OPINION-The Political Economy of development in China: A strong state

Recent events have pointed to the persistence of a strong mainland Chinese state in its political economy of development amid the ongoing successful control over Covid-19. 

On September 8, President Xi Jinping presented medals of the People’s Republic of China (PRC) to those heroes who showed their contributions to the containment of the spread of Covid-19, including renowned infectious disease expert Zhong Nanshan, Chinese medicine specialist Zhang Boli, Wuhan Jinyintan Hospital chief Zhang Dingyu, and military scientist Chen Wei. Zhong delivered a speech that expressed his grateful attitude toward the leadership of the Party and the state, reinforcing the role of the Party-state in the successful containment of Covid-19.

Two weeks prior to the medal presentation ceremony, President Xi Jinping delivered an important speech in Anhui province’s Hefei city. He remarked that the Yangtze River Delta, which includes the three provinces of Jiangsu, Anhui and Zhejiang, would become the economic “dragonheads” of the Delta region, and that ecological protection, urban renewal, the ban on illegal fishing, and the closer integration of the three regional provinces would be accelerated. In fact, the central government in Beijing published a detailed plan on the economic, ecological and urban development of the Yangtze River Delta in December 2019. However, the sudden outbreak of Covid-19 in early 2020 delayed the implementation of the plan. President Xi’s reiteration of the Delta plan signaled not only its revival but also Beijing’s determination to use the region as a stimulus in the development of a “big circulation” internally. The Yangtze River Delta has been regarded as a core region to develop local talents, advance technological innovations and stimulate the growth of the manufacturing sector.

China during the ongoing global combat against Covid-19 is adopting a new regional development strategy that utilizes the Yangtze River Delta as an economic locomotive and unleashes the huge potential of economic growth in the Greater Bay Area. Geopolitically and economically, the PRC’s new political economy of development relies on these two main regions cutting vertically across the central and the southern parts of China, leading to radiative impacts on the western and northeastern regions. Moreover, main cities have been fully utilized and developed in the PRC’s new political economy, including Shanghai, Pudong, and the seven mainland cities of the Greater Bay Area. In other words, the local states at the provincial and city levels must develop in full capacity in accordance with the central planning from Beijing so that China’s economic revival can and will be achieved.

On August 22, President Xi stayed in the Anhui province for an inspection visit to the Baowu Steel Conglomerate, emphasizing that the PRC would have to “maintain reforms, openness and quality development.” He added that the structure of demands and supply needs to be deepened, explicitly calling for the necessity of generating “big circulation” in the political economy of development in the PRC. By generating such “big circulation” internally, the PRC would fully utilize the “international dual circulations” to propel its economic revival and development. During his visit in Anhui, President Xi stressed that flood controls had to be strengthened, agricultural supplies would have to be secured, traditional industries would have to be upgraded, and the manufacturing sector would have to be digitized by using artificial intelligence.

On August 24, President Xi presided over a seminar discussion with economic and political experts on the economic and social frontiers, reiterating the importance of utilizing the “dual circulations” pattern to enhance China’s economic competitiveness. Clearly, the PRC government’s strategy is to stimulate both the domestic economy and its interactions with external countries in the areas of trade and investment so that existing and new markets would be enhanced. During the seminar discussions with President Xi, nine famous economic and political experts expressed their views, including experts from Tsinghua University, the Chinese Academy of Social Sciences, the State Development and Reform Commission, and Shanghai’s Jiaotong University. The PRC’s Vice-Premier Liu He also attended the seminar.

President Xi’s emphasis on the “dual circulations” pattern coincided with the visit of the PRC Foreign Minister, Wang Yi, to Europe. Wang’s meetings with his foreign minister counterparts in Italy, Holland, Norman, France and Germany were characterized by the PRC’s attempts at expanding bilateral trade and investment agreements with these European states. In France, Wang Yi met the French President Emmanuel Macron, deepening the strategic partnership and strengthening cooperation in the study and development of vaccines in containing Covid-19. Wang’s European visits attempted to project an image of a China that is cherishing multilateralism, mutual collaboration in the fight against Covid-19, the stabilization of the global supply chains, and the enhancement of the external “big circulation” so as to facilitate the PRC’s internal “circulation.”

