18 Nov 2018

December 2018 marks the 40th anniversary of the third plenum of the 11th Central Committee in 1978, when Chinese President Deng Xiaoping proposed an agenda to gradually transition away from a planned economy to a market-based one. This led to an unprecedented period of growth and stability. But President Xi Jinping’s new era is so distinct that it could mark the end of China’s reform and opening period. Lee Kuan Yew School of Public Policy Visiting Senior Research Fellow, Drew Thompson tells Global-is-Asian how Xi Jinping’s era is likely to unfold and what it will mean for China, its neighbours and the rest of the world.

Q: What did Deng Xiaoping establish?

Thompson: Deng Xiaoping established a political framework that sought to prevent the chaos, and social and economic dislocations of the Mao era. Deng’s goals at the heart of the reform and opening era were to increase productivity in agriculture and industry by effectively reducing the role of the state in both sectors. That wasn't entirely a top down decision. There was a groundswell of public support for change following the Mao era, so Deng was also harnessing the changes that were taking place in Chinese society.

The leadership sought to manage the reform and opening process by taking an incremental and experimental approach. They established special economic zones and identified specific provinces to trial new agricultural policies to increase productivity and peasant incomes. That approach included opening up to the outside world to attract capital, management expertise and technology that China could absorb.

The second aspect of the Deng era was political reform. Deng set out to create internal checks and balances so that no single leader could cause disruptions as they had in the past. He sought to achieve consensus with party elders, put in place mechanisms for political succession, and establish a collective leadership model that would curb and prevent excesses.

Militarily, Deng realised that national resources had to be reinvested in the economy before it could be spent on national defence. Detente with the US, solidified by a normalisation of relations in 1979, reduced the threat from the Soviet Union to China, reducing the need to invest greater resources in the military.

Chinese foreign policy was predicated on a peaceful international environment that would enable domestic economic development, made famous by Deng Xiaoping's dictum that China should bide its time and hide its strength — and never take the lead in foreign affairs. The basic principles and framework established by Deng were essentially adhered to by Jiang Zemin and Hu Jintao, who were in many ways the caretakers of Deng's legacy.

Q: How is the Xi Jinping era different?

Thompson: Xi Jinping's approach to domestic, economic, foreign policy and international security are dramatically different from the framework set out during the reform and opening period. The role of the state sector in the economy has increased dramatically under Xi Jinping, in effect rolling back the ability of private companies to contribute to economic growth and innovation.

Xi Jinping’s rise to power, the elimination of term limits and the removal of rivals and successors, have given him absolute power over the Party and bureaucracy – more similar to Mao than Deng, Jiang, or Hu.

Xi Jinping's foreign policy is another dramatic departure. His refrain is described as fenfayouwei (奋发有为) which has been translated as "strive for achievement," indicating a much more active and assertive form of diplomacy compared to Deng’s “never take the lead” mandate. Xi Jinping has instructed his diplomatic corps to focus their efforts to achieve national rejuvenation, and not just passively adapt to changes in the international security environment.

Chinese economic growth has enabled defence spending to grow steadily over the last two decades, marking the fastest and largest peacetime military build-up in history. In a speech by US Vice-President Mike Pence in October, he noted that China spends as much on its military as the rest of Asia combined. This is a dramatic departure from Deng, who faced a threat from the Soviet Union but determined that military spending would not increase China's security in what was an otherwise peaceful international environment.

Today, China's willingness to use its levers of power internationally – especially economic coercion and military intimidation – cause concern for the US, and China's neighbours. The growing influence and control of the Party over all aspects of society, the economy and the military are particularly unsettling to outsiders.

Q: Is it really the end of the reform and opening period?

Thompson: One can argue that the period of reform and opening has not officially ended, but Xi Jinping’s contribution to Communist Party orthodoxy is referred to as a “new era” by the Party itself. This movement reached its pinnacle when “Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era” was written into the Chinese constitution at the 19th Party Congress in October 2017.

In addition to the “new era” label, the rejuvenation of the Party and its role in society, the increasingly heavy hand of the state in the economy, and the return of strong man rule harken back to China before Deng Xiaoping’s imprint on government and society in 1978.

Q: How could the new era of Xi Jinping affect Chinese society?

Thompson: One characteristic of Xi Jinping's leadership has been to crackdown on free speech, tighten access to information on the global internet and increase political pressure on intellectuals and the education system – all to align public discourse more closely to the Party's interests and objectives. While the resources for domestic security have increased steadily, it's unclear if this is ultimately sustainable and begs the question at what point might Chinese society pushback on the Party’s effort to control the population. It is worth remembering that the Communist Party of China has approximately 90 million members, about six percent of the population.

Q: Chinese citizens are gaining greater exposure to other political systems through the media and travel, does this have an effect on Chinese society?

Thompson: Chinese tourism has increased steadily along with rising incomes, but the government has used tourism as a tool for coercive diplomacy when it disagrees with policies in neighbouring states. While some tourists may increase their awareness of other political systems when they travel or study abroad, there are tremendous risks of conveying or advocating for alternative governance models once they return home.

The government has the ability to manage public perception through censorship and a massive propaganda apparatus. This makes dissenting views seem like an aberration contradicting the “correct” views that dominate discourse.

The introduction of a social credit system to monitor online and real-life activities, as well as the political and economic behaviours of every individual – and the ability to restrict their freedoms should they fail to meet the expectations of the government and Party – creates a huge disincentive to speak up or act out against the authorities.

The Party and the government have proven to be very resilient and adaptable to the dramatic changes in Chinese society and the external security environment. While this may not seem like a stable or sustainable system, one should not predict that it is likely to collapse. China has defied those odds for many years and successfully adapted to both internal and external challenges.

Q: What should the world do about China?

Thompson: One of the trends in idealist thinking is that China can be shaped or cajoled to fit into the existing international system and its rules-based order. I subscribe to a realist's school where one has to accept China for what it is and develop a strategy accordingly.

Outside countries will have to resign themselves to the fact that China will continue to determine its own political system and its own path of development. This requires China's partners to accept it for what it is and to develop their own strategies to engage Beijing to meet their own interests.

China's neighbours, ASEAN, Australia and the US need to come up with new strategies to address the challenges of the new Xi Jinping era, which are so different to the reform and opening framework that Deng Xiaoping established some 40 years ago.