Genesis of a Pivotal Decade

Abstract

As Xi Jinping took the reins of the Communist Party of China (CPC) as its General Secretary at the 18th Party Congress in November 2012, he made it clear he would take the People’s Republic of China to a new stage of development—one of deepening reform. This was not just about rebalancing the economy but also about substantially improving governance and enhancing the role China would play in the world. Xi’s accession to power at the 18th Congress marked the turning of a new chapter in the era of post-Mao reforms.

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As Xi Jinping took the reins of the Communist Party of China (CPC) as its General Secretary at the 18th Party Congress in November 2012, he made it clear he would take the People’s Republic of China to a new stage of development—one of deepening reform. This was not just about rebalancing the economy but also about substantially improving governance and enhancing the role China would play in the world. Xi’s accession to power at the 18th Congress marked the turning of a new chapter in the era of post-Mao reforms.

The decade under Xi’s leadership, from 2012 to 2022, is going to be a pivotal one as he is determined to lead China towards national rejuvenation at a time when sustaining a fast rate of growth is becoming increasingly challenging. China’s reforms have reached a stage where a crucial decision has to be made. Just prior to Xi taking over in 2012, when all Chinese leaders were reformers, it was not clear where that reform was heading or what the next stage would look like. China could stay the course or embark on an ambitious process of rebalancing the economy, with all the potential benefits and risks this would entail. As top leader Xi is not happy to rest on his laurels or muddle through. He is determined to use his decade in power to leave his mark.

As China steps into the second decade of the 21st century, it has already greatly enhanced its overall national strength. It is the second ranking power in the world by this measure or, for that matter, by economic prowess. It has become the top trading country and the fastest growing major industrial economy. But the need to rebalance the economy, after the benefits of the established model had been nearly exhausted in the decade under Hu Jintao, meant fresh impetus to sustain the economic miracle would need to be found. Full of confidence and determined to face this challenge squarely, Xi takes to heart an axiom of one of the great Chinese classics: ‘Great achievements cannot be attained without ambition; success is impossible without hard work’.¹ Xi thus promptly put forth the concept of ‘the China Dream’ to encapsulate the ambitions he had for the country, and has since then been driving the Party hard to pursue them. There is no doubt that China faces a complex and difficult decade during which changes and challenges, both domestic and global, will be daunting. But Xi is committed to lead a rapidly rising and confident China to overcome them.²

By the end of the decade of his presidency, Xi intends to turn the rhetoric of the China Dream into reality. More specifically this means converting the country into a moderately prosperous society, giving the amazingly rapid economic growth a new lease of life, and preparing it to transform itself from a regional power into a superpower, or at least a leading global power. The domestic and external goals are intertwined, and reaching them will have profound implications, both for the country and for the world. The prospect of the Xi transformation is therefore a matter of great significance and is the central focus of this book. How it shapes China’s approach to dealing with the rest of the world is the subject of Chap. 12 by Honghua Men.

Opportunities and Challenges

China is in the midst of a great transformation. It has already changed from being a regional power to a global power and is on a trajectory to become a superpower. As it does so, its global interests and capabilities are developing fast.³ The rise or, depending on one’s perspective, re-emergence of China and the changes this brings is increasingly becoming a subject of great interest in the world (see Chap. 10 by Xi Xiao). Its rise from being one of the major regional powers to one of the leading global powers is making other great powers readjust strategically. This gives rise to risks and opportunities and makes the international situation more complex and complicated (see Chap. 11 by Christopher Hughes).

Under Xi, China is making the most of the capacities and progress it made in the last three decades of reform to seek new opportunities for further development and advancement. The steady improvement in the living conditions of its citizens and landmark achievements, such as becoming the second largest economy in the world, have helped the Chinese leadership to refine its objectives. What Xi’s administration aims to achieve by 2022 is to double the size of the gross domestic product (GDP) both nationally and on a per capita basis, whether in the urban centres or in the rural regions. This is what becoming a moderately prosperous society is intended to mean. The Party plans to build a strong national consensus around its commitment to make the China Dream a reality, and to use this process to galvanize everyone to join the efforts to build a rich, powerful, socialist-democratic, civil, and harmonious country. This approach is meant to shape the development strategy for the next three decades (see Chap. 8 by Tianyong Zhou).

