Chinese leader Xi Jinping waves during a ceremony to mark the 100th anniversary of the founding of the Chinese Communist Party at Tiananmen Gate in Beijing on July 1, 2021. (Ng Han Guan/AP Photo)
During China’s Cultural Revolution, it was mandatory for citizens to not only read the “Little Red Book“ of Mao Zedong, but to carry it with them at all times. Similarly, ”Xi Jinping Thought” on socialism with Chinese characteristics is now mandatory for all elementary and secondary school students. “Xi Thought” is also taught at learning centers across the country. Xi is the first leader who’s had his thought enshrined in the state constitution since Mao.
A diplomacy research center for “Xi Thought” opened last year. In June, a research center on Xi’s thought on rule of law was founded. And now, another research center on Xi’s economic thought has been approved and will be established in Beijing. The CCP claims that a new branch of economics has been created in China, based on Xi’s economic theories, or “Xiconomics.” The center will help to develop economic policies, in line with Xi’s 30-year plan called, “Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era.” Xi’s doctrine has become part of the Chinese constitution, as well as the constitution of the Chinese Communist Party (CCP), meaning that Xi’s theories cannot be challenged.
Western media often refer to Xi as the “president” of China, but this title is misleading, as presidents are elected. Xi’s official titles are General Secretary of the CCP, Chairman of the Central Military Commission (CMC) and President of the People’s Republic of China (PRC). Xi is often referred to as a paramount leader or supreme leader because he holds all three positions, as leader of the Party, the military, and the country. Now that he is taking over economic policy, he has assumed some of the powers and responsibilities of the premier of the State Council of the PRC. Xi was already head of the Central Leading Group for Comprehensive Deepening Reform and the Central Leading Group of Finance and Economics Affairs, both of which were normally led by the premier.
One of Xi’s leading economic policies is the dual-circulation strategy, a self-reliance program, which is focused on domestic markets and developed as a result of the COVID-19 economic slowdown. The goal is to shift the economy away from manufacturing exports toward internal demand and consumption. The concept of “internal circulation” first arose as a result of the trade tensions during the U.S.-China trade war. China watchers are concerned that these policies will make China even more inward-looking, and that foreign companies and investors will face increased restrictions.
Shipping containers from China and other Asian countries are unloaded at the Port of Los Angeles as the trade war continues between China and the U.S., in Long Beach, Calif., on Sept. 14, 2019. (Mark Ralston/AFP/Getty Images)
The idea of focusing on internal demand is not a new one for China. Previous leaders had also promised to increase domestic consumption. This time, however, the U.S. trade war, as well as trade spates with countries such as Australia, coupled with a general enmity of China among its foreign trading partners, has created an appropriate context for China to rely less on exports and more on its domestic economy.
When China sees a crisis abroad, it focuses its attention back home. After the 2008 global financial crisis, the regime went on a spending spree, using infrastructure investment to prop up a failing economy. Now, with the pandemic, the economies of trading partners are also stalled. Consequently, Beijing is focusing on increasing internal consumption to get things moving again.
One reason for the hype surrounding Xiconomics is to convince the Chinese people that Xi is all-knowing, a master of many fields, including public policy, rule of law, diplomacy, statecraft, and economics. The exact details of what the CCP believes is a new economic discipline and are not yet known. The People’s Daily lauded Xi’s work on supply-side structural reform as a driver of growth. Perhaps this could be Xiconomics, except that it makes very little sense. Supply-side economics seeks to increase output and employment by decreasing government involvement in the economy and giving more financial and business freedom to the private sector. In short, this is the exact opposite of Xi’s current policies, which are characterized by tighter controls on the private sector and an increasing role of the public sector.
So far, Xiconomics seems more like a publicity stunt than an actual economic theory. It is reminiscent of North Korea’s Juche economics, one of many areas of unrivaled expertise attributed to former leader Kim Il-sung. Comparing North Korea to South Korea, one could arrive at the conclusion that Juche did not work very well.
As for Xi’s dual-circulation strategy, it would be difficult for China to replace its robust trade sector with internal demand. The average citizen earns too little and saves too much for that to work. So far, the plan does not seem to be very successful. Between January and July, private investment fell by 5.7 percent, while fixed-asset investment decreased by 1.6 percent. During the same time period, retail sales fell 9.9 percent. It seems that Chinese consumers are afraid to part with their cash, not knowing what lies around the corner.
Whether Xiconomics exists and whether Xi actually has a revolutionary economic plan to save the country remains to be seen. What is certain is that by taking control of the economic sector, he has now further cemented his power on a scale of no leader since Mao.
Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.
Antonio Graceffo, PhD, is a China economic analyst who has spent more than 20 years in Asia. Mr. Graceffo is a graduate of the Shanghai University of Sport, holds a China-MBA from Shanghai Jiaotong University, and currently studies national defense at American Military University. He is the author of “Beyond the Belt and Road: China’s Global Economic Expansion” (2019).
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