By Leo Timm
The Chinese Communist Party’s 19th Central Committee has concluded its fifth plenary session, focused on economic policy. State media released an official report summarizing the main points of the meeting, which ran from Oct. 26 to Oct. 29
The Central Committee talked about goals for the 14th Five-Year Plan, which will run from 2021 to 2025. They also laid out an ambitious but vague vision for the year 2035, by which time the Communist Party intends to have China achieve “socialist modernization.”
One aspect of the Communist Party’s goal is the new “dual circulation strategy,” which aims to shift the Chinese economy away from being the world’s factory by focusing on high-end production, similar to Japan or Germany. The strategy derives its name from the concept of bolstering “domestic circulation” by supporting it with “international circulation.”
Chinese authorities haven’t revealed much about how “dual circulation” is actually supposed to work. The Communist Party has been announcing plans to strengthen high-end production for years. It recently began a new drive to catch up with the West and Taiwan in semiconductor technology, a critical field where China lags behind significantly. And before that, there was “Made in China 2025,” the plan released in 2015 to have the country dominate the world’s tech industry within 10 years.
But developing advanced computer chips is an extremely difficult process, requiring lots of innovation, experimentation, and competition. China’s endemic corruption and lack of strong protection for intellectual property rights often punishes honest work, while encouraging people to profit through underhanded means. This means that while China produces much of the world’s smartphones, computers, and other electronics, critical components in those devices have to be imported from countries like Taiwan and the United States.
And with democratic countries around the world imposing export restrictions on China and Chinese companies and clamping down on its espionage, it’s becoming even more challenging for Beijing to realize its goal of focusing on “high-end production.” Also, China is losing its advantage as the “world’s factory” since emerging economies in South Asia offer even lower production costs for basic goods.
‘Reform’ before repression
However, “dual circulation” may not necessarily be intended to actually solve China’s lack of competitiveness. Some experts believe it could be a way for the Communist Party to slowly close the Chinese economy off from the rest of the world, while tightening the Party’s control over Chinese society. For example, in September the CCP released a plan to better coordinate private businesses with the Party’s directives.
The U.S.-China trade war, the economic shocks caused by the coronavirus pandemic, and structural problems in the Chinese economy are all eroding the growth that the country experienced since the late 1970s. And China is still relatively poor. Of China’s 1.4 billion people, 900 million make less than 2,000 yuan ($300 dollars) a month, barely enough to pay rent in a mid-sized Chinese city.
None of this is good for Xi Jinping or the Communist Party, which justifies its rule over the Chinese people as being necessary for their well-being and prosperity. Recent reports citing insiders in the CCP say that the Party has adopted a strategy of increasing political control within China, while putting on a more cooperative face for the rest of the world, so as to tone down foreign pressure and give the CCP breathing room.
In addition to the “reforms” touted around and during the Fifth Plenum, extremely low interest rates in Western countries and China’s apparent recovery from the coronavirus pandemic have helped cast the country as a good destination for investment. In recent months, major U.S. investment indexes have included nearly $1 trillion in Chinese assets.
But as the economic situation in China deteriorates, the CCP is likely to close up the country in a bid to shore up its control, parting foreign investors from their money.
A new Mao – or not
In the wake of the Fifth Plenum, observers were quick to note the use of a unique title — “the Party’s core navigator and pilot of the helm” — in reference to Xi Jinping.
This quickly led to speculation that the Central Committee had bestowed upon Xi the title “helmsman,” an epithet strongly associated with founding communist Chinese leader Mao Zedong.
In keeping with such speculation, the New York Times penned an article with the headline “As the West Stumbles, ‘Helmsman’ Xi Pushes an Ambitious Plan for China,” which takes an adulatory stance on the “reforms” brought up during the Fifth Plenum
However, the phrase “helmsman” does not appear in the 6,000-word communiqué from the Fifth plenum, while the term “pilot of the helm,” only shows up once. According to experts, it has not been used by the Chinese state media.
“There is a clear difference in semantics, and one is not the other in the original Chinese,” a Nov. 5 newsletter by the SinoInsider think tank reads.
“Xi Jinping has flirted with the ‘helmsman’ title before, but not during the Fifth Plenum. During the close of the 2018 Two Sessions, National People’s Congress chairman and Politburo Standing Committee member Li Zhanshu hailed Xi as ‘core of the Party, commander of the military, leader of the people, helmsman of a socialist country with Chinese characteristics in the new era, and the people’s guide,’” SinoInsider notes.
According to the analysts, this was probably Li’s way of getting into Xi’s good graces by legitimizing the latter’s leadership position at a time when the CCP abolished term limits for the Chinese state chairmanship.
But SinoInsider doesn’t think the use of new titles is a good measure of Xi’s actual power. Rather they are used because his authority and prestige are insufficient to command loyalty from many CCP officials.
It is telling, SinoInsider notes, that Xi opts not to use the same titles as Mao, only similar ones.
“Xi’s ‘borrowing’ of titles associated with Mao is a sign of weakness, not strength. If Xi was truly all-powerful, he would not have to engage in rhetorical phrasing and would just assume Mao’s titles. The fact that Xi has not outright claimed Mao’s titles for himself points to the presence of substantial resistance to his rule in the regime.”