At the same time, Xi seeks to improve China’s relations with the great powers and its neighbours. China is already the largest trading partner of nearly 130 countries and plans to build on this to promote mutually beneficial collaboration. The setback to economic advancement in the world brought about by the global financial crisis has been seized on by China as an opportunity to leave its mark. Its commitment to sustained growth has prevented the global economy from slipping further and led to it expanding its investment and interests far and wide. Since the global financial crisis, China is contributing to improvement in infrastructure and industrial capacity, not only domestically but also elsewhere through its outward investment. In its efforts to reach out, China is creating new opportunities and challenges for others.

The environment in which China needs to achieve its ambitions is tough and testing. The successful reforms of the previous three decades have also produced deep economic and societal contradictions. This is recognized by Xi:

In development, China faces a series of sharp contradictions and challenges, which means there are plenty of problems and difficulties in the way forward. They include the lack of balance, co-ordination and sustainability in development, inadequate capacity in innovation, irrational industrial structure, the lack of clarity and precision on how to develop the country, wide disparity in development and income between the cities and rural regions, and the increase in social contradictions … To solve these problems the key lies in deepening reform.⁴

Since the 18th Party Congress, China has embarked on the journey to rebalance the economy and seek a ‘new normal’ for sustainable growth and development. How to do so is the crux of the matter (see Chap. 6 by Baojiang Han and Shiping Qi).

The wider international and strategic condition is even more complex. There is a gap between China’s capacity to fulfil its wish to take on more international responsibilities and what the wider international community expects of it. This has given rise to suspicion about its intentions. The rise of ‘the China threat’ narrative and the contradicting demand that China should be ‘a responsible stakeholder’ has made the task more daunting. As the advanced countries led by the United States of America (USA) seek to tighten rules and conventions in the international community to tame a rising China, China’s neighbours also become concerned. They have consequently heightened cooperation with the USA. In other words, the more China develops rapidly, the more others suspect and worry about its intentions, and their responses in turn pose extra challenges and difficulties for China (see Chap. 10 by Xiao, Chap. 11 by Hughes, and Chap. 12 by Men).

Putting the domestic and external challenges and opportunities together, the Chinese Government still sees scope to seize the opportunities despite the difficult environment. As the celebrated poet Su Dongpo of the Song Dynasty observed: ‘not letting something that lands on your hand slip away is good timing; not letting someone who passes by go unutilized is seizing the moment’.⁵ Under Xi, China is taking a proactive approach, looking carefully at the domestic and international environment to make the most of the opportunities and to confront the challenges as they arise. This means staying true to the bottom line and focusing on planning at the top level, as it presses on with deepening reform across the board. This spirit was summed up by Xi in a speech delivered at the Institute for International Relations at Moscow on 23 March 2013: ‘we must march in sync with progress brought about by the age we live in, which means that in the 21st century we must not retain a mind-set of the past—mentally stay in the era of colonial expansion, think the thoughts of the Cold War period or retain the zero-sum mentality’.⁶

