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Xi Expands Power as Chinese Leaders Pledge Landmark Reforms

Chinese President Xi Jinping
Chinese President Xi Jinping became chairman of the powerful Central Military Commission after the 18th party congress last November. Photographer: Jewel Samad/AFP via Getty Images

Nov. 18 (Bloomberg) -- Chinese President Xi Jinping put his most personal stamp yet on sweeping policy shifts in the world’s second-largest economy, ushering the end of a decade of consensus-based decision-making that saw reforms stagnate.

In a speech released three days after the meeting that finished Nov. 12, Xi said “more courage” was needed to push through the reforms, which include the creation of two powerful committees that he’ll likely lead. A communique released at the time used phrases he’s adopted since taking over the party last November, focusing attention on Xi in way that didn’t occur under his predecessor Hu Jintao.

Those changes reflect the power Xi has amassed and signal a different approach as China’s leaders seek to enact reforms -- such as easing the state’s role in the economy -- that atrophied under Hu. Changes announced after the party meeting will run up against the interests of state-owned enterprises and local governments that benefited from controlled interest rates and rising land values during Hu’s time in power.

“Xi’s hold on power is evident,” Francois Godement, senior policy fellow at the European Council on Foreign Relations, said in an e-mail. “We are seeing the comeback of personal leadership, with Xi taking sole responsibility.”

The Nov. 9-12 meeting of the party’s Central Committee laid out an array of measures in the broadest reform pledge since 1993, when President Jiang Zemin spurred market-driven changes, said Yuan Gangming, a researcher with the government-run Chinese Academy of Social Sciences.

Decisive Role

After the meeting, the party vowed to give the market a “decisive” role in resource allocation, according to the communique released the day it ended. Details of the reform plan, unveiled Nov. 15, included a pledge to encourage private investment in state-owned enterprises and expand farmers’ land rights.

There are also social changes: an end to the re-education through labor system, which allowed police to imprison people without trial, and an easing of the country’s family-planning policy.

The Hang Seng China Enterprises Index, also known as the H-share index, rose 4.3 percent at 12 p.m. in Hong Kong, poised for the highest close since May. The benchmark Shanghai Composite Index climbed 1.4 percent, following a 1.7 percent gain on Nov. 15 ahead of the policy package’s publication.

Boost Confidence

In a move intended to boost confidence in the party’s ability to reform a government it controls, Xi is set to take hold of a committee on enacting reform, as well as a new national security committee, Godement said. That may give him wider power to withstand opposition from entrenched interests.

There are more subtle signs of Xi’s control as well. In a break with precedent, the speech in which Xi called for more courage in pursuing change was published Nov. 15 alongside the document detailing the reforms, the Beijing Youth Daily reported Nov. 16.

Xi’s slogan of a “China Dream,” was also included in the document even though he only took over as party secretary a year ago, suggesting his ideas are gaining support more quickly than those of his predecessors, said Cheng Li, senior fellow at the Washington-based Brookings Institution.

“It’s very clear that Xi Jinping is very much in charge of the whole agenda,” Arthur Kroeber, Beijing-based managing director of GaveKal Dragonomics, an economic research firm, said by phone. “He seems to have a much stronger vision of what he wants to accomplish and a better grasp of the bureaucratic mechanisms for achieving what he wants to get done than his predecessor.”

Chinese System

There are roadblocks built within the Chinese system to Xi amassing further control. Decision-making is still centered on the Politburo Standing Committee and the broader Politburo, rather than the presidency, according to Cheng.

That consensus-driven approach marks a shift from the years in which People’s Republic of China founder Mao Zedong wielded complete control. After Mao, paramount leader Deng Xiaoping was the ultimate arbiter for all major decisions.

“I would not go too far to say he is a Putin-like figure,” Cheng said of Xi, in a reference to the dominant role President Vladimir Putin plays in Russia.

Even so, Xi has already made progress gathering power since he became party secretary. Xi became chairman of the powerful Central Military Commission after the 18th party congress last November, unlike Hu, who had to wait two years to take over the body.

Anti-Corruption

He started an anti-corruption campaign that has snared senior officials including the former vice chairman of the National Development and Reform Commission, and spearheaded a “mass line” campaign in which officials endured self-criticism sessions in a procedure reminiscent of Mao’s political campaigns.

Days before the plenum meeting, Xi appeared firmly in control and confident about his role in the spotlight, according to George Yeo, former foreign minister of Singapore, who joined a group of intellectuals to speak with the president in early November.

“President Xi was relaxed and talked about China’s challenges and hopes with considerable self-confidence,” Yeo said in a phone interview. “He is obviously in command of the situation.”

To contact Bloomberg News staff for this story: Henry Sanderson in Beijing at hsanderson@bloomberg.net

To contact the editor responsible for this story: Rosalind Mathieson at rmathieson3@bloomberg.net

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