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Expanding State Power Still Tops Xi’s Agenda

A recently publicized speech reflects how the Chinese leader sees the country’s economic challenges.

Palmer-James-foreign-policy-columnist20
Palmer-James-foreign-policy-columnist20
James Palmer
By , a deputy editor at Foreign Policy.
Security personnel stand guard at the entrance to the Forbidden City near an image of Chinese President Xi Jinping as the closing session of the National People's Congress takes place in Beijing on March 11.
Security personnel stand guard at the entrance to the Forbidden City near an image of Chinese President Xi Jinping as the closing session of the National People's Congress takes place in Beijing on March 11.
Security personnel stand guard at the entrance to the Forbidden City near an image of Chinese President Xi Jinping as the closing session of the National People's Congress takes place in Beijing on March 11. NOEL CELIS/AFP via Getty Images

Welcome to Foreign Policy’s China Brief.

The highlights this week: A recently publicized speech by Chinese President Xi Jinping reveals his economic priorities, Shanghai officials say the city’s COVID-19 outbreak is under control, and U.S. investigators point to data from the China Eastern plane crash in March showing it was intentional.

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Welcome to Foreign Policy’s China Brief.

The highlights this week: A recently publicized speech by Chinese President Xi Jinping reveals his economic priorities, Shanghai officials say the city’s COVID-19 outbreak is under control, and U.S. investigators point to data from the China Eastern plane crash in March showing it was intentional.

If you would like to receive China Brief in your inbox every Wednesday, please sign up here.


Inside Xi’s Economic Thinking

Chinese President Xi Jinping’s major speech to the Central Economic Work Conference last December was recently published in part for the first time in Qiushi, the Chinese Communist Party’s journal of officially approved ideas. The remarks provide important clues about the leader’s thinking before he takes up a norm-breaking third term as general secretary of the ruling party, or CCP, in November.

Although Xi is routinely referred to as “president” in English, his title in Chinese is closer to “state chairman.” It is this role within the CCP, and in which capacity he gave this speech, that is the most important, because both in China’s system and for Xi, the party always comes first. Only he knows whether that is because he genuinely believes in it or because his family’s power and wealth has been wrapped up with the CCP since his father, Xi Zhongxun, helped establish its dominance.

For the most part, last year’s speech reiterates a familiar theme of Xi’s: China has problems, but the CCP leadership and the “advantages of the socialist system” can solve them all. The problems are getting more acute, however: The economy is slowing down, local debts are piling up, and big enterprises have borrowed recklessly. The COVID-19 pandemic is still an issue, although mentioned only briefly—Xi gave his speech before the recent outbreaks.

The published speech shows how much of Xi’s economic thinking is about control, tied to what he sees as a necessary expansion of government power. The speech frames China’s problems as coming down to the “reckless expansion of capital,” or private industry, which can only be curbed by expanding the CCP’s power. That idea relates to one of Xi’s favorite terms from last year: “common prosperity,” achieved via the redistribution of wealth.

Publishing the 2021 speech now may be an attempt to revitalize that language. Other Chinese officials, such as Premier Li Keqiang, are focused primarily on addressing economic issues, but party power still tops Xi’s agenda.

One part of the speech may seem incompatible with its profession of socialist values: how conservative it sounds about welfare. Xi explicitly states that “common prosperity” isn’t welfare. His words also suggest a fear of overpromising what the government can deliver, but they also echo an idea I’ve heard from rich and powerful people in China—that people living in democracies never vote to cut welfare benefits because the public is lazy and entitled.

Such attacks on so-called welfare-ism aren’t new for Xi or the Chinese elite. Two major factors fuel this sentiment. The first is the legacy of the Stalinist obsession with hard work. This kind of language pervades Chinese corporate culture, where managers seek to control their workers’ time and productivity—something the government has tried to crack down on. Although China’s labor laws are often good on paper, they are rarely enforced when it comes to workers’ protection.

The second factor is the dynamics of public distribution between the countryside and the cities. Under the residence permit (hukou) system, city dwellers have access to better schools, better hospitals, higher pensions, and earlier retirement. The urban middle class that benefits from this system is the bedrock of support for the CCP. However, urban hukou holders are often bigoted against rural migrants and fear them being allowed access to the system. The CCP’s anti-welfare language partially signals to the urban middle class that the party remains on its side.