Strategic Framework for Comprehensively Deepening Reform

Xi has advocated the upholding of the bottom line and high level planning from when he came to power. As members of the Politburo Standing Committee of the 18th Congress attended ‘The Road to National Revival’ exhibition in November 2012, Xi declared a commitment to implementing the China Dream. He said: ‘the China dream is about turning national revival, the greatest aspiration of the Chinese people in the modern era, into a reality’.⁷ In his conception, ‘the goal of making China into a moderately prosperous society will be met by the centenary year of the CPC [2021]. The objective of transforming it into a rich, powerful, democratic, civil and harmonious modern socialist country will be met by the centenary year of the People’s Republic of China (PRC) [2049]. The China dream will be turned into reality’.⁸ While the Chinese leadership takes both a very long and a shorter view of strategic planning, its policies are in fact guided by the latter. This was clarified by Xi in ‘the decision of the CPC central leadership on comprehensively deepening reform’, in which he said ‘the missions of the reform should be implemented by 2020’. This means the most important goal is that of making China into a moderately prosperous society by 2021. As Xi takes charge he is confident of the guiding principles behind reform, of the direction of reform, and of the strength of the political system (see Chap. 2 by Steve Tsang). He is also keen to make the most of China’s cultural inheritance (see Chap. 9 by Yingchun Sun). Xi sees Communism and Chinese civilization as complementary, and the blending of them a great asset for national revival.

Based on the above guiding principles, the Chinese leadership is seriously pressing forward with further reform to strengthen the political system and enhance governance capacity (see Chap. 2). In November 2013, the Party held the Third Plenum of its 18th Congress and passed ‘the decision of the CPC central leadership on comprehensively deepening reform’. What is striking about this document is the commitment to go beyond economic reform. Based on the needs identified at the 18th Party Congress, it outlines an overall plan for the first half of the 21st century, focusing in particular upon the coming decade. This involves a ‘five combined into one’ approach to deepen reform comprehensively, consisting of political, economic, social, cultural, and environmental dimensions.⁹ In accordance with ‘the decision of the CPC central leadership on comprehensively deepening reform’, China will use economic development as the focal point to promote socialist economic construction, political development, cultural enhancement, social construction, and environmental advancement. The leadership should deepen reform and opening up, push forward scientific development, and unrelentingly build up the material foundation for implementing the China Dream. According to Xi Jinping, ‘the overall goal of the Third Plenum in deepening reform was to prefect the system of socialism with Chinese characteristics’ and improve the governing system and governing capacity through modernization’.¹⁰ The commitment to realizing this approach was reinforced at the Fourth Plenum of the 18th Congress, held in October 2014. This plenum focused on the promotion of rule by law. It issued an action plan for legal reform under which ‘building a socialist legal system with Chinese characteristics and constructing a socialist country with rule by law’ became the overall goal (see Chap. 3 by Lifeng Wang). This commitment to deepening reform and constructing a country governed by law is meant to deliver long term stability and good order, as well as laying the foundation for another ‘thirty years of glorious development’.¹¹

The Chinese Government now takes a proactive approach in international affairs, particularly over global economic governance and improving the international order. As China continues to rise it is taking on more of a leadership role—the founding of the Asian Infrastructure and Investment Bank being an example. According to Wang Yizhou, ‘the raising of the curtain for domestic reforms has led to not only progressive changes within China but also a transformation of how China manages its foreign relations’.¹² Indeed, Chinese leaders have come up with new ideas that are being incorporated into the thinking of China’s foreign policy establishment.

China under Xi appears more assertive to the outside world. But, as far as the government is concerned, it still adheres to a peaceful development strategy, modified by an open commitment to take a very robust stance over the territorial integrity of the country and uphold the right for the Party to decide what is best for China. When Xi was speaking to colleagues of the Politburo in January 2013, he said:

We must steadfastly take the peaceful development road, but this does not mean we do not protect our legitimate rights and definitely not scarifying our core national interest. Any foreign power that thinks it can get China to do a deal over its core national interest is delusional. It should not think China will ever compromise on sovereignty, national security and development rights.¹³

The Chinese leadership is aware of the discomfort many other countries feel about China’s rise. To reassure them it promotes the notion that all can be winners. It also puts emphasis on mutually beneficial international collaboration so that it can play greater roles in world affairs that it can comfortably perform. This is what is behind its policy to promote mutual interest, shared responsibilities, and a shared fate in international affairs (see Chap. 12). This approach manifests itself in the advocating of a new kind of great power relationship, ‘the maritime silk road’ and ‘the silk road economic belt’, now popularized as the ‘one belt one road’ strategy. However they are received by the outside world, they are policies designed to ensure both China and its partners benefit from its assertiveness and developing strategic partnerships among them.

