Xi Jinping aims to master Chinese capitalism, in line with Mao’s socialist vision

Xi Jinping’s campaign against private enterprise, it is increasingly clear, is far more ambitious than it appears.

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The Chinese president isn’t just trying to get a handle on a few big tech companies and the like and show who’s boss in China.

He is trying to roll back decades of China’s decades-long evolution towards Western-style capitalism and put the country on an entirely different path, as a close examination of Xi’s writings and his discussions with them shows. party officials, as well as interviews with those involved in policy making.

For most of the 40 years since Deng Xiaoping launched the first economic reforms in China, Communist Party leaders have given market forces greater leeway to flourish. This openness has helped lift hundreds of millions of people out of poverty and created billions of dollars in wealth, but also led to widespread corruption and eroded the ideological basis of maintaining the Communist regime.

In Xi’s view, private capital is now allowed to rampage, threatening the party’s legitimacy, according to officials familiar with its priorities. The Wall Street Journal review shows that he is trying forcefully to bring China back to the vision of Mao Zedong, who saw capitalism as a transitional phase on the road to socialism.

Xi does not intend to eradicate market forces, the Journal’s review says. But he seems to want a state in which the party does more to steer the flow of money, sets tighter parameters for entrepreneurs and investors and their ability to make a profit, and has even more control over the economy than it does. ‘today. In essence, this suggests that he aims to rewrite the rules of commerce in what may one day be the world’s largest economy.

“China has entered a new phase of development,” Xi said in a speech in January. The goal, he said, is to make China a “modern socialist power.”

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Mr. Xi’s overhaul has generated more than 100 regulatory actions, government directives and policy changes since the end of last year, according to a Journal count, including measures to break the market dominance of companies such that e-commerce giant Alibaba Group Holding Ltd., conglomerate Tencent Holdings Ltd. and carpooling leader Didi Global Inc.

Recent measures taken by the government to contain house prices are exacerbating the liquidity shortage at China Evergrande Group, a heavily indebted real estate developer, causing chills in global markets. Beijing is unlikely to bail out Evergrande in the same way it has saved many state-owned enterprises, analysts say, and could tighten regulatory screws on other private developers further.

Xi has signaled his intention to go much further. At a leaders’ meeting in August, he emphasized a goal of “common prosperity,” which calls for a more equitable distribution of wealth. This would be achieved in part through greater government intervention in the economy and more measures to get the rich to share in the fruits of their success.

An Aug. 29 online commentary broadcast by state media called it a “profound revolution” for the country.

“Xi thinks he’s moving to a new kind of system that doesn’t exist anywhere in the world,” said Barry Naughton, a Chinese economics expert at the University of California, San Diego. “I call it a government run economy.”

A number of countries tightly regulate industry, labor and markets, set monetary policy, and provide subsidies to help stimulate their economies. In Xi’s version, the government would have a level of control that would allow it to steer the economy and industry in any direction it chooses and to channel private resources towards strengthening state power.

The big risk for China and Xi is that the push will eventually remove much of the entrepreneurial energy that has fueled China’s boom and years of innovation.

For foreign companies, the campaign likely means more turbulence to come. Western companies have always had to follow the party line in China, but they are increasingly being asked to do more, including sharing users’ personal data and accepting party members as employees. They might be forced to sacrifice more profits to help Beijing achieve its goals.

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“Supervision of foreign capital will be tightened,” said a person familiar with the thinking of China’s main market regulator, “so that it will not be able to obtain ultra-high profits in China through operations. monopoly and capital market “.

The Information Office of the State Council, China’s highest government body, did not respond to questions for this article.

Prior to this year, Xi was wary of capital, but he had other priorities. Now, after consolidating power, he is putting the whole government behind his plans to put private companies at the service of the state.

A once-a-decade leadership transition slated for late 2022, when Mr. Xi is expected to break through the established succession system to stay in power, has provided the impetus to take action and show he’s doing something great for the people. to justify longer rule, say officials involved in policymaking.

In internal meetings, some say, Xi spoke of the need to differentiate China’s economic system. Western capitalism, in his view, focuses too much on the stubborn pursuit of profit and individual wealth, while allowing big business to grow too powerful, leading to inequality, social injustice, and other threats to social stability.

Earlier this year, when Facebook Inc. and Twitter Inc. took down the accounts of former US President Donald Trump, Xi saw another sign that the US economic system was flawed – he let big business rule. what a political leader should do or say – officials familiar with his point of view said.

A few months later, when the Chinese Communist Party celebrated its centenary on July 1, Mr. Xi donned a Mao costume and stood behind a podium adorned with a hammer and sickle, pledging to defend the people. After the speech, he sang with “The Internationale” broadcast on Tiananmen Square. In China, the song, characteristic of the socialist movement since the late 1800s, has long symbolized a declaration of war by the working class on capitalism.

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