China’s dilemmas

Thirds are always strategically reformist

At the end of 1978, the Third Plenum of the CPC Central Committee provided a platform for Deng Xiaoping’s rise to power and China’s turn towards “reform and opening up”. The Third Plenum in 1993, under the leadership of Jiang Zemin, proclaimed the principles of a “socialist market economy.” The 2002 Third Plenum of the CPC Central Committee played a crucial role in taking steps to further liberalise the domestic economy following China’s accession to the World Trade Organisation a year earlier. Similarly, the 2008 Third Plenum focused on rural policy reform to accelerate the implementation of the “Socialist New Village” policy, Hu Jintao’s signature initiative to address urban-rural disparities. 

Or take the Third Plenum of the 18th convocation held in late 2013. The forum was hailed by many at the time as a historic opportunity for new leader Xi Jinping to set China on a new path after Hu Jintao’s unfinished reforms. The final communiqué included more than 300 reform proposals ranging from state-owned enterprises, land policy and foreign trade to investment reforms and environmental and social protection policies. 

However, contrary to high expectations, according to many Western experts, the plenum did not fulfil its main promise to give the market a decisive role in managing China’s economic development. On the contrary, under Xi’s leadership, state dominance began to grow in the system. The following years were marked not so much by the successful implementation of the reforms approved at the plenum, but rather by the evolution of a system with a single leader, which soon became known as the “Xi Jinping idea”.

In politics, he argues, the CCP must restore its former internal solidarity, political control, and cultural dominance. Behind this party-centred facade, Xi Jinping has waged a massive anti-corruption campaign to eliminate real and potential political rivals, take direct control of policy-making in all important areas, abolish the 10-year tenure set by Deng Xiaoping for top leaders, and re-establish a Mao-style personality cult against himself. 

Xi Jinping insists that the economy will no longer emphasise growth at all costs. Going beyond toothless Hu Jintao-style platitudes, Xi Jinping said that state ownership and increased state supervision and regulation will be used to establish more robust party-state control over the economy, and that such control will be used more forcefully to achieve the party’s ideological goals, such as serving shared prosperity (greater equality) and socialist culture (a combination of party loyalty, traditional morality, and Chinese nationalism). In foreign policy, Deng Xiaoping’s patient and peaceful approach, often described by the phrase “hide strength and never stand out,” should be replaced by a “Chinese dream of national rejuvenation,” in which China uses its growing military, economic, and cultural power to “take the forefront” of world politics. 

During his first two terms, Xi Jinping focused more on political goals and ideological reforms, much to the detriment of economic development. The coronavirus pandemic and slowing economic growth pushed Xi to seek compromises – the political and ideological reforms of recent years have not led to economic growth. After four decades of market reforms and global integration, China’s economy has reached a new level and needs an innovative growth model to overcome the so-called middle-income trap – where labour costs are already quite high and productivity growth has slowed. 

After Xi Jinping secured a historic third term at the 20th Congress of the CPC Central Committee, the Third Plenum of 2024 was supposed to be a new milestone in China’s economic modernisation, especially since the economy had accumulated enough problems.

Problem economy

The year 2023, the first “quiet” year for China’s economy without lockdowns and restrictions in a long time, left a double impression.  Last January, Chinese authorities officially downgraded the COVID-19 threat status, lifting most of the restrictions imposed during the pandemic. For the first time in three years, China’s economy spent without closing major cities and logistics hubs and without restricting the movement of people. At first glance, one might say that the country has managed to return to a sustainable growth rate: the economy grew by 5.2 per cent, exceeding the 5 per cent target set. However, this growth rate is largely due to the low base of 2022, when China’s GDP added just 2.9 per cent. Unless you count 2020, when the world was just facing a pandemic, China’s economy has not grown this slowly since the late 1980s, the time of the massive restructuring that culminated in the Tiananmen Square events. 

How did the Chinese economy grow? The GDP figures of any country are based on four main areas: consumption, investment, government spending and net exports. Household consumption, which accounted for 82.5 per cent of total GDP growth in 2023, is the first thing to thank for the economic recovery. The problem with this growth, however, is its volatility. After the pandemic restrictions, demand for hotels, catering, logistics services and retailing has risen sharply from a low base. From the second half of 2023 onwards, the consumption momentum started to weaken and will no longer be able to show similar growth in 2024, given the deflationary processes in the economy, which lasted for the fourth consecutive month. 