The Chinese encapsulate their approach in a concept which they call ‘the bottom line thinking’. What this means is that they start off by thinking about the worst case scenario but strive to get the best possible results in order to ensure they are prepared for all contingencies and hold the initiative in their hands. The Chinese Government works on the premise that the coming decade will be trying and hazardous for its reform programme but it is committed to confront the challenges squarely, hold tight to its bottom line, and keep the initiative.¹⁴

Five Strategic Measures for Deepening Reform

Strengthening Governance and Anti-corruption

The incorporation of a commitment to strengthen political institutions, particularly the party machinery, and enhance their efficacy into Xi’s approach to deepening reform was made at the 18th Party Congress, as soon as Xi took on the leadership of the CPC (see Chap. 2). The blueprint was issued at the Third Plenum (2013), which outlined six major areas for enhancement, namely economics, politics, culture, society, the environment, and national security. In line with this approach the State Security Council was created to complement the state security apparatus, coordinate the national security strategy, and protect state security. The Leading Small Group for Comprehensively Deepening Reform was likewise formed to take charge of the overall design, coordination, promotion, and implementation of the reforms. Since the Fourth Plenum (2014) the objective is to build and strengthen the institution for ‘governing the country according to the constitution’ so that rule by law will prevail. This strengthening of the legal and judicial framework also implies a commitment to build what the Party sees as a harmonious relationship among the ethnic groups in China (see Chap. 5 by Lei Zhao). Since the 18th Party Congress, the anti-corruption campaign has been put in place and widened and deepened to a level never seen in the reform era to create a better political environment that will enhance governance capacity and efficacy.

Building the New Normal and Maintaining Social Stability

The concept of the new normal was put forward by Xi to guide China in striking a balance between promoting growth and environmental protection (see Chap. 7 by Jing Zhang), so that the government can improve people’s livelihood and maintain stability and good order in the country. This strategic approach to rebalance the economy requires a lowering of the growth rate to between 6.9 and 7.6 % in the rest of the decade. In Xi’s conception, ‘in the foreseeable future, China is still in an upward trajectory … and through hard work its economy can still maintain a relatively high level of growth’.¹⁵ More specifically, what Xi has in mind is:

China’s growth is slowing down and it is the result of government direction. To achieve the objective of doubling the 2010 per capita GDP by 2020, a growth rate of 7 % will suffice. This is based on our calculation as we drew up the medium and long term plans. We recognize that in order to address in a fundamental way the basic issues for long term economic development, we must resolutely implement structural reform, though this would require reducing the growth rate. In all matters we must take into account both the long and the short term requirements as we plan carefully and reflect deeply. Methods that maximize short-term returns at the expense of long-term gains are not sustainable.¹⁶

What the new normal means is that the Chinese leadership will steer the economy to grow at medium to high speed, with a better balance and new impetus for growth. It also implies structural reforms are to be implemented to place greater emphasis on sustainability and quality of growth, which requires scope being given to allow the market to play a decisive role so that resources are used effectively to support the government’s objectives (see Chap. 3).¹⁷ In parallel to this adjustment, the Chinese Government plans to use the law as the basic instrument to govern the country and society. It sees social justice as a core value, and its efforts to provide a safe and ‘harmonious’ environment for ordinary people to live and work as crucial for its policy of social governance and stability (see Chap. 6).