Although the central government has provided support for companies and local authorities to cope with the cost of COVID-19 restrictions and lockdowns, it has supplied much less for migrants and other workers. That gap has left thousands of people who are not part of the urban middle class homeless and stranded in Shanghai.


What We’re Following

Shanghai, Beijing outbreak updates. The Shanghai government now reports that it has brought its COVID-19 outbreak under control, with community spread eliminated. Officials have promised that the city will fully reopen in June. Most residents remain under lockdown, however, although some restrictions have eased. Meanwhile, outbreaks are also hitting hard in some towns across China.

Many areas of Beijing are under lockdown in all but name, which has prompted protests at prominent universities, such as Tsinghua University and Peking University. Such unrest is fueled by immediate anger rather than sustained political ideology, although elite student protest is especially sensitive. Harsh restrictions in elite areas of Shanghai and Beijing have reminded some privileged Chinese that their lives are still in the hands of an unaccountable government.

California shooting and Straits politics. A mass shooting at a Taiwanese church meeting in Laguna Woods, California, that killed one person and injured five more has stirred divisions within the diaspora. The gunman was born in Taiwan to a waishengren family, people who came over from China during or after the Chinese civil war. Although the distinctions between waishengren and benshengren—older Taiwanese families—have eroded considerably, waishengren identities were once linked to the more pro-China Kuomintang party.

The gunman was a member of a so-called peaceful unification group in Las Vegas, where he expressed violent anti-independence sentiments. (Brian Hioe at New Bloom magazine has an excellent deep dive into the complexities of the issue.) Although the mass shooting is an American phenomenon, violent language toward Taiwanese independence advocates has increased considerably in China, and pro-unification groups have been involved in attacks in Taiwan.

Contested islands. The United States and Australia continue to tussle for influence with China over the Solomon Islands, a small Pacific country in a strategic location. U.S. officials held talks last month with leaders from the country, who seem to be seeking to play both sides for potential aid. The fight over influence in the Solomon Islands has been a major campaign issue in the Australian election, which will take place this weekend.

Next week’s FP Live discussion with former Australian Prime Minister Kevin Rudd will analyze the results and what they mean for the world. Register for that event here. Incumbent Prime Minister Scott Morrison faces criticism and a possible loss of support from some Chinese Australian voters over the country’s hawkish China policy.


Tech and Business

China Eastern crash investigation. U.S. investigators have examined black box data from the crash of China Eastern Airlines Flight 5735, which killed 132 people in March, suggesting that the plane’s sudden nosedive was intentional. An intentional crash has always been considered a possibility, but the preliminary U.S. assessment raises many more questions. The most likely scenario is action by a pilot, although investigators haven’t ruled out a cockpit breach.

Unlike the case of Germanwings 9525—a confirmed incident of pilot suicide in a commercial jet in Europe in 2015—very little is known about the China Eastern pilots or their backgrounds. The government has enforced strict censorship about the event, and Chinese officials have not responded to the news of the U.S. investigation.

China’s April slump. The economic data for China in April looks worse than anticipated: Shanghai posted zero car sales for the month, compared with a usual 60,000 sales. Without a full lockdown, retail in Beijing was down nearly 17 percent. The optimistic scenario is that pent-up demand will cause a rebound, as happened in late 2020.

But the pessimistic scenario is that insecurity over China’s zero-COVID policy, mixed with the likelihood of future outbreaks, will lead to high levels of savings and risk aversion. Add record unemployment, especially among young people, and the picture begins to look dark.

U.S. casino magnate accused of lobbying for Beijing. The U.S. Justice Department has brought a civil suit against U.S. casino magnate Steve Wynn for failure to register as a foreign agent—something officials have asked him to do since 2018. According to the affidavit, Wynn acted as a direct conduit for Sun Lijun, who served as China’s vice minister of public security, to then-U.S. President Donald Trump, specifically attempting to get fugitive Chinese billionaire Guo Wengui deported. (Guo funded another Trump ally, Steve Bannon.)

It’s unclear just why Wynn would sign up to play this role. Two of the casinos he founded are in the gambling hub of Macao, but he sold out of the projects in 2018, just after the period the Justice Department accuses him of lobbying for China.

James Palmer is a deputy editor at Foreign Policy.

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