By Christopher K. Johnson & Scott Kennedy —
After much anticipation, the Chinese Communist Party (CCP) on October 18 opened the 19th Party Congress. The Congress, which will run through October 24, is the culmination of the more-than-year-long preparations for the CCP’s five-yearly leadership reshuffle, where President Xi Jinping looks poised to put his personal stamp on the Politburo and elevate his standing in the leadership beyond his current “core leader” position. The Congress also marks the half-way point for what traditionally would be the decade-long tenure of the sitting leader, though there has been much speculation that Xi may seek to remain around longer. Although less attention grabbing than the horse race for seats at the apex of the CCP hierarchy, the Congress also features an important keynote policy address by Xi Jinping and the approval of amendments to the CCP constitution.
Q1: What are the mechanics of the Party Congress? How does it work?
A1: The CCP, through a series of tightly scripted elections, has carefully selected nearly 2,300 delegates to attend the 19th Party Congress. The delegates range from incumbent top CCP leaders, cabinet ministers, and senior military generals to so-called grassroots representatives from various walks of life, including workers, scientists, farmers, and sports figures. At the opening of the Congress, Xi Jinping, as the serving CCP general secretary, delivered a keynote address known as the political work report. The delegates will then deliberate on the work report and the proposed amendments to the Party constitution over the next several days. At the close of the Congress, the delegates will elect a new Central Committee, composed of roughly 200 full members and 150 alternates. In an important departure from previous midpoint congresses, however, the turnover in the Central Committee is expected to be the largest since the height of Mao Zedong’s Cultural Revolution (1966–1976), owing in no small part to Xi’s withering anticorruption campaign that has ensnared several leaders at that level during Xi’s first five years in power. The day after it is seated, the new Central Committee will hold its first plenum, where it, in turn, will elect the new Politburo and its Standing Committee, China’s top decisionmaking body. The plenum also will elect the new Central Discipline Inspection Commission, the Party’s antigraft watchdog; members of the new CCP Secretariat, the executive arm of the Politburo; and the CCP Central Military Commission, China’s military policy-setting organ.
Q2: What were the key takeaways from Xi Jinping’s political work report?
A2: Politically, the work report strongly signaled the impending codification of a theme that has been a centerpiece of the propaganda narrative swirling around Xi Jinping since he took the helm of the CCP in 2012. In simplest terms, this narrative states that, in the now more than 95-year history of the CCP, there have been three main eras—the liberation movement and the establishment of the People’s Republic of China (PRC) under Mao; the Reform period under Deng Xiaoping; and the current era under Xi Jinping’s stewardship. As if to underscore that last point, the work report revealed a new ideological twist, the “Thought on Socialism with Chinese Characteristics for a New Era.” Xi seems to accomplish several political goals with this new terminology. First, it effectively erases from history his two immediate predecessors, Hu Jintao and Jiang Zemin. Second, by granting him “Thought” (思想) status, it arguably allows him to surpass Deng’s contribution (Deng Xiaoping Theory) by effectively putting him on a par with Mao (Mao Zedong Thought). The only remaining step would be for the new “Thought” to be associated with Xi by name in the Party charter. Although presumably even Xi would blush at doing so in his own work report, authoritative media coverage after Xi’s speech showed several of his colleagues on the current Politburo Standing Committee doing so, strongly suggesting that the amendment to the constitution will reflect an eponymous contribution.
As to the report’s political substance, Xi also put his own stake in the ground by setting a new interim goal for China to “basically realize socialist modernization” by 2035. It is no coincidence that the target falls at the midpoint between China’s already established “twin centenary goals”—becoming a “moderately well-off society” by the time of the CCP’s centenary in 2021, and to “have built a modern socialist country that is strong, prosperous, democratic, culturally advanced, and harmonious” by the PRC’s hundredth birthday in 2049. Many observers will focus on the fact that the new goal is consistent with being achieved during Xi’s lifetime, which may be meant to hint at his intentions about staying on beyond his next term. But it is far too early for Xi himself, to say nothing of external observers, to be making such judgments.