Uphold Core Values and Promote a Revival of the Chinese Culture

The Chinese leadership under Xi values soft power and seeks to build it by reviving elements of traditional Chinese culture and blending this with the country’s socialist core values. At a Politburo study meeting in December 2013, Xi made this clear. As he sees it, to achieve the goals encapsulated in ‘the two centenaries’—that of the founding of the CPC and of the PRC—or the implementation of the China Dream, China must make the most of the beauty and appeal of its civilization to enhance its soft power.¹⁸ To Xi, a country’s core values are what make soft power, and the way to promote and project socialist core values is to dress it in the civilization of China, which he believes is in the DNA of its people—something that determines how they think and behave (see Chap. 9). Thus, for China to transform its core values into soft power, it must project the Chinese culture as full of life and impact, one that strives to build a better future by drawing on the great qualities from a magnificent civilization.

Enhance the National Security System Through New Thinking and Institution Building

From the perspective of the Chinese leadership the complexity and challenges that China needs to face as it rises are increasing substantially. In a globalized world that is constantly evolving, the leadership finds it necessary and useful to set up a new state-level overarching body to ensure China has the capacity to enhance its national security strategy and to plan and prepare to meet whatever challenges it may face (see Chap. 10). This underpinned the creation of the State Security Council at the Third Plenum (2013), which was tasked with making and coordinating policies that affect the security of the state, as well as enhancing its capacity to respond effectively to unexpected challenges. The areas that fall within its remit include territorial integrity, maritime security, foreign affairs, military matters, resource security, the economy, and people’s livelihood—the last two imply that social stability is within its remit as well. At the inaugural meeting of the State Security Council, held on 15 April 2014, Xi pointed out that its mission was to devise an approach to national security with Chinese characteristics. This requires the putting in place of a comprehensive national security strategy that treats the security of the people as its calling. The starting point of this strategy is the security of the state. Economic security is to be treated as a matter of core importance, the protection of which requires maintaining military security, social security, and cultural security.¹⁹ Xi added the importance of building on a sustainable basis a shared Asian security framework that promotes comprehensive cooperation in the region at a meeting of the Conference on Interaction and Confidence Building Measures in Asia, held in Shanghai a week later.²⁰

The ultimate aim of the Chinese national security strategy is to further the security and interests of the state as China marches towards superpower status and seeks to enhance global security. The coming decade is going to be a testing one for it as it advances in this direction. To succeed, the national security strategy devised is intended to meet the following objectives in the remaining period of Xi’s leadership:

• To protect territorial integrity and maritime rights;

• To pre-empt independence movements and promote unification;

• To maintain or create an international environment conducive to China’s policy of peaceful development;

• To defend and enlarge the scope for advancing China’s strategic interests;

• To build up military capabilities to ensure the security of the state.

Advance Strategic Interests by Emphasizing Mutual Benefits

Xi takes a proactive approach to managing relations with the rest of the world. In the first two years as leader he visited 32 countries across Asia, Australia, Africa, Europe, North America, and Latin America. The message he has tried to deliver is China’s commitment to seek cooperation and promote mutually beneficial ties, as well as a willingness to contribute to improving the international order and global governance. As China puts forth various proposals for bilateral relations, regional cooperation, and other developments, it incrementally asserts its right to speak on regional and global matters.

The centrepiece of Xi’s new look diplomacy is the promotion of a ‘new kind of great power relationship’ with the USA. He introduced this concept to the world at the Sunnylands summit with American President Barack Obama in California in June 2013. This was a landmark event as Xi proactively produced a basis for developing a healthy relationship between the two leading powers. The guiding principles he presented were to avoid clashes and confrontation and to promote mutual respect and mutually beneficial relations. He intended his proposal to form the basis for reaching a consensus for forging a new kind of relationship between the two, thus avoiding the Thucydides’ Trap. Scholars and analysts outside of China and the governments of its neighbouring countries do not all share or accept such an interpretation of its policy or Xi’s intentions. Their reservation notwithstanding, the fact that Xi took such an initiative is significant. The relationship between China and the USA is a highly complex one, with competition and beneficial interests interwoven at every level, bilaterally, regionally, and globally. The consequences of this most important bilateral relationship being mismanaged could be dire. In making this démarche at Sunnylands Xi was presenting a formal welcome to the USA to play a positive role in the peace and development of the region, and as an effort to contribute to stability and improvement in Sino-American ties on Chinese terms.²¹

Aware that the rise of China is causing concern around the world, the leadership do try to reassure others that it remains committed to the peaceful development approach. It has reached out to European countries in particular, attempting to improve relations, promote cooperation, and move their relationship to a higher level. It is also deepening its strategic partnership with Russia and actively supports the working of the BRICS (Brazil, Russia, India, China, and South Africa) as a multilateral cooperation organization.