Wang Yi’s European visits were matched by Premier Li Keqiang’s video conference during the third Lancang-Mekong Cooperation Leaders’ Meeting. Premier Li stressed that China set up a special fund for public health in the Lancang-Mekong regions. Most importantly, China promotes economic partnership agreements with Cambodia, Myanmar, Thailand and Vietnam. Again, the PRC projected an image of a peaceful China keen to strengthen public health and economic cooperation with Southeast Asian states.

While overseas Chinese media have reported that the PRC adopts an internally “hard” policy but externally “soft” foreign policy, such internal “hardness” has been combined skillfully with softness. President Xi presided over the seventh meeting of Tibet’s work on August 28 and 29 in Beijing, emphasizing that the Tibet Autonomous Region would have to strengthen the unity of nationalities, to deal with regional and developmental inequities, to protect the ecology of the Tibetan plateau, and to enhance the sense of duties and mission among the cadres working in Tibet. Most importantly, he stressed that the PRC’s socialist system “must maintain the thinking of governing the border in its national governance, of firstly stabilizing Tibet in its governance of the borderland, of maintaining the focus of national unification and strengthening the unity of nationalities in the work on Tibet.” The meeting saw the attendance of Premier Li Keqiang and four members of the Standing Committee of the Politburo, namely Li Zhanshu, Wang Huning, Han Zheng and Zhao Leji.

The strong and assertive Party-state can be internally seen in its persistence of anti-corruption work. On August 31, the Politburo meeting presided over by President Xi discussed two documents, one on the ecological protection and quality development of the Yangtze River Delta and the other on the inspection visits of the Central Discipline Inspection Committee to various places. These inspection visits continue to combat corruption and ensure strict Party discipline among its members.

Externally, China embraces openness. On September 1, President Xi presided over a meeting of the Committee on Comprehensively Deepening Reforms. Again, he stressed the importance of the “dual big circulations” as a crucial “entity,” maintaining the PRC’s “socialism with Chinese characteristics,” promoting the national governance system, and “modernizing the governing capability.” 

Three days later, he delivered a speech at the China International Service and Trade Fair, saying that the world’s trade revival could be stimulated by technological revolution and industrial reforms. Moreover, the emergence of digital technology would play a crucial role in the world’s economic revival, including the use of technology in public health, online education, office coordination, and cross-border electronic businesses. At a time when the United States is increasingly economically self-protective under the presidency of Donald Trump, China is adopting a strategy of stimulating both domestic and global political economy by maintaining openness, emphasizing technological innovation, and retaining multilateralism.

On September 9, President Xi held a meeting of the Central Committee on Finance and Economy, emphasizing the importance of conducting research on how to smoothen domestic economic circulation and modernize the logistics system. He added that the government’s role should be enhanced to promote the construction of software and hardware circulation system, to improve the new monitoring function of the social credit system, and to perfect the payment calculation and its related monetary infrastructure.

On September 11, Premier Li Keqiang attended a video conference of perfecting the business environment, stressing that all levels of the Chinese government must adopt a three-pronged strategy of “relaxation, management and services.” The government should, to Li, relax the areas of creativity and innovative capacity, and manage the quality of such products as the Internet, vaccines, pharmaceuticals and supply chains. Finally, it should serve the business sector by facilitating cross-provincial transactions and coordination while protecting digital safety and individual privacy. Under these circumstances, according to Premier Li, China would be able to enhance its openness and competitiveness.

Externally, although China and India have border disputes, the PRC Foreign Minister Wang Yi and the Indian Foreign Minister Subrahmanyam Jaishankar met in Moscow on September 10, reaching a five-point consensus in which both sides disallow an escalation of divergent views into disputes, maintain dialogue and distance between the two militaries, retain regional peace and calmness, continue mutual communications and coordination through existing mechanisms, and establish mutual trust-building measures. China adopts a relatively “soft” and tolerant policy toward India.

In short, the strong Party-state in the PRC is the most prominent feature amid the containment of Covid-19. The strong Chinese state is characterized by a regional developmental strategy of utilizing the Yangtze River Delta as the economic locomotive linking up with other regions, including the Greater Bay Area, emphasizing “dual big circulations,” embracing openness and multilateralism, stressing technological innovation, and enhancing the role of government at all levels to revitalize and stimulate the economy. The new political economy of development in China is clearly punctuated by a strong Party-state.