In Beijing, tonight European-time sees the start of a major political event: The Communist Party of China opens its Party Congress, which only takes place every five years, and with it the beginning of a new legislative period in the one-party state of China. Key appointments will be made, which is why the Congress has almost the same political significance as parliamentary elections in Western democracies. It is largely undisputed that Xi Jinping will be confirmed in the office of General Secretary of the CPC and thus as the country’s president. The decision will presumably take place toward the end of the Congress, which lasts almost a week and where the composition of the key party organs, the Politburo and the “Politburo Standing Committee”, will be newly decided. It will also be interesting to see how many loyal supporters Xi will muster and whether a potential successor is among them. Commentators suggest it is by no means sure whether Xi will retire from his position of head of state after five years, as the constitution ordains.
At present, Xi already has great powers, and looks set to emerge from the Party Congress even stronger, something to be gauged not only by the number of appointees he gets through, but also by his influence on Party doctrine. The so-called “Political Report”, a kind of government declaration, which Xi will probably present as soon as tomorrow, should indicate this, albeit only between the lines. If his ideology is considered close to that of Deng Xiaoping or even Mao, he could become a “pioneer of socialism”, making him largely impervious to criticism.
However critically one should regard such a person cult in political terms, such a development would be favourable for reform policy. Xi is regarded as an economic reformer and in his first period in office made reform policy his own domain. His successes have at best been mixed: Under his government, structural change has made progress, as has the liberalisation and supervision of the financial markets, with monetary policy being given a stronger market thrust. However, Xi’s first term also coincides with the stock market bubble bursting with the subsequent concerns about the economic cycle, the explosion in housing prices, and above all the sharp rise in corporate debt levels. There continues to be an immense need for action among state-owned corporations, the high excess capacities need to be slashed very swiftly, and bankruptcies should also be permitted more easily. As a strengthened president, with powers to shape things and backing from the people, Xi would probably be more able to push these projects, even against Party interests, and would presumably wish to do so.
However, Xi looks set to only proceed with great caution and without being overly hasty. He is committed to the goal of adjusting the prosperity of Chinese citizens to that of the inhabitants of the industrialised nations, and calls this the “Chinese dream”. One key milestone in this regard is to double the economy within this decade. The far weaker growth rates that a consistent reform of government-owned corporations would doubtless entail could threaten this goal. This would be good for the medium-term economic outlook: A stronger downturn in the Chinese economy is not to be feared for the time being. However, there is the danger that the reforms are not implemented with enough resolve or speed to place the economy on a sound footing in the long run. This leaves a great longer-term risk that China will slide into a growth and/or financial crisis owing to the countless imbalances