Updated: Jan 18
©Xinhua News/Pang Xinglei. Xi Jinping, General-Secretary of the CPC Central Committee, waves to journalists at the Great Hall of the People in Beijing, Oct. 23, 2022
China’s economy during Xi Jinping’s first decade
Xi Jinping received an unprecedented third mandate as General-Secretary of the Chinese Communist Party (CCP) at the end of October 2022. This event has marked a historic moment for the future of the People’s Republic of China (PRC). In this article, we will try to shed light on possible changes in China’s worldwide orientation, especially contemplating the question whether there will be any adjustments in Beijing’s economy-centered era or not.
Since he was first appointed as President of the PRC in 2013, Xi Jinping has gradually reoriented Chinese foreign policy outward, to complement the country’s economic initiatives with more effective diplomatic action. China’s global projection now illustrates one with a more cooperative approach, orienting actions on a new model of international cooperation based on infrastructure, economic development as well as liberal markets.
Throughout his leadership, the Chinese economy’s external projection has steadily increased and became ever more diversified. What made China rise with respect to its international presence was the initiation of the Belt and Road Initiative (BRI) - Xi’s landmark project during his first two terms. This globe-spanning infrastructure project has responded to the real need to enhance the still insufficient infrastructure mechanisms between Europe, Asia and Africa, with potentially positive effects on trade flows and economic development in those regions (Bencivelli and Tonelli, 2020).
While affirming China internationally, the BRI is met not only with praise but also with critique. For instance, Zongyuan (2022) argued that the BRI’s rollout has generated concerns among Western policymakers about Beijing’s growing control over global strategic infrastructure, economic and naval-sea capacity, contributing to these countries’ aversion towards such influence. Conversely, some others perceive the project as beneficial, especially for the most vulnerable countries in rural developing areas.
A decade under Xi Jinping’s administration has seen extraordinary change for the “Red Dragon.” During the course of his ten years as Chairman, Xi’s leadership shaped the Communist party, becoming the guiding figure for the country. Ten years of an administration that confronted rivals and potential enemies, especially from the Western counterparts. Xi Jinping showed himself to be a master in China’s economic expansion and growth, boosting the BRI project to the fullest. Complementary, he aimed at reducing China’s reliance on exports, while increasing domestic consumption. Moreover, the military underwent a modernization process and absolute poverty claimed to be eradicated among all 1.4 billion people (The Guardian, 2022).
Overall, the first outlook showed Xi has managed to merge rapid economic expansion and rising wealth, while investing efforts in the country’s internal security. So far, the military is indeed strong, but more has to be done on the population’s inequality, with the demographic crisis looming ahead. What will the prospective changes look like?
The unprecedented Third Mandate
During the 20th National Congress of the CCP held from 16 to 22 October 2022, China’s newly-confirmed chief presented a detailed report of his leadership in the last two terms. Indeed, he outlined the success of his previous governance while also building upon his vision for the future of the country.
The speech shed light on a wide range of development goals typical of China’s policy agenda. In particular,the administrative and structural reforms in the industrial as well as the enterprise sectors, the market liberalization, and the changes in leadership composition were among others addressed (MERICS, 2022). The unprecedented third term as General-Secretary of the CCP, in fact, brought together the announcement of a whole new brand of men-party composition.
“I wish to thank the whole party sincerely for the trust you have placed in us”, Xi said after his appointment, and promised to “work diligently in the performance of our duties to prove worthy of the great trust of our party and our people”. From his very first speech as the re-elected CCP chairman, the focus of global attention lay on issues facing the future of China.
According to recent figures set out in September, the People's Republic of China is the world’s second largest economy today, with a gross domestic product (GDP) of roughly US$17.7 trillion GDP in 2021 (The Economist, 2022). Arguably, this accomplishment can be attributed to a large extent to Xi Jinping, with a reported Chinese GDP that has more than doubled, growing from RMB 54 to 114 trillion, during his ten years in power. (Wu, 2022).
However, in his report, Xi barely mentioned the words “economy” or “economic development”. Politics enjoyed priority over the economy. In fact, such words were replaced by the commitment toward making China a more secure country.
Few analysts would understand that security and economy are indeed intertwined one with the other. For instance, the more secure a country is internally, the more favorable, and easier, will it be to enhance its economic development. If the opposite occurs, the economy may in fact suffer. In a context where there are ever-increasing challenges to address – from the Russia-Ukraine war, the pandemic with its ups and downs, to new elections worldwide that may cause new political balances and alliances – Xi might have shifted the focus to the struggle for political statements over the economic outcomes (Wu, 2022).