Instead, the new goal seems to offer an intriguing balance between sharpening Xi’s earlier, lofty pronouncements concerning the achievement of the “China Dream” and “The Great Rejuvenation of the Chinese Nation” and giving the leadership more flexibility by injecting greater ambiguity into the specifics. Many internal commentators, and especially those in China’s Marxist theoretical community, previously had criticized Xi’s earlier concepts for lacking theoretical depth or rigor. The 2035 goal undergirds Xi’s branding of a “New Era” by hinting that the conditions in China are changing for the better and suggesting that the CCP’s efforts to achieve its ambitions are gaining momentum. This is highlighted by the fact that the work report describes in much more detail than before what a “moderately well-off society” will look like, and each component is boosted in a comparative sense (“a stronger economy, greater democracy, more advanced science and education,” etc.). At the same time, however, the report did not repeat the target from the last Party Congress of doubling per capita gross domestic product by 2020, nor was there a specific reference to the separate, long-stated goal of doubling the size of the economy by 2021. Both omissions seem geared to giving the leadership more room to slow the economy and deal with the many structural problems that have caused alarm among external economists and commentators, which appears meant to bolster Xi’s claim that his new ideological mantra is a theoretical breakthrough based on a careful study of China’s current conditions.
Q3: What does the report tell us about the thrust of Chinese economic policy going forward?
A3: That said, Xi Jinping was crystal clear in his report that there are no plans for convergence with liberal capitalism. The phrase, “crossing the river by feeling the stones”—a metaphor for moving from plan to market—was nowhere to be found. Instead, China will keep and strengthen its hybrid system that combines both extensive state intervention and markets to achieve a fully modern and globally powerful economy. Although the oft-cited line from the 2013 Third Plenum of the 18th Central Committee, “to let the market play a decisive role in allocating resources,” was cited, so were its counterparts defending the critical position of state-owned enterprises (SOEs) and the need to “better develop the role of government.” Xi boldly put forth China as an alternative model to the Washington consensus and an example “for other countries and nations who want to speed up their development while preserving their independence.”
Central to the Party’s new 2035 goal is a focus on the quality of growth and improving efficiency, not higher growth. To achieve this goal, Xi highlighted five priorities that were entirely consistent with those laid out in the 13th Five-Year Plan released in March 2016: (1) Industrial restructuring that sees the decline of overcapacity in infrastructure-related sectors and a concomitant deleveraging of debt held by companies and financial institutions; (2) Building a world-class innovative economy across a wide range of high-tech sectors; (3) Reducing pollution and improving environmental protection; (4) Building a stronger social safety net, including health care and retirement systems; and (5) Reducing inequality that exists between regions and between urban and rural communities.
Foreign industry is likely to find both positive and negative takeaways from the report. On the upside, Xi committed to providing national treatment for foreign firms and further opening up investment by moving toward a negative-list approach, where market access would be granted except in specifically designated sectors. He particularly highlighted services as an area that would be broadly opened. He also said that China should continue to liberalize interest rates and its exchange rate. Finally, he said China was a defender of the existing international system and would seek to build on it through free-trade agreements and its “One Belt, One Road” Initiative.
That said, on the downside, there were several areas of reform that he did not mention. He did not specify increasing market access for manufacturing and high-tech industries. He made no mention of opening China’s capital account or having China’s currency, the renminbi, play a larger international role. In short, Xi intends for the country’s international economic engagement to occur increasingly on China’s terms, toward industries and at a pace that fits China’s interests, not necessarily those of China’s trading partners.
Mr. Christopher K. Johnson holds the Freeman Chair in China Studies at CSIS. Dr. Scott Kennedy is deputy director of the CSIS Freeman Chair. Follow him on twitter @KennedyCSIS. This piece first appeared as a CSIS Critical Questions here.
Christopher K. Johnson is a senior adviser and holds the Freeman Chair in China Studies at CSIS. Prior to joining CSIS, Mr. Johnson worked as a senior China analyst at the Central Intelligence Agency.