In four decades, China has been transformed from an inward-looking, agrarian society into the world’s second largest economy and an emerging superpower, flexing its muscles on the international stage.
Early indications are that Xi will focus on employment growth and military modernization in his speech. While celebrating China’s remarkable economic advance, Xi will also be aware of the headwinds facing the Chinese economy, including a bitter trade dispute with the United States, mounting public sector debt and sluggish economic data.
In November, output from China’s factory gates was well below expectations and the all-important retail sector had its worst month since May 2003.
Late supreme leader Deng Xiaoping was the architect of the economic reforms which paved the way for China’s rise, but Xi has put his imprint firmly on the economy during his six years in power. In public, Xi will be keen to show continuity with the reform era kick-started by Deng, but in reality the two leaders have profoundly different styles.
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Deng introduced free market reforms as he proclaimed: “To get rich is glorious.” For Xi, the reassertion of state control of the economy, with the Communist Party and his leadership at the core, is the focus of his “China Dream.”
Xi has made regular commitments to economic liberalization but key figures within the Communist Party elite, eager to shore up support for the government should the economy slow significantly, will want him to pick up the pace.
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There are calls for China to lessen centralized state control of the economy by trimming industrial subsidies, creating level playing
fields for overseas firms and cracking down on intellectual property theft and technology transfer.
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China currently ranks a lowly 59th out of the 62 countries evaluated by the Organization for Economic Cooperation and Development (OECD).
Reforms would help defuse trade tensions with the United States. Xi struck a deal with US President Donald Trump on the sidelines of the Group of 20 summit in Argentina in early December, but the ceasefire could be under threat since the arrest of Meng Wanzhou, chief executive of the tech giant Huawei, in Canada.
She was detained at the request of American authorities who are seeking her extradition over alleged breaches of sanctions against Iran. China has responded with the arrest of two Canadian citizens, escalating tensions.
The nationalistic tabloid Global Times, which comes from the same house that publishes the official People’s Daily, has struck a hawkishtone, saying Beijing needed to “meticulously select counter-targets” to countries threatening China’s interests learn their lesson.
“No matter how difficult the situation is, sincere opening-up is not contradictory to a reasonable defense of China’s interests,” it said.
While the combative voices are there, it seems likely that many entrepreneurs, government advisers and strategists will be hoping Xi takes a less strident tone when he greets the cadres in the Great Hall of the People.
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