Local residents watch the live broadcast of President Xi Jinping's speech to celebrate the 40th anniversary of the country's reform policy. Photo: AFP
Local residents watch the live broadcast of President Xi Jinping's speech to celebrate the 40th anniversary of the country's reform policy. Photo: AFP

They came, they saw and they left comforted by the power of the Communist Party. Polite applause punctuated the copiously choreographed Xi Jinping show to celebrate China’s rise to economic superpower status.

But the rich rhetoric was tempered with a sharp reminder to the West that the road ahead will be paved with CCP slogans.

Naturally, there were the usual pledges by President Xi to continue the “reforms” and “opening up” policies initiated under late Paramount Leader Deng Xiaoping in 1978. After all, this was the 40th anniversary.

With the Party elite hanging on every word of his keynote speech in the grandiose Great Hall of the People, he reiterated that Beijing will not deviate from its one-party system or bow to pressure from the country’s main trading partners.

Political reform is not an option while economic reform will proceed with “socialism characteristics,” Xi pointed out.

“The great banner of socialism has always been flying high over the Chinese land.

“The leadership of the Communist Party of China is the most essential feature of socialism with Chinese characteristics and the greatest advantage of the socialist system with Chinese characteristics.

“No one is in a position to dictate to the Chinese people what should or should not be done. We must resolutely reform what should and can be changed, we must resolutely not reform what shouldn’t and can’t be changed.”

While he did not directly refer to the United States and the fragile trade war truce, the implication was there.

Foreign competition

His remarks will also resonate with the European Union.

The EU has constantly complained about “promise fatigue” when it comes to the pace of further opening up the world’s second-largest economy to foreign competition.

“Xi is talking about the need for a strong government, big and powerful state-owned enterprises and large-scale investment,” Zhang Lifan, a political commentator and an outspoken critic of Beijing, said. “It seems his thinking on this has not changed.”

During a speech lasting nearly 90 minutes, Xi highlighted the role of the “state economy” while calling for increased development of the “private sector.”

But there was nothing new to ease growing concerns about the country’s centralized model with the Communist Party at the heart of “everything.”

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Indeed, this approach of heavy government-backed subsidies to sprawling state-owned enterprises, and the administration’s perceived involvement in China’s new wave of tech companies, simply acted as a catalyst to the bruising trade conflict with the US.

Add alleged intellectual property violations and cyber theft, and you have a toxic mix which has resulted in the stand-off between Washington and Beijing.

“Despite promises of the importance of the speech, very little new was announced, particularly given its similarity to parts of Xi’s speech at the Politburo meeting a few days prior,” Jonas Short, the head of the Beijing office of brokerage Everbright Sun Hung Kai, told Reuters.

It also failed to address a slowdown in growth which will be the main talking point at the Central Economic Work Conference in Beijing during the next few days.

Last week, a myriad of data released by the National Bureau of Statistics highlighted the problems facing Xi’s administration as manufacturing activity declines and consumer spending shrinks.

Weakening growth

Tax cuts have already been penciled in for middle-class shoppers hit by stagnating wages and rising prices.    

To underlined the depth of weakening growth, new car sales have stalled while statistics reveal the property market is cooling after being squeezed by tighter credit restrictions.

In part, these are byproducts of the trade conflict. But they are also symptoms of government policy to realign the overall economy.

Caught in the middle has been the private sector with small- and medium-sized companies struggling to survive amid mixed signals from Beijing.   

“What is the fundamental problem? Fear of policy uncertainty, fear that the government is not trustworthy?” Xiang Songzuo, an economist at Renmin University in Beijing, told a forum at the weekend.

On Monday, the People’s Bank of China released a statement stressing that it would step up “support for private and smaller companies,” making it easier for them to access credit.

Indeed, this fits into the Politburo’s key goals for 2019, including pressing ahead with “advanced technology manufacturing,” containing “financial risk” and “shaping a strong domestic market.”

None of those policy moves were mentioned on Tuesday by Xi. But they look certain to be included in next year’s plan following the Central Economic Work Conference along with further commitments to “open up the broader economy.”

“China cannot develop itself in isolation of the world but the world also needs China for global prosperity,” Xi said.

As long as it features “socialism with Chinese characteristics.”

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