Rollback of Xi Jinping’s Economic Campaign Exposes Cracks in His Power
By Lingling Wei, March 15, 2022, WSJ
Mr. Xi last year rallied the whole government behind his
campaign to clamp down on capitalist forces, from tightening
Beijing’s grip over data accumulated by the private sector to
restricting overseas share listings and shutting off lending
to property firms, in a realignment with socialist principles.
By the end of the year, developers’ sales were plunging more
sharply than during the global financial crisis. Big tech firms,
long a draw for the young and bright in China with their Silicon
Valley vibes, were laying off droves of staffers.
China’s top government body, the State Council, was startled by
the economic assessment, according to people with knowledge of
the council’s economic surveys of major cities.
The leadership had anticipated hits on certain sectors, said an
economic adviser in Beijing, but “the speed of the slowdown was
a surprise.”
A year-end high-level political meeting all but acknowledged that
Mr. Xi’s economic campaign had gone too far.
In recent months, China has scrambled to dial back some of last
year’s efforts, policy announcements and interviews with people
close to decision-making show.
Financial regulators are loosening restrictions on banks to lend
to developers and home buyers. Various government agencies are
affirming support for tech firms. Local officials are shifting
attention away from wealth redistribution to how to prop up businesses.
The course correction, as some officials describe the recent policy
shift, has created openings for other party figures to play a more
visible role in what has long been a solo act.
One of them is Mr. Li, the premier. Long sidelined by Mr. Xi,
Mr. Li could leverage the economic pressure on Mr. Xi to install
more members of his faction in key posts, party insiders said.
They said that even though Mr. Li’s term as premier will soon end,
he is likely to stay on in a different leadership position.
Some party “elders,” or retired leaders who still have a say in
political discourse, have recently spoken up against Mr. Xi’s
desire to break with the established leadership-succession system,
according to the insiders. They include former Premier Zhu Rongji,
an elder statesman known as Boss Zhu in China and an economic
reformer admired by the West. Mr. Zhu, who negotiated China’s
2001 entry into the World Trade Organization, privately has
questioned Mr. Xi’s state-centered policy, the insiders said.
That Mr. Xi’s hold on power would be in any way questioned was
unthinkable just a few months ago, although it is too early to
tell how serious the challenge might be. China has a history of
mobilizing to quickly overcome economic challenges. And previous
powerful leaders Deng and Mao weathered setbacks only to re-establish
firm control.
The Information Office of the State Council, which handles media
inquiries for senior leaders, didn’t respond to questions.
Support for companies
---------------------
Since the beginning of the year, various levels of government
have shifted away from a near-blanket crackdown on private businesses.
The National Development and Reform Commission, China’s top economic- planning agency, led a group of government agencies in reaffirming
support for companies forming the so-called platform economy, such
as Alibaba Group Holding Ltd. , the e-commerce giant co-founded by
billionaire Jack Ma ; conglomerate Tencent Holdings Ltd. ; and search-
engine firm Baidu Inc., which all received stiff regulatory punishments
last year for what authorities called anticompetitive behavior.
The effort, people close to the commission said, reflects a tacit
admission among the leadership that looser controls are needed to
let these companies continue to operate, especially in areas of
digital innovation, while at the same time continuing to limit
tech giants’ foray into financial areas, such as lending.
A buzzword Mr. Xi introduced last year, “common prosperity,” an
aim to distribute wealth more equitably that had made business
owners worried about being forced to hand over their fortunes,
is barely mentioned anymore.
Behind closed doors at a December conference to set the 2022
economic agenda, Mr. Xi even appeared to acknowledge that wealth redistribution is hard to do when growth is slowing. Common
prosperity, he told officials, according to people briefed on
the remarks, was about “making the cake bigger first,” and then
dividing it more equally.
A few months later, Mr. Li mentioned Mr. Xi’s common-prosperity
agenda exactly once when laying out the key economic goals for
2022 in his speech to China’s legislature.
Mr. Xi isn’t done fighting for his economic revamp, and the
pressure on entrepreneurs hasn’t entirely gone away.
At home, stringent requirements on the tech sector’s data and
investments remain in place. To adhere to those rules, Tencent
has been divesting its vast portfolio, including by unloading
shares in a Singaporean internet firm and in a Chinese e-commerce
operator.
For now, the party urges caution on any new and potentially
disruptive policies. Soon after the December meeting, Han Wenxiu,
a senior adviser to Mr. Xi, summed up Beijing’s economic agenda
for this year in an article in a party journal: “All parties must
actively introduce policies that are conducive to economic stability.”
It said policies that would lead to economic contraction should be
introduced “prudently.”
Debate on ‘opening’
------------------
The remarks came as concerns have grown both inside and outside
the party that Beijing is going too far in dialing back Deng’s
“reform and opening.”
Li Yang, a senior member of the Chinese Academy of Social
Sciences, a government think tank, noted in a January article
that the party’s focus on building the economy brought China
40 years of rapid growth. That focus, he wrote, “has been rarely
mentioned in recent years.”
While millions of posts on China’s tightly monitored social media
voice support for Russia since it invaded Ukraine, some are
expressing concerns over Beijing’s foreign-policy shift. One
well-known blogger, Qin Quanyao, in a March 4 post rebuked the
notion of what some nationalist commentators call a “new world
led by China and Russia.”
“China has the unparalleled happiness brought by 40 years of
reform and opening, and the infinite benefits brought by
globalization,” Mr. Qin wrote, adding that the so-called new
global order is “not suitable for China’s national conditions.”
Recently, an article by the late Wu Jianmin, a prominent Chinese
diplomat, recirculated on China’s social media. It highlighted a
decision facing the party leadership after the Sept. 11, 2001,
terrorist attacks in the U.S.: Should Beijing stay quiet or voice
support for the U.S.?
Then-leader Jiang Zemin, who watched the terrorist attacks unfold
on TV, quickly convened a meeting of the top leadership. Five hours
after the attacks, he spoke to President George W. Bush, condemning
them and expressing deep condolences to the U.S. government and
people. That decision, Mr. Wu argued in the article, helped bring
U.S.-China relations to a new level and won China years of development.
Beijing hasn’t condemned Russia’s war in Ukraine and has refrained
from using the term “invasion.”
Mr. Xi has stepped away from the collective decision-making model
his predecessors have followed since the Deng era and made a
challenge of the U.S. a centerpiece of his policies. Anyone in
the party questioning that mission would risk being called a
traitor, as it touches on issues Beijing considers “core.”
It is relatively safer for Mr. Xi’s fellow leaders to express
concern around economic decisions, because they hinge less on
ideology. In addition, a healthy economy is key to the party’s
claim to legitimacy.
“The economy is one area where local officials can say, ‘I’m
politically loyal and I support you, but some of the policies
haven’t been going very well,’ ” says Joseph Fewsmith, a longtime observer of China’s elite politics at Boston University.
https://www.wsj.com/articles/rollback-of-xi-jinpings-economic-campaign-exposes-cracks-in-his-power-11647354449
--- SoupGate-Win32 v1.05
* Origin: fsxNet Usenet Gateway (21:1/5)