In my previous article we looked at the sweeping crackdown of China’s technology sector, beginning with Jack Ma and Ant Financial, and how this is part of Xi Jinping’s goal of “common prosperity.” While corruption and debt excesses needed to be reined in and people wanted better data privacy protections, Xi’s common prosperity initiative is also about concentrating power, redistributing wealth, and controlling the unpredictable market. In this article we’ll look at the roots of common prosperity and why analysts believe Xi is making these changes now.

Appealing to the Working Class

In his speech celebrating the hundredth anniversary of the founding of the Communist Party in China, Xi said that the Party will make “notable and substantive progress toward achieving well-rounded human development and common prosperity for all.” He called on his compatriots to not lose the vision of Marxism: 

Marxism is the fundamental guiding ideology upon which our party and country are founded; it is the very soul of our party and the banner under which it strives…We must continue to adapt the basic tenets of Marxism to China’s specific realities and its fine traditional culture. We will use Marxism to observe, understand, and steer the trends of our times, and continue to develop the Marxism of contemporary China and in the 21st century.

Transcript of Xi Jinping’s full speech from the 100^th Anniversary of the Communist Party, Quartz

The trappings of the hundredth anniversary celebration signaled the Communist Party’s identification with Mao and the working class. Xi Jinping wore the iconic button-down gray suit associated with Mao. The hammer and sickle, the traditional symbol for Communism and emblematic of the working class, was prominently displayed throughout Tiananmen Square. And, important to Xi’s messaging, he participated in singing “The Internationale” afterwards. The Wall Street Journal’s Lingling Wei said in an interview on The Journal Podcast, 

So then Xi Jinping delivered a very rousing and aggressive speech. Basically, he talked about how the Party really saved China and we needed to continue to follow our own path and we need to stand up for the people. So it’s a very confident and aggressive speech, and immediately after the speech, The Internationale, this song that traditionally is a song of celebrating the socialist movement in China, was played. The big significance of that song is that it represents a declaration war by the working class on capitalism.

The Journal Podcast, “Xi Jinping Is Rewriting the Rules of China’s Economy” at Wall Street Journal

See here for an English translation of “The Internationale.” 

Roots in the Former Soviet Union

Not only is “The Internationale” the traditional hymn of communism, but it was the one-time anthem of the former Soviet Union. Although Russia was not highlighted in Xi’s speech, the fall of the Soviet Union haunts the Chinese Communist Party, particularly Xi Jinping’s generation. When he first took office, Xi called members of the government to study the Soviet Union to ensure the same fate does not befall The People’s Republic of China. 

Journalist and former China correspondent Kai Strittmatter says in in his book We Have Been Harmonized that “Marx may be on Xi’s lips, but Lenin is in his bones.” Jinping Thought is “the new Marxism” which is defined by the Party’s enemy: The West and its values. Strittmatter says that once the Soviet Union fell, the Communist Party of China needed a new contract with the people, a way to establish their legitimacy. The CCP’s social contract has become increasingly focused on nationalism and material prosperity, which means the Party has a strong incentive to address the excessive inequalities and large numbers of poor.

China’s New Economic Policy Is Described as Bringing Order Out of Chaos

The Wall Street Journal’s Lingling Wei notes that the catchphrase for Xi Jinping’s macroeconomic policy is boluan fanzheng. This is an old Chinese idiom that translates as “to restore a chaotic (or disordered) society back to normal,” similar to the English idea of “right the wrong.”* The phrase has political connotations dating back to Mao and has to do with the CCP putting things in a right direction after the elite class set it in the wrong direction.

Boluan fanzheng was also used to describe Deng Xiaoping’s macroeconomic policy of “opening up” and letting some “get rich first” after the economic turmoil from the Cultural Revolution. Cai Xia says in her essay, published with Stanford’s Hoover Institute, that Deng Xiaoping knew that “the CCP’s legitimacy and survival depended on its economic performance. If China could not shake off poverty, the Communist Party would collapse sooner or later.”

Massimo Introvigne notes that Deng Xioaping was a student of Nikolai Bukharin, who introduced “New Economic Policy” to the Soviet Union to build back the economy after the Russian Civil War. The country had been addled by communist redistribution policies, so Bukharin suggested his New Economic Policy that allowed for some elements of capitalism, such as private property and private business, on a temporary basis while communism “matures.” 

If we look at the context for the New Economic Policy, we can understand Xi Jinping’s messaging during the hundredth anniversary ceremonies. The New Economic Policy was in response to multiple uprisings by the disaffected working class who did not appreciate losing their rights while living in poverty. The policy ended under Stalin when the government eliminated private ownership of farmland to control how food was distributed. The country was still having trouble feeding workers and the urban poor. 

According to Introvigne, just as Stalin wanted to ensure that the Soviet Union did not become a social democratic country, Xi Jinping is determined to avoid this fate for China. In the Soviet Union, agriculture was the big business. Today, China’s technology, real estate, and food and beverage sectors are the big businesses, so it makes sense that companies like Meituan (food and beverage), Eventgrande (real estate), and Alibaba (e-commerce) were reined in by the CCP. 

Commentators have pointed to Xi’s regulations as signaling the end of China’s “Gilded Age.” This has implications for the global economy, particularly in technology. As we will see in the next article, how this plays out practically may make the rich poorer, but unless China rectifies endemic problems, it will not solve China’s problems with poverty.

*See Chinese Idioms and Their English Equivalents by Chen Yong-Zhen and Chen Spring, The Commercial Press (Hong Kong), Ltd., 1983, 1987 (See idiom #0167)

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Will China’s Huge Tech Sector Crackdown Stifle Innovation? Part I: How will the Common Prosperity program really play out in the private sector? Whether it’s billionaire tech giants or online tutoring CEOs or big-name celebrities, the CCP will not tolerate competition for power and influence. (Heather Zeiger)