The rest of GDP components are represented by modest indicators. Weak global demand and the pre-recession state of major trading partners in the West led to a 1.3% decline in China’s net exports. Investment in the manufacturing and infrastructure sectors grew by 6.3% and 5.8% respectively. However, the main impact on these sectors was investment through state-controlled companies. While private investment, after rising in the first four months, started to decline, which was of particular concern to the government. 

According to the Chinese press, China’s private sector is unofficially called “56789”, emphasising its importance: it accounts for 50% of tax revenues, 60% of GDP, 70% of innovative patents, 80% of jobs and 90% of companies in the whole country. To support private business, the government has announced 17 measures, including preferential financial support, the creation of special funds, and assistance to local governments. The real estate sector remains an investment blemish, where investment fell by 9.1%. This follows a significant drop of 10 per cent in 2022. And 2024 looks set to be no exception.  Although it was the property market that contributed to the impressive growth of the Chinese economy from the early 90s to the late noughties. Investment in this sector generated a multiplier effect, fuelling demand in other areas of the economy. However, the situation has changed over the past 15 years. 

Continued investment “by inertia” on the part of local authorities has resulted in a lot of empty developments, accumulation of debt on the part of developers and non-performing loans. The economy simply could not absorb such volumes of construction. This situation was compounded by government influence on the issuance of loans in the PRC banks that financed the massive development. The real value of the assets against which the loans were issued was below book value. 

Back in 2020, the government was concerned about the volatility of the property market, which generates about 25-30% of the country’s GDP. At that time, China introduced a “three red lines” policy to reduce the debt risks of property developers. For example, the debt load of property developer Evergrande exceeded the external sovereign debt of Saudi Arabia, Luxembourg, and Croatia combined. Beijing intends to tighten state supervision of the market. In addition to restrictions, stimulative measures were taken: mortgage policy was relaxed, and requirements for buyers of primary housing were eased. There are some signs of market improvement, which are still not enough to reverse the trend, and Evergrande Group is preparing for liquidation in a Hong Kong court. 

A few words about this famous Chinese holding and its main shareholder. Evergrande Group is an exemplary investment giant, hardly the largest residential property operator in China (in the Chinese South – definitely the largest). Everything in it corresponded to the parameters set back in the 1990s – and registration in the Cayman Islands, and the allegedly joint-stock nature of ownership, while in fact the holding was owned by Chinese billionaire Xu Jiayin (also known as Hui Ka Yan). Xu Jiayin, a native of Henan Province and a member of the CPC, was chairman of the board of directors and secretary of the party committee of China Evergrande Group, as well as vice president of the China Entrepreneurship Federation, vice president of the China Real Estate Industry Association and honorary president of the Guangdong Charity Federation. Back in March 2016, he became chairman of Evergrande Financial Group, the holding company’s financial engine.

In September 2023, Xu Jiaying, as reported in Chinese media, “was suspected of violating the law and committing an offence, and coercive measures were taken against him in accordance with the law.” Following this, Xu was slapped with a multi-million dollar fine and banned from securities trading for life.

The Chinese economy enters 2024 with a number of unresolved problems: low consumer demand, deflationary processes, uncertainty in foreign trade, weakened private investment activity and a crisis in the property market. And while infrastructure investment remains one of the government’s most effective tools to support economic growth, even it cannot deliver sustained double-digit growth year on year to compensate for lags in other areas.

The next problem is demography. For the first time in 60 years, China has recorded a decline in the total population. In 2022, there will be 850,000 fewer Chinese people. In addition, the average age of the Chinese is growing rapidly, the population is aging, which means an additional burden on the economy. Older people consume less and thus stimulate economic growth less. At the same time, the number of unemployed young people is breaking records: in June 2023, their share reached 21.3 per cent, almost double the pre-pandemic level.

China is the largest buyer of energy resources in the world. It is also Russia’s main trading partner. China’s economic problems may affect world prices for oil and other raw materials. So China’s problems will also become Moscow’s problems. Another brake on the Chinese economy is the trade and technological war with the United States. Any further rapprochement with Russia will add arguments for the Americans to increase pressure on China and complicate Xi’s attempts to maintain good relations with the European Union, the main market for Chinese goods.