In his speech, the narrative reiterated China’s ambition to exert more influence in setting international rules and standards, rather than focusing on the last years of opening-up policies and engagement with commercial partners across continents. Indeed, the prospect of the new China calls for a return to a protectionist assessment, where national self-reliance and production weigh more than free trade and cooperation abroad. Zong Yuan (2022) has clearly pointed this out, highlighting that China’s attention on “self-reliance in technology” has been repeated five times, the need for “strengthening supply-chain reliability, resilience, and security” three times, and China’s “national security” twenty-six times respectively.
What to expect?
The possible change in China’s focus will have tremendous implications on different issues.
Firstly, the imperative statements on the market. The newly formed administration will probably give way to a new economic model, where the party-state will reshape its own benchmarks by which the proper economic functioning of the country was determined. To prosper, certain previous social, legal, and political requirements of market activities may challenge the one-party dictatorship (Wu, 2022), therefore an abrupt change may occur. An example would be that more liberal market rules will be replaced with a thorough and absolute command of the state-led market.
Secondly, China’s foreign policy positioning and expansion may degrade to some extent, especially considering the contemporary geopolitical landscape. On the one hand, Moscow's war of aggression against Ukraine is highlighting even more China’s controversial global stance, as it is letting the world know the country is not yet ready to take a decisive position either in support or against Russia. On the other hand, the long-standing conflict with the United States over the Taiwan question, in which China keeps claiming rights vis-à-vis the American fine-tuned intervention against any Chinese international norms violation, may cause developments on the global stage to the PRC’s detriment. Similarly the position played by Europe in the United States-China-Russia triangle, a partner that has overall welcomed China as a friend, may be a role that is increasingly difficult for the “old continent” to maintain.
Lastly, the social turmoils spreading across the country are challenging the CPC. The latest waves of protests against Covid-19 lockdowns are a demonstration of the people’s desperation and dissent vis-à-vis the new Chief appointment, and are questioning the way China’s future will be structured.
All in all, the “end” of the economy-centered era does not mean that economic development is no longer key. Hence, China’s economic prospects will increasingly depend more on politics than supply and demand dynamics (Zongyuan,2022). The Future will be determined by the way politics and the economy can coexist together.
The culmination of Xi’s efforts that were clearly reported in his attendance at the October’s Party Congress is the result of a newly economic infused ideology. Steering economic development remains crucial, even though the state’s political and social governance remains focused on modernizing the country, while maintaining a distinct systematic position in the international arena.
We stand ready to observe more pragmatic changes and to analyze what the results of this third term and annexed change will be.
About the Author:
Lucilla De Stefano holds a Double Master’s Degree in Chinese International Relations and Law from the China Foreign Affairs University of Beijing, and LUISS Guido Carli University of Rome. She visited China twice in her life, and lived in Beijing for a year. She is fond of the Belt and Road Initiative dynamics with Europe, which became the topic for her university dissertation. She is now working as an HR Analyst Junior Consultant at IFAD, a United Nations Specialized Agency. You can find her on LinkedIn.
The opinions expressed here are those of the writers and do not represent the views of European Guanxi.
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Bencivelli, L. and Tonelli, F. (2020). China’s international projection in the Xi Jinping era : an economic perspective. Cham, Switzerland: Springer.
MERICS. (2022). Is this time different? The structural economic reform challenges for Xi’s 3rd term | Merics. [online] Available at: https://merics.org/en/short-analysis/time-different-structural-economic-reform-challenges-xis-3rd-term [Accessed 10 Nov. 2022].
The Economist. (2022). Will China’s economy ever overtake America’s? [online] Available at: https://www.economist.com/the-economist-explains/2022/09/06/will-chinas-economy-ever-overtake-americas.
The Guardian. (2022). China’s decade under Xi Jinping explained in seven charts. [online] Available at: https://www.theguardian.com/world/2022/oct/20/chinas-decade-under-xi-jinping-explained-in-seven-charts.
Wu, G. (2022.). For Xi Jinping, the Economy Is No Longer the Priority. [online] Available at: https://www.journalofdemocracy.org/for-xi-jinping-the-economy-is-no-longer-the-priority/, Journal of Democracy, [Accessed 3 Nov. 2022].
Zongyuan, Z., L. (2022). Politics Will Determine China’s Economic Future During Xi’s Third Term. Council on Foreign Relations. [online] Available at: https://www.cfr.org/in-brief/politics-determine-china-economic-future-xi-jinping-third-term