. He says that power structures in various countries are beginning to change, and so is the western dominated global governance system. Additionally, western countries are emerging from the financial crisis through re-industrialization, but despite emerging markets, the global economy doesn’t have an engine for full recovery. China has also grown significantly in both the world economy and global governance. He specifically says that they need to turn their economic strength into international institutional authority.
Xi refocuses on development and how it should be people centric. The fruits of development should be shared by everyone. Economic, cultural, social, ecological, and political development should all be in the interests of the people. People should take part in and actively participate in development and share the sense of achievement. Development should not proceed either too fast or too slow. Xi compares development to a cake, which will grow bigger and bigger and be shared fairly to represent the strength of socialism.
Economic work should be adapted to the new normal
Xi notes that outside observers have noticed that China’s growth rates have slowed down. Xi responds to this by pointing out that several trends in China’s economy have changed, and so they must now adapt to the “new normal.” He then details each of these changing trends and how to respond to them.
- People are no longer following the latest fad, but they must continue allowing consumption drive development
- Investment in traditional areas has reached capacity and they must find new areas to invest in and to eliminate barriers in investment
- Global trends have changed and there is not as much desire for China’s exports, so they must “foster new comparative edges”
- Production capacity has exceeded demand, and so they should promote concentration of production, and specialized production will be a new feature
- The labor field is shrinking and the working population getting older, so they should increase quality of human capital and pivot to innovation driven growth
- The market, which used to promote quantity and cheapness is now shifting away towards quality and product differentiation. Xi says that they must drive even deeper reform to create conditions for better market competition under these circumstances
- Xi notes that they have taken a heavy toll on the environment and as a result its carrying capacity has reached its limit. In response they should promote an eco-friendly, low carbon development model
- There have also become an accumulation of risks from things like debt and shadow banking. Xi says that they must find correct prescriptions for both the symptoms and root causes of these risks in order to defuse them.
- The ninth problem is the hardest to summarize because it pertains to their concept of resource allocation and model of macro-economic control. Basically, they used to have huge demand, but now they have an oversupply of goods. Xi says that they must intervene when necessary to invigorate the market and create a favorable environment. (Xi elaborates on this later)
In addition to the solutions Xi offers, he says that just because the growth rate slows, it does not mean the economy is bad, and conversely high growth does not make it good. These are symptoms that China’s economy is evolving to something more advanced and better structured.
Promote supply-side structural reform
Despite what the name might imply, this is not a policy advocating neoliberalism. Xi explains that with supply side economics, supply creates its own demand, and so supply is the key to economic development, in addition of course to tax cuts, improving saving and investment. Of course, in order to supply these tax cuts, Xi explains that they are premised on reducing government expenditure and restricting monetary supply in order to stabilize prices. Xi refutes this model for ignoring demand and the role of the government in the market.
His solution for the problems inherent in supply side economics is “Supply Side Structural Reform.” “The key to our supply side structural reform is to release and develop productive forces, to adjust structures through reform, to reduce ineffective and lower-end supply, to make supply structure more adaptive and flexible to changes in demand and to increase total factor productivity.”
The goal is to improve the country’s supply capacity to meet the people’s needs, which are becoming more extensive, individualized and sophisticated.
He says that Supply and Demand are opposite and unified and interdependent.
Demand Side management focuses on short term macro regulation, and propels growth mainly by adjusting taxation, and money supply to stimulate or restrain demand.
Supply Side management tackles structural problems creates growth drivers and boosts growth mainly by optimizing the allocation of production factors and by adjusting the structure of production to improve the quality and efficiency of the supply system.
I’m going to go on a bit of a tangent here because after doing some cursory research, it does not look like this is a model that has been adopted by any other country and is so far completely unique to China. This system is derived from the contradictions of demand and supply side economics to essentially achieve the best of both worlds. This is what I can only describe as a dialectical approach to their economic problems that otherwise had no obvious answer. I think it also stands to reason that when Supply Side Structural Reform no longer works for China, they will cast it aside and adopt another model, either already existing or of their own invention.
Healthy development and diverse forms of ownership
They should uphold the basic socialist economic system where public ownership is dominant, but other forms can develop side by side. Public ownership will continue to grow and contribute to reform, opening up and modernization. The public and private sectors should be mutually reinforcing with no need for conflict. Those in the private sector should also want to be involved in building socialism. Finance should benefit the economy and society. Supervision should be strengthened to defuse risks.
Environmental Reform and Ecological Development
Xi says that they must take great measures to promote ecological progress. He says that they should put a cap on energy consumption, save water and land resources and reduce pollution. He also wants to institute a target responsibility system, presumably to ensure that targets are met and to clarify assignment responsibilities.
In addition to that, Xi notes that after long term use, the exploitation of arable land has become too intense. He proposes that crop rotation should be adopted, and allow certain land to lie fallow, with proper compensation for the farmers. This system would return fertility to the land and create a more sustainable system for agriculture.