As to China’s neighbours, Xi takes them seriously. Indeed, eastern Asia remains the strategically most important region in the thinking of the government, a reality not changed by the steady transformation of China from being a regional power to a global power. In a working meeting of the Party Central held on 24 October 2013, Xi laid down the guiding principles for managing ties with the region: insist on kindness and building friendships with neighbours, and reassure and enrich them in line with a policy of promoting closeness, sincerity, benefits, and tolerance.²² This was translated in policy terms into a plan to upgrade relations with the Association of Southeast Asian Nations (ASEAN) through the founding of the Asian Infrastructure and Investment Bank and the building of a ‘silk-road economic belt’ and a modern ‘maritime silk road’, so that all will benefit from being part of a ‘coalition of a shared future’. The Chinese Government is also exploring the scope for upgrading its involvement and contribution to the region and its neighbouring countries. It focuses on the forming or upgrading of free trade areas, supporting infrastructural development in South East Asia, and potentially constructing a China–Burma–India economic corridor. Such efforts have been made to reduce suspicion and concern of China’s rise among ASEAN countries, and are intended to contribute to the forging of a stable and prosperous order in the region.²³

Contextualization

The decade under Xi Jinping’s leadership is and will be an important and eventful one. The developmental progress China had made by 2012 put it in a place where its leadership had to make strategic decisions as to which direction it should move forward. The developmental approach it had followed after Deng Xiaoping inaugurated the reforms in late 1978 was by then losing steam. The ‘golden decade’ of the Hu Jintao–Wen Jiabao partnership marked the high point of what the old approach could deliver. The prospect of stretching and extending it for another decade was poor. The international environment was changing, the economic landscape was evolving, demographic advantages were being eroding fast, environmental pressures were mounting, public expectations were rising, and the relationships among ethnic groups were becoming testing. The Chinese Government had to take a more dynamic approach or risk such challenges getting out of hand. Whoever succeeded Hu Jintao would have found himself—there was no female successor in sight—presiding over an important and eventful decade.

By the time of the leadership succession at the 18th Congress, whether the established approach to reform could be revitalized by minor tweaking or needed to be substantially overhauled by a bold effort to make major changes was the central question that needed to be addressed. Abandoning China’s chosen developmental path and adopt a Western democratic developmental model was not an option taken seriously by any Chinese policy maker. But the exclusion of this as an option does not make it much easier for the leadership to decide on the strategic direction to follow.

What is defining the direction of change in the Xi decade is not the general condition of the country and the need for change, but the personality and vision of Xi Jinping himself. Whether Xi could have done what Hu Jintao did and try to keep the ship of state on an even keel without rocking it is a moot point. Xi did not consider this an option. From the time he took over the leadership of the CPC, he immediately put his own stamp on the Party and the country, and pushed hard for changes. His chosen approach was to deepen reform—not to change course but to press on way beyond what had previously been attempted in order to revitalize the reforms started under Deng Xiaoping. More specifically it means making full use of the Party as the instrument for deepening reform, for which he promptly started a rectification campaign to rid it of the ineffective and unreliable elements and strengthen its capacity to work through the anti-corruption campaign. This campaign was also launched to rally public support to his cause. Whether Xi will succeed or not, history will tell. What is certain is that Xi has already left his mark in shaping the strategic direction of China’s development, be it in domestic policies or in foreign affairs.