What’s Behind Xi Jinping’s Speech on Economic Reform During His Southern Tour?

What’s Behind Xi Jinping’s Speech on Economic Reform During His Southern Tour?
A television screen at a restaurant in Beijing shows Chinese leader Xi Jinping speaking during a broadcast from Shenzhen at an event marking the 40th anniversary of the establishment of the Shenzhen Special Economic Zone on Oct.14, 2020. (Noel Celis/AFP via Getty Images)
China’s official mouthpiece Xinhua News Agency revealed on Oct. 11 that Chinese leader Xi Jinping would be visiting Shenzhen city to celebrate the 40th anniversary of the Special Economic Zone. Shenzhen is an industrial hub in China’s southern Guangdong Province that links Hong Kong to the mainland.

Crisis of Losing the People’s Trust

The circumstances surrounding Xi’s southern tour are similar to what then-leader Deng Xiaoping encountered when he took the same tour 28 years ago, such as the economic situation and the infighting within the Chinese Communist Party (CCP).

Deng’s southern tour took place after the June 4, 1989, Tiananmen massacre and the disintegration of the Soviet Union in 1991. The CCP was isolated internationally. Western democratic countries generally imposed sanctions on the CCP, and China’s economy was in trouble. At the same time, internal strife in the CCP was ongoing and demands for reform were growing.

Xi’s southern tour also coincided with problems at home and abroad. China’s economy is struggling due to the ongoing U.S.–China trade war and the COVID-19 pandemic. On top of that, the international community wants to hold the Chinese regime accountable for covering up the spread of the CCP virus, which causes the disease COVID-19, when it first broke out in Wuhan city in late 2019.

The United States and other Western countries have imposed sanctions on Beijing for implementing a national security law in Hong Kong. The mounting pressures have put the interests of CCP officials on the line and intensified the power struggle within the Party.

These pressures have also forced the CCP to call on economic reform in order to save itself from the brink of collapse.

In this context, will Xi’s southern tour bring about a major turning point in China’s history, just like Deng’s 1992 tour?

On Oct. 11, prior to Xi’s tour, the general offices of the Central Committee and the State Council jointly issued a plan that would implement pilot reforms in Shenzhen, turning the city into a “demonstration area of socialism with Chinese characteristics” in the next five years (2020–2025). The document emphasized that the plan was Xi’s brainchild and specially prepared as a publicity piece for his southern tour.

The document pointed out that the reforms in Shenzhen are to “strengthen the core engine in the construction of the Guangdong-Hong Kong-Macau Greater Bay Area Function.”

This means that the plan will undermine Hong Kong’s metropolis status and eventually replace the city’s international financial status altogether. Another section in the document, in fact, spells it out: “Support qualified foreign financial institutions to initiate the establishment of securities companies and fund management companies in Shenzhen according to law.”

However, the reality is that Shenzhen doesn’t have the advantages of Hong Kong’s separate customs territory and free port. Shenzhen’s regulatory system lacks transparency and is also constrained by the CCP’s foreign exchange control policy. These could all exacerbate Shenzhen’s lack of economic stability during global financial downturns.

As the CCP tries to take away Hong Kong’s freedoms and rule of law, people have lost confidence in the free and stable status of the financial hub, which would only reduce the number of foreign investments in Hong Kong and mainland China.

The Shenzhen reform plan reflects the CCP’s consistent policy to use “lies to govern all.” It follows the same deceptive Party line whenever the regime is on the brink of collapse.

Deng used this same approach 29 years ago on his way south to Shenzhen when he said: “Only when the economy develops and the people’s livelihood improves, will they believe you. ... The basic line of economic construction as the center is not for 10 years or 20 years, but 100 years!”

Deng’s speech was an example of the CCP’s strategy of using “lies to govern all” to prevent the regime from crumbling, rather than creating concrete political and systemic reforms.

On Oct. 12, Xi addressed a local sector in Chaozhou city, in which he emphasized that China’s technology industry should become more “self-reliant.” This approach is the same as former leader Mao Zedong’s economic strategy of “self-reliance” within a “planned economy.”

However, during Xi’s tour in Shantou city on Oct. 13, he talked about “taking the road of reform and opening up,” which was Deng’s approach. Deng opened up China’s economy to global markets (“opening up and reform”) under a socialist market economy in the late 1970s.

Xi’s conflicting statements show that “reform and opening up” is only a stopgap measure. In order to get rid of the crisis within the Party and the situation of being isolated by the international community, Xi calls for reform but it’s only to appease both domestic and foreign audiences. It’s also a response in preparation for the upcoming Fifth Plenary Session of the Central Committee this month.

Point of No Return

On Oct. 14, Xi gave a speech on the 40th anniversary of the establishment of the Shenzhen Special Economic Zone, saying: “Currently, reform is at a new historical juncture, with many unprecedented challenges emerging. So the complexity, sensitivity, and difficulty of pushing forward reform are no smaller than four decades ago.”
In tackling the challenges of economic reform, Xi recommended, “Stick to the combination of ‘crossing the river while feeling the stones,’” referencing a phrase attributed to Deng who used it as a metaphor to describe China’s cautious approach toward the reform and opening up and restructuring of its economy at the end of the 1970s.

Why does Xi believe that economic reform will be like “crossing the river while feeling the stones” 40 years ago? Would the 1.4 billion Chinese in the mainland willingly go along with it and take risks?

Xi’s talk in Shenzhen indicates that there is no solution to China’s current economic difficulties. In this context, “reform and opening up” is again exploited as a political slogan to fool those who toe the Party line and to hide the Party’s deepest fear of demise.

Huidong Zhang was a general manager at Rightway China Real Estate in Dalian, Liaoning Province. He earned a master’s degree in business administration and then worked for Dalian Heavy Industry Group Co. Ltd. 
Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.