The Third Revolution: Xi Jinping and the New Chinese State

"It is a revolution. I agree with Elizabeth Economy. But there is a trick here. If you ask any ordinary Chinese person or anyone who interacts with China a lot, they’ll say that many things seem like they’re carrying on as usual. They don’t feel like there’s a revolution or struggle going on. One analogy Steve Tsang and I use in our book is that Xi Jinping has kept the hardware but changed the software. The political, social, economic, and foreign policy changes he has made are profound, they’re systemic, and they are changing China’s direction of travel. But Xi has done it by keeping in place the hardware that the Chinese Communist Party has maintained since the death of Deng Xiaoping, from the 1990s to the present. This means that the basics of the political system are there, but how they work has changed. The Chinese Communist Party still has their national congress once every five years. Many political meetings, titles, and rituals are still there. But he’s added another layer on top of them. Also, how the system works has changed. The most important change is that now power is centralised to Xi, and the previous process of collective deliberation has gone. The previous process of policymaking by decentralisation and experimentation is gone. Things are very centralised, and Xi Jinping emphasises top-level design. He says that the Chinese Communist Party and China are like one body, and we need to move together. Everybody has their role to play, and he is there to direct and orchestrate. The metaphor of unity is strong. What Steve Tsang and I argue is that he’s fashioning the whole of China and the whole party into oneness. He’s forging a strong unity of sameness, of homogeneity. That is what makes all the difference, although, on the surface, the hardware remains the same. The party is still there, and various political meetings still happen, but what they mean and how they work have been changed. Let me qualify that. Xi Jinping’s vision of building the Chinese Communist Party is a merger of Leninism and Maoism. Leninism believes in hierarchical political order, a vertical line of command leading up to the party leadership, and party organisation. The party is not only an ideology; the party is also a structure. What that means is that the party needs to penetrate and lead everything and everyone else in China. To give an example, every organisation in China that has more than three party members must set up a party cell, and that party cell needs to work in a way that is following party regulations. The essence of that, which Xi Jinping draws out, is that the party cell needs to lead. For example, if there is a private company in China that has three party members, there needs to be a Chinese Communist Party structure set up within that private company, and that structure isn’t there only symbolically, as in ‘I’m setting up a structure because I have to’; that party committee or that party cell in that private company needs to be consulted on all major decisions and needs to have veto power. What it means is the party is leading what is nominally a non-party organisation. This happens in state-owned companies, in private companies, in schools, in hospitals, even in so-called civil society organisations (what we call NGOs), and social groups — such as women’s groups, football clubs, etc. You’re really talking about a party penetrating society, and leading society at a structural level. Another example of the party leading is that Xi Jinping has set up a lot of what are called ‘central commissions’ or ‘leading small groups.’ These are very high up in the political hierarchy, and they are there to make final decisions and do policy design. Formerly, those powers often rested with government departments on a de facto basis, but now those powers are held by these leading small groups. Early on in Xi Jinping’s second term, he also had a list of reforms that resulted in a lot of government departments being eaten up by party departments, so they became formally subsumed into the party structure. So that is one part of Leninism—building the party structure. The Chinese Communist Party leader before Xi Jinping who really believed in the party as a structure was Liu Shaoqi (1898-1969), Mao Zedong’s right-hand man. By making the party more Leninist, Xi Jinping is following the Liu Shaoqi playbook. The other aspects of Leninism are very strict, ironclad discipline and ideological conviction. Xi Jinping is instilling discipline in the party by pursuing an endless anti-corruption campaign. Because it’s so endless, we might call it a drive, rather than a campaign. ‘Campaign’ suggests it’s time-limited. If you look closely at the campaign, it is not so much about anti-corruption in the traditional sense—of money changing hands unlawfully or selling of offices. Money is a part of it, but the main goal is rectification. Rectification is another Leninist term, and it means purging the party of impurities. Xi uses the anti-corruption drive to enforce loyalty to him. Officials are being checked on whether they are loyal to Xi Jinping. There are a lot of inspections going on, including unannounced ones, where Xi will send in people who are not from that province or from that department. Inspectors from elsewhere will come into the inspection unit unannounced and they’ll call on people, look at documents, and check how faithfully they are implementing Xi Jinping’s policies. If they are not, that’s disloyalty, and they will be charged with a political crime. What’s so disturbing about it is that the whole anti-corruption or rectification campaign is taking place outside China’s legal system. It’s used to enforce Xi Jinping’s power. In Xi’s first two terms, the anti-corruption campaign left people who are his allies completely untouched, while resulting in rival political factions disappearing—their key leaders are gone, and their budget slashed. It’s very politically oriented and helps Xi Jinping to consolidate power massively. Xi has also indicated many times that anti-corruption and rectification must never end. Some might wonder, ‘After such an aggressive effort, is the party still so dirty that you need to push so hard?’ But it’s not that you’re clean or not clean. It’s about ensuring political loyalty. That’s an ongoing process. It shows Xi’s sense of insecurity despite all the honorific titles and real power that he has in his hands. Ideological conviction is another feature of Leninism. Hence the relevance of Xi Jinping Thought. Socialism as it is seems almost outdated: no one in China knows what it is; no one believes in it. You need a reboot to give people faith that there is one central idea gelling us together to make us one people. Xi Jinping Thought is supposed to do that. That’s a really good question. Xi Jinping himself has said the most important characteristic of socialism in China is that the Chinese Communist Party is in charge. He’s almost saying that it’s self-referential. As long as the CCP is front and centre it’s socialist. But it’s more than that. You mentioned the economy. Xi Jinping really believes in state-owned enterprises. Party-controlled, state-owned enterprises should be a lot stronger at an organisational and financial level than private companies. Xi has said many times that state-owned enterprises must be at the forefront of the Chinese economy. He has a vision where the Chinese economy must be made strong, and that does not mean simply growing the economy. GDP growth is far from strength, according to Xi. For the economy to be strong, it needs to be internationally competitive, leading, and strategic in the long term. That means technological innovation: new vehicles, AI, 5G infrastructure—all these new and emerging technologies. He wants to make the economy big and important, something that can make China powerful. It’s an instrument for Chinese power. Significantly, he has said that China’s innovation sector is where state-owned enterprises need to dominate and be front and centre. If you look at the state funds that have been allocated for innovation, most of them have gone to state-owned enterprises and they are very closely carrying out the innovation agenda that Xi Jinping has set out in policy documents. Xi’s vision is a ‘socialist market economy.’ By that, he means that state-owned enterprises must take the leading role, especially in strategic industries and in industries—like technological innovation—that he believes will shape China’s future. Private companies are subsidiary to state enterprises, but they have a role to play because they are much better at earning money and creating jobs, so Xi Jinping wants to harness that. They’re useful, so keep them there. At the same time, the boundaries between private and state-owned enterprises have been blurred under Xi Jinping by a lot of the reforms that he has undertaken, including what I told you earlier about how the party structures inside private companies must lead—he is really big on that. If that really happens (and it is happening), it will mean that the autonomy and scope for a private company to make commercial or any other decisions has been greatly narrowed because the party has a say. “Socialism can save China…Marxism works” Xi Jinping has also launched a crackdown on China’s top technological firms—including both Chinese firms and Western tech firms in China—on anti-monopoly grounds. Those firms were found to have monopolistic practices and were issued with very significant fines. This is a way of using regulatory power to bring private companies under control. The other thing to bring to mind on China’s socialist market economy is the outsized role of the state in planning things and in directing the economy and directing resources. A policy document that was very controversial when it was released in 2015 was called ‘Made in China 2025’. It was a ten-year blueprint on how to make China a global technological leader. When it was released, it got a lot of criticism from the US government and major Western chambers of commerce. They said, ‘This is distorting market practices, because the government is going to heavily subsidise selected industries so that they can effectively out-compete any other firms because they can run so cheaply. This is deeply unfair, and a threat to every other firm in the world who is in those industries.’ Since then, the Chinese government (including Xi Jinping) have reduced their mentions of ‘Made in China 2025’—to the extent that you might not even see them saying this term. Nonetheless, the thinking is still there. That hasn’t changed, and it’s still being pushed. The idea is that the government can pick winners, choose losers, and create a market using state steerage and national industrial policies. You identify the sectors—and even the quotas of what companies produce in each sector—that should dominate the market. It’s very much a legacy of the socialist planning that we saw in early Maoist China, which was adopted from the Soviet Union. Another thing Elizabeth Economy says—which I think is very true—is that Xi Jinping’s centralisation of power, and the growing control over information in China, mean that it is now difficult to assess the degree of real consensus in China over China’s policy direction."