Xi Jinping Tightens Grip on Economy, Moves China Toward Maoism

March 16, 2022 Updated: March 17, 2022

News Analysis

After the death of Mao Zedong, Deng Xiaoping liberalized the Chinese economy, fostering China’s transformation from one of the poorest countries in the world to the number two economy. The Chinese Communist Party’s (CCP) 2022 Work Report suggests that Deng is being erased, as Xi Jinping drives the country back to the authoritarian days of Mao.

The latest Work Report, which was submitted to China’s rubber-stamp legislature (the National People’s Congress, NPC) for deliberation on March 5, shows that Xi wants to deemphasize Deng’s economic liberalization.

China’s most important annual meeting took place between March 4 and March 11. During the “Two Sessions”—the meetings of the NPC and the National Committee of the Chinese People’s Political Consultative Conference—CCP officials recapped the country’s economic situation from the previous year and laid out guidelines and policies for the coming year, including spending and growth targets.

The report stated, “We must act on the people-centered development philosophy and rely on the efforts of everyone to promote prosperity.”

This new rhetoric sounds much more like old-style communism than market socialism, which has driven China’s growth for the past 20 years.

The report repeatedly stated that the Party and the government have “Comrade Xi Jinping at its core”—a clear reminder that Xi is the paramount leader, on par with Mao.

During the Mao era, students and workers studied Mao’s “Little Red Book.” Today, “Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era” is a bestseller in China, comprising 14 principles that have been enshrined in the Chinese Constitution.

The social welfare section of Xi’s book reads “Improving people’s livelihood and well-being is the primary goal of development … and ensure that people are content with their lives and jobs.”

Epoch Times Photo
Chinese leader Xi Jinping’s book, translated into foreign languages, is on display at the Great Hall of the People, Beijing on Dec. 1, 2017. (Fred Dufour/AFP via Getty Images)

Apparently, Xi believes that the best way to improve people’s lives and make them more content with their jobs is through social and financial control. He calls for restrictions on high incomes. By contrast, Deng’s policy was to allow “some to get rich first.”

“Stagnant consumption data has made clear that it’s urgent to increase people’s incomes and focus more on distribution fairness,” Wang Jun, of the China Center for International Economic Exchanges, was quoted as saying by Nikkei Asia. By reducing the wealth of the rich, the CCP hopes to stimulate consumption.

The Work Report had very few mentions of the dual circulation strategy, a strategy by which China would prioritize domestic consumption while still remaining open to international trade and investment. A movement away from dual circulation suggests that China will be concentrating more on its internal economy, while closing itself off from the outside world.

Under Deng, the dual circulation was originally coined by Chinese researcher Wang Jian as the “great international circulation.” Consequently, the abandonment of dual circulation is another example of cutting ties with the Deng regime.

The U.S.-China trade war was a catalyst for the policy shift, as it drove China to redirect its focus from engaging with the world toward concentrating on its internal economy. The pandemic also played a role, as the lockdowns and the “zero-COVID” policy reduced China’s ability to export products or to earn money from tourism. It also stymied the country’s ability to further internationalize by hosting foreign students and businesspeople. But many of the changes were caused by Xi. The trade war and the pandemic may have just been convenient excuses for the leader to tighten his grip on the economy.

Xi’s Economic Thought is called “Xiconomics,” which the Party must consult for “correct development direction.” Over the past two years, however, Xi’s vacillating economic policies have resulted in a number of disastrous control measures, increasingly restricting the market aspects of the Chinese economy.

Last year, Xi unveiled his many policies to remedy China’s flailing economy. He pledged to curb the disorderly expansion of capital, increase growth, boost private consumption, wean the economy off of debt, and decrease fossil fuel use. He also promised “common prosperity,” a wealth redistribution program that is meant to help poor people. But most of this was only briefly mentioned in the Work Report.

Xi’s plan was for China to switch to a consumption-driven economy, but then he implemented a “zero-COVID” policy, causing sporadic lockdowns that discouraged people from spending money. To improve this policy, he shifted to a “dynamic COVID-zero” strategy, which seems to be the same, or more draconian. COVID cases have recently surged across the country. The industrial hub of Shenzhen, a city of about 17 million people, was locked down over the past week.

Xi’s campaign against fossil fuels resulted in energy shortages, and the measures had to be reversed.

To curb China’s debt crisis, Xi vowed to tighten credit controls. And now, at a time that the world is plagued by mounting inflation, China’s central bank is cutting interest rates.

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A building under construction is seen in Shanghai, China, on Sept. 24, 2021. (Hector Retamal/AFP via Getty Images)

In order to make homes more affordable for ordinary people, Xi reined in the real estate sector, which was driving the economy. This resulted in ripples of unemployment and stagnation in construction, building materials, and allied industries.

Xi targeted the tech sector, which is the engine of innovation and modernization. So far, the China tech gauge, an indicator of China’s technology stocks, has slumped more than 60 percent since its peak last year.

To reduce the cost of raising children, Xi effectively eliminated the private tutoring industry, wiping out as many as 3 million jobs and wrecking a $100 billion industry. In the long run, this will also decrease the overall English language skills of China’s youth, making them and the country less competitive in world markets.

China’s GDP target for the coming year is 5.5 percent, the lowest in decades. The Shanghai Stock Composite has been trending more or less downward since last year, with 10 of China’s biggest U.S.-listed companies losing over $1 trillion in value.

Moreover, Xi’s refusal to condemn Russia’s invasion of Ukrainian could put China at risk of being hit with economic sanctions. Meanwhile, since the Ukraine invasion, the CCP allocated more money to defense, raising the military’s budget to $230 billion. This will further stress the economic system and add to China’s public debt which, under Xi’s watch, grew to 270 percent of GDP in 2020.

Xi’s policies are definitely looking more like Mao than Deng. At Mao’s death, the average Chinese person earned $187 per year—so central planning has been proved to be a faulty economic system. Erasing Deng from the collective memory allows Xi to veer toward Maoism, repeating the mistakes of the past.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.

Antonio Graceffo, Ph.D., has spent more than 20 years in Asia. He is a graduate of the Shanghai University of Sport and holds a China-MBA from Shanghai Jiaotong University. Graceffo works as an economics professor and China economic analyst, writing for various international media. Some of his books on China include "Beyond the Belt and Road: China’s Global Economic Expansion" and "A Short Course on the Chinese Economy."