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ASIA: Why was the recent Party Congress such a big deal?
Xi Jinping’s marathon speech to open the 19th Congress of the Communist Party of China (the Party) sealed his leadership aspirations. Xi has emerged from the Party Congress held in October, as one of modern China’s most powerful leaders. He was granted another five-year term as General Party Secretary and will also serve as President of the People’s Republic of China (PRC). Xi has now been elevated to the pantheon of great Chinese leaders and his influence will extend well beyond his second five-year term. This has big implications for Australia.
What’s his vision?
At a time when the US and Europe are looking inward, and Australians search for a compelling narrative for the future, Xi outlined an ambitious vision for this new era, predicting that by 2050 China will become a leading global power.
Xi’s vision includes the size of the economy, the environment, social wellbeing and cohesion as well as security, both domestic and regional. Part of the plan includes building a world-class military that can fight and win wars.
So, what’s new?
In his first term, Xi emphasised stability over market reform. State-owned enterprises still control key parts of the Chinese economy, the RMB remains tightly managed and debt-funded infrastructure programs are rolled out whenever growth needs a kick-start.
Xi said he would now press ahead with changes to “firmly and unwaveringly deepen reform in every aspect”, including that the market should play a decisive role in the allocation of resources and support the development of private firms.
He also pledged to further open China’s services sector to foreign investors, saying that “China’s open door will not be closed, it will only be opened wider”.
Is China moving towards a Western style of politics?
Xi made it clear that China has no interest in systems of Western democracy. Tellingly, he said that the Party would permeate all aspects of life in China, from law to technological innovation.
Multinational corporations are finding that China is becoming a harder place in which to operate, with restrictions on political freedoms on the rise.
What is China’s role in the world?
In a clear message to the US, Xi said: “No country can retreat to their own island, we live in a shared world and face a shared destiny.”
At the APEC CEO Summit in Da Nang, Vietnam, US President Donald Trump accused countries in the region of trade abuses and pledged to “always put America first”. Trump’s tone presented a stark contrast to Xi, who spoke shortly after saying “openness brings progress while self-seclusion leaves one behind”.
Xi aims to promote China’s development model as one for other countries to follow and says the model – socialism with Chinese characteristics – offers other countries a new option.
With the Belt and Road Initiative (BRI) now etched into the CPC Constitution, Xi has set up China as the new world champion of globalisation with the BRI as its centrepiece.
Xi aims to promote China’s development model as one for other countries to follow and says the model – socialism with Chinese characteristics – offers other countries a new option for speeding up development while preserving independence. Xi insisted that China did “not pose a threat to any other country”, but also said “construction on islands and reefs in the South China Sea has seen steady progress” and noted this as one of his key achievements.
He was especially tough on regions eyeing independence, particularly Taiwan – whose government China does not recognise – but also Hong Kong. “We will not tolerate anyone using any means, at any time, to separate one inch of land from China.”
How can China innovate when free thinking and open debate are not encouraged?
China is among world leaders in the fields of robotics, drones, green tech and AI. And when it comes to mobile payments, China is the clear world leader with Alipay and WeChat symbols of Chinese innovation. Alibaba’s Singles Day saw sales exceed $US25 billion and 90 per cent of transactions took place over a mobile device.
What does it mean for Australia?
There are many unknowns. But what we do know is that the rapidly expanding Chinese middle class will continue to demand better food, education, healthcare and old-age care services. And they will want to travel the world.
As Asia, led by a confident China, rises in relative terms, Australia will lose its place in the world as a G20 economy in the coming decade-and-a-half. China’s impact on Australian living standards is hard to overstate.
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This article first appeared in Edition 4 of The Press
By Andrew Parker Partner, Asia Practice Leader, PwC Australia
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