China: Security and risks highlighted in Xi’s opening of Congress

• China’s President Xi Jinping kicked off China’s 20th CPC Congress on Sunday by reading out the Work Report, which outlines China’s policies for the coming years.

• The report had few surprises and as expected there were no signs of an easing of the zero-covid policy, see China Research – Four key questions on the National Congress of the CPC, 13 October.

• Xi Jinping highlighted the current very challenging environment, emphasized security, and need for self-reliance. He repeated that China would work for a peaceful reunification with Taiwan but would not promise to renounce the use of force if necessary.

• The coming week will mostly be meetings behind closed doors before a new Standing Committee (China’s top leadership) is presented on Sunday next week.

As expected there were few new economic policy signals in the new Work Report (the document is not yet published in English but the speech can be watched here). There were no new signals on covid policies but as we wrote in the preview, state media had signalled this already in the run-up to the Congress. The Congress focuses more on the long-term policy path and goals China pursues for the coming decades. China’s goal is to by 2035 be a so-called ‘modern socialist economy’ and by 2050 reach the Chinese Dream of National Rejuvenation that includes “common prosperity for all”, a strong and democratic country and being in harmony with nature. Clearly China’s definition of democracy is not liberal democracy but what they call “whole-process democracy” which they broadly describe as leadership based on meritocracy and goals and solutions based on consultations with the people and institutions.

Xi Jinping stressed that China faces an arduous endeavour with still a long way to go and said China should be mindful of dangers and be prepared for worse case scenarios. He also underlined security, a fighting spirit as well as need to speed up self-reliance. No doubt he is referring to the rising confrontations by the US and risks surrounding Taiwan. China also faces plenty of domestic challenges with demographics being one of them. In the report China commits to taking more steps to raising the birth rate.

Economic policies are described under the umbrella of a “New Development Pattern” which Xi said should be accelerated. It is framed as high-quality development and has been the policy for some years now with minor adjustments along the way. He stressed that economic development is the top priority and foundation for reaching the goal of rejuvenation. The “new development pattern” covers the following elements:

Consolidating and strengthening the state sector while …

…“unswervingly support” the private sector. However, that includes controlling “disorderly expansion of capital” to secure fair competition (as in case of the tech crackdown). At a press conference before the congress, a party spokesman said that “The private sector is an important part of the economic basis for upholding and developing socialism with Chinese characteristics. Entrepreneurs are an important force that the party must rally and rely on in the long term,”. He said the party fully recognised the positive role played by capital, but also stressed the importance of correctly understanding and grasping the character and ways of capital and preventing unregulated expansion

• Market being the decisive factor in allocation of resources.

• Continuing opening up for investments in more areas.

• Strengthening domestic demand as well as its interplay with the external economy (dual circulation). It includes securing domestic supply chains and self-reliance on key technologies, food security and energy security.

• Modernizing the industrial system and strengthening strategic sectors identified in China’s industrial policy blueprints like Made-in-China 2025. The latter is no longer named directly but the content is the same.

• Regional development policies to reduce imbalances.

• Green development such as investing heavily in non-fossil energy sources.

Xi also stressed technology and education as the fundamental pillars for building a modern socialist country. It includes attracting talent in all areas and build a strengthening ecosystem for innovation. This is also not new but has been on China’s agenda for at least a decade. And not without results as China has climbed to a rank of 11 in the Global Innovation Index this year up from #35 ten years ago.

Xi repeated that China’s main contradiction remained being “between unbalanced and inadequate development and the people’s ever growing needs for a better life” and stressed that the goal was to close this gap. It is unchanged from five years ago. Highlighting contradictions is part of the Marxist tradition and Xi many times highlights the Marxist roots underpinning the Communist Party.

On the issue of Taiwan, Xi stressed that China would “insist on striving for the prospect of peaceful reunification with the greatest sincerity and best efforts, but we will never promise to give up the use of force and reserve the option to take all necessary measures”.

“We will not renounce the use of force and will take all necessary measures to stop all separatist movements.” (on Taiwan issue).

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