Tense relations with the US, including against the backdrop of the Russian-Ukrainian war, discourage foreign companies. They are in no hurry to invest in China, either because of the restrictions already imposed or because of fears of future sanctions, including those related to Ukraine or Taiwan. Western companies are looking for new locations to expand production, and money is going to India, Vietnam, Egypt, Turkey and Mexico.  It is now quite clear that China will not be able to overtake the US, as the slowdown in economic growth will be more significant than previously thought, the decline in foreign investment in the Chinese economy, demographic problems in addition to weakening economic ties with the US only exacerbate the problems in the economy caused by structural problems.

At present, two mutually exclusive vectors are simultaneously at work in the Chinese economy: the Party’s tightening control over the economy (which leads to slower growth) and the need for further liberalisation and attraction of investment and technology. The Third Plenum of the CPC Central Committee hoped to find an answer to this question.

Anxious expectations

It should be said that the holding of the Third Plenum immediately created intrigue. The fact is that it is usually held in November-December, but this time it was postponed until July. There were theories that the postponed plenum was a consequence of disagreements in the leadership of the Communist Party of China about the further path of development. Everyone froze in anxious anticipation.

As we have already noted, 2023 in China was marked by the creation of favourable investment and business activity. At the central level, the government removed barriers to market entry and eradicated unfair procurement practices. Local governments competed to attract investment by offering competitive terms such as tax preferences and land tax exemptions. Some regional authorities even returned investment attraction targets. Local Party secretaries spent more time travelling around China to meet with business representatives than working in the office. Therefore, the postponement of the Third Plenum created anxiety in the sense that local governments did not know how long the investment attraction policy would last and feared that new directives from Beijing would make their efforts futile. 

The concerns of local party functionaries were also shared by the business community. Many companies believe that China is now a “buyer’s market” because of government policies supporting investment. A significant number of entrepreneurs are still hesitant. Businesses need predictability, something that is lacking in China today. The uncertainty of recent years has forced them to be cautious and wait for clearer signals. Businessmen reasonably feared that deals made today with local governments might not be realised due to sudden political changes. To add to this, barriers at the regional level, both between provinces and between cities and counties, have never been resolved. 

Each province sleeps and sees its own industrial giants on its territory, providing tax revenues. At the macro level, Xi Jinping is working to promote regional cooperation, but at the local level, authorities continue to influence the results of tenders and prevent the free flow of goods and services between provinces. One existing problem is the current hukou household registration system, which imposes significant restrictions on labour mobility both between urban and rural areas and between different administrative entities within the country. Provinces continue to be a state within a state.  

Another acute problem that was to become the focus of the Party forum was the growth of domestic consumption. For 10 years, the CPC leadership has unsuccessfully tried to shift the economic model towards domestic consumption. To increase domestic demand, money is needed. Reforming the social security system would be one way to solve the problem. The next question is: how should financial obligations be shared between the centre and local governments? The assumption is that cost-sharing could be restructured, with Beijing taking on more spending to stimulate economic growth as regions struggle with rising debt risks and declining land revenue. This entails the need for tax reform. 

Reforming the value-added tax, the largest source of tax revenue in China, could increase local government revenues. And then the revenues could be spent not only on the implementation of political KPIs sent from the centre, but also on solving local problems, including stimulating economic growth. Another key issue is attracting foreign investment.  Will Xi send a new signal to foreign companies? This is also a question of questions. Here the expert community can be divided into optimists and pessimists. Optimists quoted Xi Jinping, who said in May 2024 that “China’s policy of reform and opening up will remain unchanged for a long period of time, and China’s doors will never close. Pessimists, on the other hand, noted that this contradicts Xi’s “self-reliance” policy. 

Bloomberg analysts, on the eve of the plenum, highlighted their three topics to which the CPC leadership, in their opinion, may pay special attention: First, to increase taxes. The solution could be to expand the consumption tax, which is currently levied only on alcohol, tobacco, cars and refined petroleum products, to include luxury goods. Second, working through the increase in the retirement age. The retirement age in the PRC has not changed for more than 40 years and is 60 years for men, 55 years for women in the office sector and 50 years for women in the labour force. The share of the elderly may increase to one-third of the population by 2030. 