China’s campaign for development has come at the cost of some places putting too much emphasis on developing, with little regard for the environment. Regional environmental management is not always followed or enforced, and so he says that it must be reformed so that the system can work properly, with rule-breakers being punished.
Xi’s emphasis on shifting the focus of the economy to an innovation driven one is meant to go hand in hand with the promotion of green development. He wants to shift the economic growth model away from high resource and energy consumption and from high emissions, intensify control of pollution, accelerate environmental protection and restoration, promote resource conservation and recycling, popularize green consumption, and refine mechanisms for ecological progress.
What should be notable here is how Xi is taking measures here, basically to ensure that they do not face food insecurity at home. If they didn’t take these measures what would presumably happen is that they would have to begin importing food. If they were not open to the outside world, this would basically be the conditions of a famine, but because Xi and the communist party are already looking ahead, they can prevent this from happening, despite the fact that they could import food. On another tangent, Anti-communists are quick to point out when people have suffered under communist regimes, but never seem to point out when it works, like in this instance.
As you may have noticed by now, despite the fact that China has a market, the government still has a huge amount of involvement in how they plan and develop the economy. This has the huge advantage of being able to serve their people’s interests and being the ones to tell the capitalists what to do, not the other way around. While the capitalists in America have dragged their feet in regard to protection of the environment and ecological development, China has taken this challenge head on.
Implement the Free Trade Zone strategy
Xi asserts that opening up brings progress and isolation brings stagnation. With that in mind, China’s Free Trade Zones are intended to produce, not just foreign investment, but also give China a greater voice and allow them to inject more Chinese elements into international rules. FTZ’s are also intended to increase cooperation in countries involved in the Belt and Road Initiative.
China’s diplomacy must befit its major country status
Since both China and the outside world have come to rely on each other, Xi says that China should now consider both domestic and international markets and laws. He reiterates that they should seek win-win development.
A new era of china Africa cooperation and development
Xi says that the world is undergoing profound changes and calls for new development that is mutually beneficial. Xi says they should remain committed to what he calls the “5 pillars”
- Political equality and mutual trust
- Mutually beneficial economic cooperation
- Mutually enriching cultural exchanges
- Mutual assistance in security
- Solidarity and coordination in international affairs
Xi says that poverty is the root cause of chaos and development holds the key to both their problems. China will stand up for and speak for Africa. China will do a number of initiatives and projects to encourage development and industrialization in Africa. China will transfer agricultural technologies and share its experiences. China will encourage its financial institutions to set up in Africa. China will share and promote green energy and technology in Africa. China will improve Africa’s capacity for hardware and software.
Increase sino-arab dialogue and expand common ground
China wants to build peace in the middle east. Xi says that there is no such thing as “good terrorism,” and there should be no double standards. Terrorism should not be linked to any ethnicity or to religion. Hearkening back to the speech he gave about religious and ethnic affairs.
China will set up a research facility for China-Arab development. They will step up cooperation on cyber security. China can speed up introduction of new high tech technology to the middle east. China should advance industrialization in the middle east. They will also enhance cultural exchange, including the translation of many Chinese and Arab texts into the local languages.
This particular speech was given in January of 2016. It should not have come as a surprise then that China made a deal with Iran recently expanding Chinese presence in banking, telecommunications, ports, railways, military cooperation and many other projects in exchange for discounted oil.
Additionally, the part where Xi talks about the cultural exchange and translating classic Arab texts into Chinese languages doesn’t align with the narrative being peddled by the west that China is trying to suppress islam or its minority ethnicities.
Mutual Benefit and a community of shared future
Xi says that cyberspace is a common space for human activities, and that it should be in the hands of all countries. He urges the construction of a global internet infrastructure and promotes interconnectivity. He wants to build online platforms for learning and cultural exchange. Promote innovative development for cyber-economy and common prosperity. Maintain cyber security and promote orderly development. Build an internet governance system to promote fairness and justice.
Responding to the post financial crisis period, Xi says that nations should work together to solve global problems and share information. They should build platforms for cooperation and pursue interconnected development.
Xi says that they need to promote investment liberalization and that protectionism is like treating an ailment with poison. He says that globalization is a historical outcome of social productivity and technological progress. The global economy “is the great ocean from which you cannot escape” Lack of global governance, he says, is what makes it difficult for the global economy to adapt to the new situation. Xi promotes innovation, win-win cooperation, fair and equitable governance, and a balanced, equitable and inclusive development model.
In a speech given to the UN general assembly, Xi says that they should commit to multilateralism and reject unilateralism, and reject the mindset of a zero sum game or winner take all. He emphasizes the need for diplomacy and resolving differences through dialogue and consultation.
“We should promote open, innovative and inclusive development that benefits all. The 2008 global financial crisis has taught us that allowing capital to blindly pursue profit will result in chaos, and that global prosperity cannot be built on the shaky foundations of a market without moral constraints. The growing gap between rich and poor is both unfair and unsustainable. It is important for us to use both the invisible hand and the visible hands to form synergy between market forces and government functions and strive to achieve both efficiency and fairness.”