key takeaways

  • reiteration of Party supremacy
  • a Xi-inspired ‘New Era’ to run to 2035
  • rules-based governance framed as ‘socialist modernisation’
  • new-style government–business relations
  • reassurance on ‘openness’ to foreign investment
  • growth-at-all-cost replaced by environmentally and socially ‘balanced development’

master the theme: new era of socialism with major-power characteristics

Under Mao, China stood up (站起来); since the late ‘70s, it has been busy ‘getting rich’ (富起来) (or at least ‘moderately prosperous’); and now in the Xi Jinping-anointed ‘New Era’ of post-reform China it has ‘gained power’ (强起来).

The mission, for now, is to ‘realise socialist modernisation’ by 2035, according to the report Xi delivered to open the 19th Party Congress on 18 October, and setting the tone for the rest of the congress. Constantly reiterated, ‘socialism’ boils down to concentrating power under the Party. A page has been turned on the older sense of redistributive social justice by civil society actors.

The model is set: a thriving private business environment under party-state supremacy; a high-tech, innovative utopia whose people are highly educated both to think creatively and to have unswerving faith in the system; a Party that upholds strict moral discipline, staying ‘fit to rule’; and an assertive international stance that sees China lead and provide solutions for other nations to adopt. Charged with ‘ideological, theoretical, cultural and institutional self-confidence’, this will peak with a lot more of all the good stuff—strength, education, prosperity, democracy, culture, nature, harmony and beauty—in time for the 100th anniversary of the People’s Republic in 2049.

A large part of this is China’s increasing global clout. ‘Ruling as a major power’, flagged as a theme in the lead-up to the congress, is reflected in Xi’s unveiling of ‘Chinese-style major-power foreign affairs’. This promises a new contribution to global peace and development through initiatives like Belt and Road, the Asian Infrastructure Investment Bank and Shanghai Cooperation Organisation.

Xi reaffirmed a shift of focus away from growth-at-all-costs, towards a more equal, sustainable model: dropping the growth target in favour of tougher regulation, and calling for quality and efficiency over quantity. New-era PRC faces fundamentally different challenges from the past, according to Xi—Deng-style ‘development’, which brought unprecedented growth but also unprecedented wealth gaps and environmental degradation, must now be ‘balanced’. This era, which starts with Xi, though beginning in earnest in 2021, is to be guided by Xi Jinping’s new Thought, ‘Socialism with Chinese Characteristics for the New Era’, almost certain to be adopted in the Party charter before the congress wraps up.

Party business

As predicted, Xi struck a largely positive tone, saving ominous words for the last section on Party building and discipline. Rules-based governance is a major theme. The new Leading Small Group for Governance by Law signals a more centralised, institutionalised legal system that better serves Party governance priorities like anti-corruption. A National Supervision Commission, consolidating all national supervisory organs, including the powerful Central Commission for Discipline Inspection, will cover all who exercise public power. A Supervision Law, to be passed next March, will regulate the Commission, replacing secretive Party disciplinary measures with legal detention applicable in society at large.

Mention of ‘a new kind of relationship between politics and business’ foreshadows more party-state control over the private sector. This would continue a recent theme, with the Party having installed cells in private firms, and the state to gain board seats in tech companies.

ecological civilisation

Eco-civ made its entry into the 17th congress report as essential for achieving moderate prosperity. It was given a proper guernsey in the 18th, marking an overall shift to policies, procedures and lifestyles with less environmental impact. It was then enshrined in the Party constitution. This time around, Xi acclaimed China’s commitment to mitigating climate change. China, he noted, is a participant, contributor and leader internationally, a clear snub to American ambivalence towards the Paris agreement. Xi’s speech further underscored the need for harmony between humans and nature. Also getting talked-up is his ‘two-mountains theory’: clear waters and lush mountains are as valuable as those of gold and silver—a signal that development at the expense of the environment will not be tolerated.

people-centred development

Poverty alleviation, mentioned once in the 2012 report, is given its own paragraph, as the 2020 deadline for building a ‘moderately prosperous society’ looms. As basic needs are met, general well-being becomes more important. So does care for the young, old and most vulnerable (all cited in the report)—embodied in a welfare system that sees none fall through the cracks. The key health strategy, Healthy China 2030, made the report, as health is given more policy sway generally. Traditional Chinese medicine, a plank of China’s outward projection, is mentioned for the first time.

reassuring on ‘opening’

Xi sought to reassure that China is still open for business, as more trade partners look to other shores. This included pledges to ease barriers to market access, to ensure all locally registered enterprises are treated equally, and to implement a ‘pre-establishment national treatment plus negative list’ system for foreign investment. Belt and Road, said Xi, would be the focus of ‘two-way’ opening up. Free Trade Zones will have greater autonomy, according to the report, and ‘Free Trade Ports’ will be explored.

‘enshrining sci-tech as the core battle force’

A list of strategic emerging industries is reiterated, that will likely become priorities for development and investment—internet, big data, artificial intelligence, modern logistics—to build a sci-tech powerhouse, a digital economy and a ‘smart society’. Supporting this high-tech regime are improvements in the creation and use of IP, alongside calls for mass innovation and entrepreneurship. This vision is repeated for the armed forces, to be strengthened through science and technology: a ‘smart’ and ‘intelligent’ military ‘embodying sci-tech as the core battle force’ is the goal.

financial concerns

The next step in fiscal reform is to realign central–local revenues with spending responsibilities, according to Xi—a resolve has been evident for some time, with little to show. Xi endorses greater direct financing, indicating an intention to wean the economy off its over-reliance on the banking system (the major source of indirect finance) and flagging an implicit mandate to ensure healthy securities markets.

Mention of ‘a steady push for full capital account convertibility’, noted in the last report, is discarded, highlighting concern about capital outflows and their destabilising effects on the RMB. Further initiatives on top of the existing measures (such as the mainland–Hong Kong stock connects, bond connect, QFII and RQFII) appear unlikely in the medium term.

more of the same for rural rights

The 30-year extension of farmland contract rights approaching expiration suggests radical change to the rural land system is decades away: the state will hold to the status quo, while fiddling at the edges. Indeed, the approach may bolster the current system, in particular by delineating the ‘three rights’ (三权) approach to rural land (ownership, contract and use rights), first mooted in 2016. Farmland contract rights, this implies, will remain as a safety net for rural migrant workers who transfer land use rights and move to cities, encouraging more of the rural population to do so (a process Xi wants to ‘speed up’). An ‘agricultural social service system’ is pledged as well; recent policy documents aim to better include small farming households in upscaled agricultural operations.

in case you missed it…

cp.signals—domestic policy movement
debating North Korea
streamlining sci-tech funding

cp.positions—audit of shifts across policy sectors
economy: civil–military integration, and more…
governance: world class 2.0 list, and more…—monthly roundup
september: run-up to the congress
august: more fall to anti-corruption