The new Chinese leader, Xi Jinping, made a highly symbolic visit to Shenzhen last week. He deliberately sought to echo the historical ‘southern tour’ of the late Deng Xiaoping. The General Secretary of the Communist Party of China Xi’s message by visiting Shenzhen, a metropolis of millions that came into existence after China’s economic miracle, was simple: he knows that China needs a new generation of economic reforms and over the next 10 years he intends to implement them.
Former Premier Deng did his southern tour in 1992, after the Tiananmen Square massacre and following a debate within the party about whether the regime had to return to its leftist origins. He signalled that there would be no going back. The rise of China today and its emergence as the world’s second biggest economy is a direct consequence of Premier Deng’s leadership. The general secretary of the Communist Party of China, Xi’s challenge is not in the same league as Premier Deng’s. After all, that China must change its original export-driven, investment-heavy economic model is not a source of debate. The entire seven-member standing committee of the party is united in this belief. Xi seems set to begin moving the economy towards a consumption-driven model similar to the kind that exists in the West — and India. To encourage overly cautious Chinese people to spend more and save less, Beijing has already begun letting wages rise and spending billions on expanding the welfare system.
This will be more difficult than it sounds. There is no shortage of vested interests who have thrived on the investment-based model, especially among the powerful provincial party units. Xi will also have to roll back the expansion of the State-owned enterprises in the Chinese economy that was overseen by his predecessor. Those who believe that this structural shift will somehow bring about some sort of Chinese collapse will be proved wrong. Xi may stumble, but the past record of Chinese leaders indicates he won’t fall. Instead, India should recognise that a China that grows at even moderate rates for a decade more will place the country at a peer level that includes only the US. Xi has already begun working to inspire his country to the next stage. It is hoped the consequences of his successful rule will also inspire India to take its own leap forward.
This will be more difficult than it sounds. There is no shortage of vested interests who have thrived on the investment-based model, especially among the powerful provincial party units. Xi will also have to roll back the expansion of the State-owned enterprises in the Chinese economy that was overseen by his predecessor. Those who believe that this structural shift will somehow bring about some sort of Chinese collapse will be proved wrong. Xi may stumble, but the past record of Chinese leaders indicates he won’t fall. Instead, India should recognise that a China that grows at even moderate rates for a decade more will place the country at a peer level that includes only the US. Xi has already begun working to inspire his country to the next stage. It is hoped the consequences of his successful rule will also inspire India to take its own leap forward.