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China's Xi pledges 'unswerving' reforms, but on own terms

Published 12/18/2018, 05:03 AM
© Reuters. Alibaba's Executive Chairman Jack Ma holds his certificate at an event marking the 40th anniversary of China's reform and opening up at the Great Hall of the People in Beijing
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By Kevin Yao

BEIJING (Reuters) - Chinese President Xi Jinping called on Tuesday for the unswerving implementation of reforms on Beijing's terms, saying no one could boss it around, but offered no new measures in a speech marking 40 years of market liberalization.

In remarks lasting nearly an hour-and-a-half, Xi called for support for the state economy and development of the private sector, and said China would expand efforts at opening up and ensure the implementation of major reforms.

China's substantial support of its sprawling state sector is a point of contention with the United States.

Xi was speaking amid mounting pressure to accelerate reforms and improve market access for foreign companies as a trade war with the United States weighs on the economy.

But he said China had to make its own decisions.

"There is no text book that can provide a golden rule, and there is no instructor who can boss around the Chinese people," Xi said at Beijing's Great Hall of the People.

Xi was speaking on the day China has marked as the 40th anniversary of the start of late leader Deng Xiaoping's campaign of "reform and opening up", which led to explosive industrial growth that made China's economy the world's second-largest.

"We must, unswervingly, reinforce the development of the state economy while, unswervingly, encouraging, supporting and guiding the development of the non-state economy," he said.

Xi reaffirmed the ruling Communist Party's leadership in all aspects of society and said reforms should be in line with the overall goal of improving the socialist system with Chinese characteristics.

"Opening brings progress while closure leads to backwardness," Xi said.

"Every step of reform and opening up is not easy. In future, we will be inevitably faced with all sorts of risks and challenges, and even unimaginable tempestuous storms," said Xi, stressing the role of the Communist Party.

But his remarks failed to excite investors. The Shanghai Composite index ended down 0.8 percent, while the blue-chip CSI300 index lost 1 percent, tracking broadly lower Asian shares.

"Despite promises of the importance of the speech, very little new was announced, particularly given its similarity to parts of Xi's speech at the Politburo meeting a few days prior," said Jonas Short, head of the Beijing office of brokerage Everbright Sun Hung Kai.

Short said attention would now focus on the Central Economic Work Conference expected later this week for clues on policy direction.

'TORMENTS WON'T COME BACK'

The trade war with the United States has spurred some entrepreneurs, government advisers and think-tanks to call for faster reforms and the freeing up of a private sector stifled by state controls and struggling to gain access to credit.

Xi and U.S. President Donald Trump agreed early this month to a 90-day truce in the trade dispute, which halted the threatened escalation of punitive tariffs while the two sides negotiate.

William Zarit, chairman of the American Chamber of Commerce in China, said there would be plenty of other opportunities for China to offer greater substance for a foreign audience.

"We know that China doesn't want a trade war, so we are optimistic that real opening up can still take place before the 90-day window closes on March 1," Zarit said in a statement.

In his speech, Xi enumerated the accomplishments of China's development since it moved away from a planned economy, when basic goods were rationed and often scarce.

"Grain coupons, cloth coupons, meat coupons, fish coupons, oil coupons, tofu coupons, food ticket books, product coupons and other documents people once could not be without have now been consigned to the museum of history," he said.

"The torments of hunger, lack of food and clothing, and the hardships which have plagued our people for thousands of years have generally gone and won't come back."

Numerous luminaries in attendance were cited for their contributions to economic reforms including the heads of online giants Alibaba (NYSE:BABA), Tencent Holdings and Baidu and carmaker Geely Automobile Holdings, a nod to the role of the private sector.

Xi's emphasis on the need for "top-level design" suggested he is not willing to significantly reduce the state's role in the economy, Beijing-based political commentator Zhang Lifan said, noting that the trade war had already hurt the economy.

© Reuters. Alibaba's Executive Chairman Jack Ma holds his certificate at an event marking the 40th anniversary of China's reform and opening up at the Great Hall of the People in Beijing

"He is talking about the need for a strong government, big and powerful state-owned enterprises and large-scale investment. It seems his thinking on this has not changed," Zhang said.

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