The authorities are doing their best to reverse the demographic situation by offering incentives to families to have one more child and expanding state health insurance. However, the effect is still unclear, and measures to increase the retirement age will reduce the rate of decline in the working-age population, but may prove very unpopular and provoke social discontent. Third, specific measures to attract foreign investment. China’s economic rivalry with the United States, the ongoing relationship with Russia during Western sanctions, the border dispute with India, and other geopolitical issues are affecting the already declining flow of foreign investment into the country. Senior officials have said they would open more of China’s markets to foreign firms and lift unreasonable restrictions to convince the world that they are ready to host big business, but so far this has not happened. 

In general, the opinions of both Western and Chinese expert communities were divided regarding the upcoming Third Plenum of the CPC Central Committee. The Western media were increasingly pessimistic. The main question is whether the CPC leadership will have the courage to carry out radical reforms to stimulate the economy or whether the ever-increasing level of control over all areas of life will remain at the centre of attention. Chinese experts immediately raised the bar of expectations, calling the upcoming party forum nothing less than epochal. However, despite the polarity of assessments, one thing was clear: the Third Plenum must provide answers to the crisis phenomena that have been observed in the Chinese economy in recent times, as well as to the deteriorating external environment. 

Long-awaited plenary meeting

And so, in July 2024, the long-awaited Third Plenum of the CPC Central Committee of the 20th convocation was held. It should be noted that it did not attract much attention of the world community. It did not result in a sharp escalation of the political struggle in the Chinese top brass, nor did it put forward any teeth-grinding slogans. The removal of former Foreign Minister Qin Gang from the CPC Central Committee announced at the forum did not become news, as it was already known in advance. However, however, Qin Gang is called in the communiqué “comrade”, which apparently means that he, despite his alleged extramarital affair with a journalist, still retained his party card. This is in contrast to former defence minister Li Shanfu, as well as former PLA missile commander Li Yu-chao and former missile chief of staff Sun Jinmin, who were expelled from the party for alleged bribery. Among other things, this opens the door to their further criminal prosecution. Corruption in the CCP is, of course, considered a much more serious offence than adultery.

The course of the plenum was not broadcast on television, but, as far as we know, no one was taken out of the meeting room or carried out, as was the case, for example, in 2022 with former Chinese President Hu Jintao. In short, there were no special reasons for hype.

The work of the 24-member bureau headed by Xi since 2022 has received the approval of the Central Committee, which has labelled one of the results of its work as a trend towards “economic recovery and improvement”. “In the face of a complex and confusing international environment”, the CPC plans to “give more prominence to reform”. This should make it possible to fully build a “high-level socialist market economy” by 2035. And the next global goal in China is to build “a modernised socialist power by 2049, the 100th anniversary of the founding of the People’s Republic of China. But also by the 80th anniversary of the formation of the People’s Republic of China, i.e. by 2029, the Communist Party has set itself several intermediate goals, which for a person unfamiliar with the Chinese worldview look quite abstract. Among them are the construction of a “beautiful China” and a “tranquil China” (we are talking about China’s security both inside the country and in the external arena, including through the modernisation of the People’s Liberation Army of China).

China’s current economic policy is literally woven with contradictions. On the one hand, the communiqué talks about the need to make better use of the role of the market and even that restrictions on it will be lifted. And at the same time it talks about effective regulation to “better maintain order and eliminate market failures.” Experts are now asking: what exactly are the restrictions that will be lifted and how will the balance between market elements and administrative regulation be struck? 

Among other things, the party’s intentions to seek “equal access to factors of production” for all economic entities regardless of their form of ownership seem contradictory. The reality is that it is much more difficult for private enterprises to obtain loans than for state enterprises and to defend their property rights. Despite the rather active discussion of support measures, the situation does not change from year to year – on the contrary, during Xi Jinping’s presidency, the pressure on business has only increased.

As expected, the issue of huoku – the registration system of Chinese households, especially rural settlements – was raised. Decades of economic boom and urbanisation in the country have led to a huge influx of rural population into the cities, resulting in a large swath of vacant property in the countryside. Allowing market transactions in agricultural land would lead to greater urbanisation, higher levels of land use and greater economic benefits for rural residents. By some estimates, the abolition of hukou will lead to a 30 per cent increase in consumption for the 200 million peasants living in urban areas, and the 400 million middle-income group (the largest in the world) will continue to grow.

