Last week’s Communist Party congress was a blast for President Xi Jinping of China. Not only did Xi fill the entire leadership with loyalists, but the forced removal of his predecessor from the meeting sent a chilling reminder about who runs the show. None of that should be surprising; as I wrote previously, the party congress is purely a political theatre to showcase already apparent trends.
It’s time to treat the Chinese president’s men as who they are. It’s time to ground U.S. policy with that understanding.
Romanticizing the Chinese Communist Party starts at the top. When President Xi Jinping came to power a decade ago, many China watchers claimed he would be pro-market. Because Xi’s father was a reformer, the reasoning goes, he must be friendly toward the economy too. Xi has indeed left his stamp on China, but not in the manner optimists expected.
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A decade later, the wishful thinking about market reforms is still going strong. Before the new Politburo Standing Committee was unveiled last week, speculations had it that Wang Yang — previously number four in the committee and who some thought was liberal-minded — would succeed Li Keqiang as the next premier. Some even suggested that the relatively pragmatic Li would replace Xi as the next party leader. Instead, both Wang and Li were forced to retire after this leadership reshuffle.
A similar hype surrounds He Lifeng, a potential next vice premier in charge of the economy and trade, and what that might mean for the Sino-American economic relationship. He, who made it to the Politburo last week and is poised to get that job, was touted as pro-growth because of some market-friendly speeches in his current post as the head of the National Development and Reform Commission. But the irony is that during the post-Mao era, as China’s top economic planning organization, the NDRC’s job has been to figure out how to cling to central planning.
Perhaps more revealing than He’s pro-growth talks are his economic ideas. In 2017, just after taking over the NDRC, He wrote a touching article for the 80th birthday of Xiamen University’s Department of Public Finance, his alma mater, in memory of the professor who influenced him the most: Deng Ziji. Deng was no ordinary scholar. If there was a Mount Rushmore of public finance in China, Deng might deserve two spots. But the economics he’s famous for should concern every China watcher. Fiscal policy in the West is about raising taxpayers’ funds to provide public goods like roads and bridges that benefit the economy. But Deng, very much a Marxist, argued that fiscal policy should serve the power of the state, and if the state wants to equalize economic outcomes — and not in the milder western sense — the planner should deliver that.
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Since China’s market reform started in the late 1970s, Deng’s theory has been struggling to survive in academia just like how He’s NDRC is scrambling to stay relevant with economic planning. Fantasies about better politicians in Beijing are like weeds in your backyard. They will grow again when He, as Xi’s economy czar, talks trade with his U.S. counterpart. Washington once hoped the man currently occupying the job, Liu He, was liberal-minded and could help change Beijing’s unfair trade practices. But the age of market reforms in post-Mao China is clearly over and is counterproductive if U.S. policymakers lean too hard on their hopes.
Here’s a better policy: Believe it when you see it.
Weifeng Zhong is a senior research fellow with the Mercatus Center at George Mason University and a core developer of the open-sourced Policy Change Index project, which uses machine-learning algorithms to predict authoritarian regimes’ major policy moves by “reading” their propaganda. He’s also the curator of the Wei To Think Again newsletter on U.S.-China competition.
