21 May-3 June 2023

Fortnightly newsletter tracking high-level policy signals sent by China’s top leaders. For more information, visit About Five Things.

Commentary

An overarching theme of Xi Jinping’s years as China’s leader has been the concentration of ever more power in his own hands. Most recently that was seen in the establishment of two new Communist bodies, a Central Science and Technology Commission to oversee the Ministry of Science and Technology and a Central Financial Work Commission to oversee the governments financial regulators. Both will report directly to the Party’s Central Committee, and so both will ensure that the Party’s political and ideological guidance holds sway in two industries that Xi regards as key for his goal of making China a modern, socialist nation.

But sectors other than those which demand Xi’s personal imprimatur because of their importance to his vision of China’s future are also subject to continuing calls for stronger central oversight. Two examples of this occur in the last fortnight’s most widely circulated articles in the country’s official media, one on education (original here, translation here) and one on culture (original here, translation here). As is typical with such pieces, both call for following the Party’s direction in their contributions to building a powerful nation without specifying what that might actually involve.

In a fascinating recent article on his blog, “Modern central banking in the modernization drive”, Andrew Batson explores one way in which officials handle such calls in practice. Dissecting a speech by Yi Gang, the chairman of the People’s Bank of China, he notes how fealty to Xi and his ways is declared at the start and end of the speech, while its body is devoted to explaining why China’s central bank is sticking with its own, long-established policies. In short, Yi is saying that what he is doing is fully in line with Xi’s modernization project, and so he will carry on as before.

Now, that might work for a technical subject such as central banking, where officials might be reasonably sure that their expertise offers them authority in their own right. For more general areas, however, cover might be harder to find.

Hong Kong offers an extreme example of this. Its leaders’ policy programme amounts to two things: pushing “national security” – making sure that popular protests like those of 2019 never occur again – and integration with the rest of China. Nothing else, including addressing the underlying causes of discontent in the city, really matters.

A more moderate – but also more important – example, is current economic policy making and its application at a local level. After abandoning its zero-Covid policy late last year, China’s leaders appear to have expected that growth would resume of its own accord. By late April, however, they knew this wasn’t happening, with a Politburo meeting noting that the economy’s “internal driving force is not strong”.

Despite this, little has been done to change matters. Private investment remains weak; local governments are struggling to cope with declining income as land sales fall; government debt – central and local – continues to rise; compared with the pre-covid trend, household savings are up, but both disposable income and consumption are down. Lending to state-owned enterprises is up strongly, but that to the private sector is not.

Could a lack of central directives explain this apparent passivity? Quite possibly. But that begs the question as why China’s leaders aren’t reaching for something to stir the animal spirits. One answer lies in Xi’s vision of China as a technological superpower with its requirements for concentrating resources in science and hardware-oriented technology, with stepped up attention to threats to national security, and greater central central oversight.

It is also a response to the argument that what China really needs is to shift away from being an investment-driven economy to a private consumption driven one. Such a change in direction would call for measures such as steering funds now devoted to state investment into the hands of households and encouraging moves towards a more risk-taking, decentralized, consumer-oriented economy with greater autonomy for private business.

In the minds of China’s leaders, now would appear not to be the right time for such a switch.

Top-ranked articles for 21 May-3 June 2023
% = percentage of publications carrying the article

1. Accelerate the construction of a strong education country  Provide strong support for the great rejuvenation of the Chinese nation
加快建设教育强国  为中华民族伟大复兴提供有力支撑
Xinhua News Agency, 29 May 2023
Chinese / Machine translation / 46%

2. Xi Jinping meets with Russian Prime Minister Mishustin
习近平会见俄罗斯总理米舒斯京
Xinhua News Agency, 24 May 2023
Chinese / Machine translation / 43%

3. Give full play to the unique role of auditing in advancing the Party’s self-revolution  Further promote the high-quality development of audit work in the new era
发挥审计在推进党的自我革命中的独特作用  进一步推进新时代审计工作高质量发展
Xinhua News Agency, 23 May 2023
Chinese / Machine translation / 43%

4. Xi Jinping attends, addresses opening ceremony of Eurasian Economic Union’s Second Eurasian Economic Forum
习近平出席欧亚经济联盟  第二届欧亚经济论坛全会开幕式并致辞
Xinhua News Agency, 24 May 2023
Chinese / Machine translation / 42%

5. Xi Jinping sends congratulatory letter to 2023 Zhongguancun Forum
习近平向2023中关村论坛致贺信
Xinhua News Agency, 25 May 2023
Chinese / Machine translation / 42%

6. Strive to be a good child in the new era with all-round development of morality, intelligence, physique, art and labor
争当德智体美劳全面发展的新时代好儿童
Xinhua News Agency, 31 May 2023
Chinese / Machine translation / 40%

7. Accelerate modernization and capabilities of national security system Guarantee new development pattern with new security pattern
加快推进国家安全体系和能力现代化  以新安全格局保障新发展格局
Xinhua News Agency, 30 May 2023
Chinese / Machine translation / 40%

8. Xi Jinping sends congratulatory letter to 2023 China Tibet Development Forum
习近平向“2023·中国西藏发展论坛”致贺信
Xinhua News Agency, 23 May 2023
Chinese / Machine translation / 40%

9. General Secretary Xi Jinping cares about stories of scientific and technological workers
习近平总书记关心科技工作者的故事
Xinhua News Agency, 29 May 2023
Chinese / Machine translation / 38%

10. Take up new cultural mission and strive to build modern civilization of Chinese nation
担负起新的文化使命努力建设中华民族现代文明
Xinhua News Agency, 2 June 2023
Chinese / Machine translation / 38%

For more information about Five Things on China’s Leader’s Minds, visit About Five Things on China’s Leaders’ Minds or email fivethings@bilby.ai