One of the main obstacles facing many cities on the road to the “new urbanisation” proclaimed by the plenum is the financial predicament in which local governments have found themselves in recent years: the accumulation of municipal debt, the real estate crisis (which is estimated to account for over 25% of China’s GDP) and the growing imbalance between revenue inflows and expenditure responsibility. In 2022, local governments received 53 per cent of total revenues while bearing 86 per cent of costs. So once again the age-old dilemma arises: whether to give more taxes to local governments or consolidate tax revenues to the central government. And it appears that the “Decision” of the Third Plenum suggests a choice in favour of the latter to improve the fiscal, tax and financial systems. For this purpose, it is planned to create a “national strategic planning system” to centralise greater fiscal responsibility and reduce local government spending.

The same applies to another priority identified at the plenum – scientific and technological innovation. This year’s communiqué refers to “a new system for mobilising resources across the country to make key technological breakthroughs”. It is about securing high-tech supply chains, especially after the US launched a trade war against China in 2018. The Central Science and Technology Commission was established in 2023. It is directly linked to the CPC Central Committee and therefore has, much more power to allocate resources across the country. The next phase of reform is likely to focus on further empowering this structure.

The ideological component of the plenum was also very predictable. Xi is again labelled as the “guiding core” of the CPC Central Committee, and his ideas on socialism with Chinese characteristics for the new era are decisive. Party members, the army and the entire Chinese people are being urged to rally their ranks even more closely around the Central Committee and Comrade Xi. However, new notes have also emerged. According to some experts, some turns of phrase – such as “not to forget the original goal” – that emphasised the declared desire of Xi Jinping and his team to remain faithful to the ideals inherited from the difficult yet romantic period of the CCP’s struggle for power have disappeared from the language of the plenum’s published documents. At that time, Mao Zedong and other leaders of the older generation marched in one column with the fighters of the Great Campaign (the strategic redeployment of Party forces to the Northwest, 1934-1936) and lived for a decade in the loess caves of Yan’an. Perhaps these lexical subtleties, little understood by outside observers, are also the result of internal party discussions and theoretical developments. 

Xi Jinping’s foreign policy 

As for foreign policy, the outcome document stressed that “China’s modernisation” is on the path of peaceful development. “It is necessary to firmly adhere to an independent and autonomous peaceful foreign policy, to promote the building of a community of the common destiny of mankind,” states the CPC Central Committee. It should be said that the core element of the PRC’s foreign policy concept is precisely the idea of the “Community of the Common Destiny of Mankind.” The 19th Congress of the Communist Party of China (October 2017) included a clause on promoting the establishment of the “Community of the Common Destiny of Mankind” (CCCM) in the programme section of the CPC Charter. Then, in 2018, this clause was also enshrined in the PRC Constitution. 

This concept was put forward by Xi Jinping in 2012. It notes that the world’s population is facing threats that one or more countries cannot cope with. These include, for example, resource scarcity, climate change, and environmental pollution. The resolution of these problems requires the co-operation of all countries of the world, the President of the People’s Republic of China is sure. The concept envisages refraining from waging wars, creating a common space for security, mutual exchange of experience between countries, applying innovative approaches in the economy, and maintaining a culture of diversity and equality.

One of the platforms for realising the community of common destiny of mankind that China promotes is the “One Belt, One Road” initiative. In practice, the Belt and Road is a global set of economic and infrastructural projects of the People’s Republic of China, which covers about 80 countries in Asia, Africa and Europe. Allegedly – unlike the practice of creating geopolitical or military alliances used by the US and other states. The success of China’s global “Belt and Road” project is evidenced by the participation of 148 countries and 31 international organisations. “The Belt and Road” is seen as an economic platform that ensures broad participation on a non-discriminatory basis, builds international consensus, deepens political connectivity and combines the strengths of all participating countries. 

The project covers the whole of Eurasia, Africa and the Middle East. The success of the Belt and Road project is considered to be the practical promotion of the modernisation of developing countries and the beginning of a “new era of transcontinental cooperation”. In addition to the Belt and Road Initiative, three other functional projects – the Global Development Initiative, the Global Security Initiative and the Global Civilisation Initiative – should ensure the implementation of the concept-plan of the community of common destiny. The Global Development Initiative is the most popular, under which China has provided assistance and substantial aid to many developing countries. More than 100 countries and international organisations have expressed support for the Initiative. More than 70 countries participate in the Group of Friends of the Global Development Initiative established at the UN. 

