Xi Jinping: The Future of China The 19th Party Congress in Review October 2017 2 The 19th Party Congress in Review Introduction A Snapshot of the Congress th At the close of the 19 Party Xi Jinping is now the most powerful leader since Mao Zedong and the Party Congress on October 25, it was is more firmly than ever at the center of China’s development. confirmed that Xi Jinping will No heir apparent has been appointed into the Politburo Standing remain head of the Communist Committee, breaking with precedent dating back to 1992. Based on age, there are three contenders in the Politburo, but the break with precedent Party of China (“CPC”) and of the adds fuel to speculation that Xi may remain for a third term. country for a second five year Initiatives over the past five years have been driven by Xi Jinping’s Chinese term. The meeting cemented Xi Dream: the rejuvenation of the Chinese nation. A dream that sees the as the most powerful leader in country standing tall on the world stage. This vision and dream will China since Mao Zedong with his continue to drive the next five years. name written into the Party Xi unveiled a new development plan that sets a vision for China in the year Constitution with a reference to 2050 when the People’s Republic of China turns 101. “Xi Jinping Thought on Socialism Expect Xi’s second term to push through bolder reforms. Initiatives taken in the first five year term will continue (e.g. fighting corruption and expanding with Chinese Characteristics for a the Party’s role in the country), but expect the anti-corruption focus to New Era”. No other living leader become ‘reform while fighting corruption and wrongdoing’. Do not expect Western political reform or any reform that undermines the Party’s position. has had his name added to the constitution since Chairman Mao. Xi committed to providing equal treatment to foreign investors and rolling out a negative list nationally to govern investment – unless a sector is in the President Xi’s predecessor, Hu Jintao, sought to rule as list, it is considered open for investment. Yet, expect continued first among equals and his two terms at the top of the contradictions between on-the-ground experiences and central statements Party were defined by consensus driven leadership. Five in the near-term. Sectors deemed sensitive in terms of national security years ago, Xi quickly obtained all key titles and positions. (e.g. technology) or ideology (e.g. content) will remain challenging. Since then he has systematically consolidated power and added titles. A year ago, he was anointed “core” Economic development shifting from rapid growth to “high-quality leader of the Party, signaling that he stood above his development” with quality put first and a priority on performance. To peers. This week’s ascension into the constitution achieve, will require continued reform including changing officials’ KPIs. confirms Xi is now unequivocally above any other person in the country. Challenge Xi, challenge the The reinforced role of the Party, and Xi’s grip on it, will provide domestic foundation of the Party. political stability to drive reform. But, with reform comes change—if we see In addition to confirming Xi Jinping as the head of the limited change, reform is not working. Party, China’s new leadership team was unveiled on October 25 at the end of the First Plenary Session of the Over the next five year period expect the middle class to grow significantly 19th Party Congress. The meeting saw the promotion of and with it disposable income and domestic consumption. five members of the previous Politburo into the seven- person Standing Committee and the appointment of 15 SOE reforms will continue and will play an integral role in the economy. new members to the 25-person Politburo. Mixed-ownership, or the introduction of private capital into SOEs, will be promoted. Expect state capital to also flow into private business. Xi reiterated support for building global Chinese businesses and encouraged Chinese companies to continue going abroad. On the foreign affairs front, expect China to continue to increase its assertiveness as the global diplomat, and to extol the virtues of its own development model. © BRUNSWICK GROUP 2017 3 The 19th Party Congress in Review The First Five Years At the end of November 2012, two weeks after being years and will continue to drive the next five years. appointed at the head of the Party, Xi visited the The first five years was focused on resetting the foundation. It was National Museum in central Beijing to see an about resetting behaviors and expectations. It was about exhibition titled “The Road to Rejuvenation” with the addressing citizens’ demand for “better education, more stable full Politburo Standing Committee. He reflected on jobs, more income, greater social security, better medical and the suffering China had endured since the Opium healthcare, improved housing conditions and a better environment.” War in the 1840s and spoke about the path to making China great again since the founding of the It was about remedying the challenges that had come People’s Republic of China in 1949. He presented from unbridled economic growth. the Chinese Dream: the rejuvenation of the Chinese nation. This drove the anti-corruption campaign that led to the removal of 440 officials at or above the provincial and ministerial ranked levels, This focus on restoring China’s position so it can stand tall on the along with 43 full members and alternate members of the CPC world stage has in many ways driven the actions of the last five Central Committee. © BRUNSWICK GROUP 2017 4 The 19th Party Congress in Review at the center of the nation, Xi is at the center of the Party. His power over the next The Next Five Years five years and beyond is unquestionable. When Xi was named core leader a year ago at the Sixth Plenum, confirming that he stood above his peers, the communiqué also acknowledged the importance of “democratic centralism”, or ensuring that all senior officials have a voice. The latest affirmation of Xi’s position confirms who has the final say. At the start of the 19th Party Congress, Xi Party at the Center of the Nation: Much has been written about the power Jinping delivered a three-and-a-half hour Over the past five years Xi Jinping has that Xi now holds at the center of the Party. opening address with sweeping goals that revitalized the role of the Party and focused Also of importance is that the amendments will define the next five years. For those on reaffirming its license to lead by tackling that have enhanced the current General watching Chinese politics since Xi Jinping “prominent problems that prompt the Secretary of the CPC (currently Xi Jinping) came into office, there will be little surprise strongest public reaction and that threaten will pass to Xi’s eventual successor. in the themes outlined as they build on to erode the very foundation of the Party’s much of the work of the first five years. With Xi at the core, his doctrine enshrined in governance.” He has made the Party the Party Constitution, and his people in Nonetheless, there were important central to China’s future. This was further place across the Politburo and the Central evolutions in thinking, as well as new goals cemented this week. Xi noted that “without Committee, he has full power for the next and commitments that matter for those the leadership of the Party, national five years, and likely beyond – regardless engaging with China. rejuvenation would be just wishful thinking.” whether he stays in office after 2022. Expect the initiatives from the first five year There is now no question over the role of To Reform or Not Reform: term to continue. The commitment to the Party. The Party constitution, for eliminate corruption, for example, was example, was updated to stress the Party’s The first five years have set the foundation inserted into the Party constitution with a absolute leadership over the military, and for a more reform-driven second term. that the chair of the Central Military Expect that the reforms announced in the requirement to ensure that “the fight rd th against corruption keeps going.” Commission (currently Xi Jinping) will have 3 Plenum of the 18 Party Congress in overall responsibility of the military. Even 2013 to now be implemented at a much Some of the key points from this year’s the Party’s presence in foreign invested quicker pace. Do not expect Western gathering are outlined below. companies has increased. Qi Yu, the political reform or any reform that deputy head of the Party’s Central undermines the Party at the center. The New Era: Organization Department, stated during the Xi noted that the country is at a “pivotal China is at a new historic juncture in its Congress that at the end of last year more stage for transforming (the) growth model” development, stated Xi in his opening than 100,000 foreign invested companies and putting in place new growth drivers. address, as he unveiled his evolution of had established Party committees to bring Quality and performance are critical, he Deng Xiaoping’s “Socialism with Chinese together Party members working inside the stated, and supply-side structural reform Characteristics” for the next phase of company, more than double the number at remains a top priority. Xi committed to China’s development – “Xi Jinping Thought the end of 2011 before Xi Jinping came into protecting entrepreneurship, supporting on Socialism with Chinese Characteristics office.