Under the Global Security Initiative, China is implementing its approaches to maintaining international peace, including international conflict resolution, mediation efforts to resolve contradictions between different states, support for the UN peacekeeping mechanism, ensuring the safety of maritime navigation, etc. In essence, a summary of the initiatives being put forward can be summarised as follows: no one will be allowed to tell China what to do and how to live, and China in turn promises not to do so towards other countries that join its club.

All this emphasises that China has changed, and above all when it comes not only to the economy, but also to foreign policy and diplomacy. Today there is already a lot of evidence in favour of China’s global ambitions. It is not for nothing that China talks about the need to “nurture the garden of world civilisation”. Or Xi-civilisation, as some Chinese state media have dubbed the future construction. 

The final document of the congress did not ignore the issues of national defence. The communiqué calls for maintaining “the Party’s absolute leadership over the People’s Armed Forces. By the upcoming 100th anniversary of the People’s Liberation Army of China (PLA) in 2027, it is planned to “fully implement the strategy of the Armed Forces through reforms. As some experts point out, the slowdown in economic growth will not be able to curb China’s military build-up. The Chinese government has enough freedom and action in the budgetary sphere and no project, except perhaps internal security, is likely to be above military expenditures. 

With a planned GDP growth of 5 per cent in 2024, China has decided to increase its military budget by 7.2 per cent to $231bn, the draft budget shows. By comparison, the US defence budget for 2024 is $886.3bn, while Russia’s is $118bn, Reuters reported. China has increased defence spending for the ninth consecutive year. The agency had at its disposal a report accompanying the draft budget. In particular, it says that China will resolutely oppose “separatist activities aimed at Taiwan’s independence and external interference.” The document emphasises that the PRC will be “resolute in striving for China’s reunification”. 

The Agency notes that the report does not contain the wording “peaceful reunification”, which was contained in similar documents of previous years.  At that time, outside China, it was instantly interpreted as a signal that an invasion of the island was about to begin. But as explained in the Chinese government, everything turned out to be much simpler: because of the discussion of the then more topical COVID-19 topic, part of the report was simply shortened and the word “peaceful” came out accidentally. Nevertheless, Western experts believe that China poses a threat to the rest of the world today not because of the narrowing window of economic opportunity. They believe that the architect of this narrowing is largely Xi Jinping himself. The goals and methods that they believe encourage Xi to slow China’s economic growth and make him much more dangerous in the foreign policy arena.

Summarising the results of the Third Plenum, it should be noted that it would be not quite correct to consider it solely from an economic and social point of view. In the opinion of many experts, it is not the results themselves that are of interest, but the way in which Xi is building a line of behaviour and strengthening his position.  Two years ago, he became the first president in Chinese history to be elected for a third term – until 2027. In 2022, the 20th CPC Congress reaffirmed the course of maintaining the policies pursued since his leadership, which Beijing has, in fact, consistently followed. Xi has firmly retained a leading role in making any policy decisions and strategising until 2029, while making it clear that he is also seeking a fourth term. In this context, therefore, the Third Plenum focused not so much on presenting a major reform package, but rather on emphasising – a key feature of the “new reform era” is the dominance of the country’s leadership. The emphasis on governance, and especially on approaches based on socialist ideology and on consolidating power with Xi Jinping at its centre, is certainly not the answer the West would like to hear. 

Therefore, the final communiqué of the Third Plenum essentially reinforces the direction that Xi is setting. According to Steve Tsang of SOAS China Institute, technocrats within the party are as disappointed with the outcome of the Third Plenum as investors. For the foreseeable future, he believes the CCP will bring political and social stability to China, but it won’t do much to restore economic vitality. The official GDP growth target for 2024 is 5 per cent, but it will be very difficult to achieve. Economists are aware that if China’s economic growth continues to be unstable, unbalanced and unsustainable, the economic and political situation will worsen with each successive year of postponement. 

If the current economic model with minor cosmetic changes, which places greater emphasis on security rather than economic growth, fails to produce tangible results, it could also become a factor of domestic political instability. And if economic reforms are too radical, deep economic reforms may lead to unpredictable domestic political consequences – citizens’ demands for more active political participation and a stronger role for private business. This is what the West hopes for, but not Xi Jinping.