Foreign commentators and local bloggers regularly predict that China is heading for an economic and political crisis. But the country’s leaders are in strikingly confident mood. They believe that China can keep growing at more than 7 per cent a year for at least another decade. That would mean the country’s economy – already the second-largest in the world – would double in size. And, depending on the assumptions you make about US growth and exchange rates, it would probably mean that China becomes the world’s largest economy by 2020.
Nobody embodies the leadership’s confidence better than the burly, imposing figure of Xi Jinping, China’s president. Last week, I was part of a group of foreign visitors – brought together by the 21st Century Council, a think-tank – who met the Chinese leader in Beijing.
Mr Xi’s manner is warmer and less formal than that of Hu Jintao, his slightly robotic predecessor. Yet the staging of the meeting had faint echoes of Chinese history, in which foreign barbarians paid tribute to the leader of the Middle Kingdom.
The president sat in an armchair in a cavernous meeting room in the Great Hall of the People, with a vast mural of the Great Wall of China behind him. Arranged in a semi-circle in front of him was a group of former presidents and prime ministers from other nations, including Gordon Brown of Britain and Mario Monti from Italy. In the semi-circle behind them were some western business leaders, and a smattering of “thinkers”.
President Xi started his remarks by pronouncing himself “deeply moved by the sincerity you have shown”. He then proceeded to give a confident presentation of his vision for the “great rejuvenation of the Chinese nation”.
In remarks that were widely picked up by the Chinese media, Mr Xi dismissed the idea that China risks falling into a “middle-income trap” that stalls its development and said he was confident that rapid growth could continue, without the need for further stimulus measures.
Exactly how China will sustain its growth and strengthen its global position is, however, the subject of intense discussion among the country’s leadership, as became clear in a series of other meetings arranged for our group with top military, diplomatic and economic policy makers.
Decoding these debates is not always easy, given that Chinese officialdom remains deeply attached to slogans. If the members of the 21st Century Council had been forced to drink a shot every time they heard the phrase “Chinese dream”, “peaceful development” or “harmonious world”, most of them would have been under the conference table fairly swiftly.
Nonetheless, several themes are clear.
The Communist party plenum that convenes in Beijing later this week is being talked up as a turning point for economic reform. Some officials even compare it to the historic plenum in 1978, in which Deng Xiaoping launched the entire process of “reform and opening up” that has transformed China. Economic liberalisers are in a confident mood. Li Keqiang, prime minister, pledged to “deepen reform comprehensively” by promoting changes in the “fiscal, financial, pricing and enterprise fields”.
The details of these changes may emerge only in the months after the plenum. But the key target that liberalisers have in their sights is the network of mammoth state-owned enterprises, whose role has actually expanded over the past decade. The real optimists think that the Xi-Li team may even start privatising some of the state-owned behemoths, such as China’s National Grid. Others merely hope that the power of the SOEs will be reined in, giving more room to private enterprise. Yet almost everybody acknowledges that the state-owned enterprises have huge lobbying power and will be very difficult to control.
Changes are also promised in the relationship between the central government and local administrations, although they sound contradictory. On the one hand, there is a pledge to rein in out-of-control borrowing by local governments. On the other, there are promises that provincial governments will be allowed more room to experiment.
While there is occasional talk of political reform, the phrase seems to mean a drive against corruption and a promise to make government more accountable. There is no suggestion of movement towards a Western-style democracy. On the contrary, Mr Xi is clearly determined to maintain the Communist party’s central role in running China.
I left Beijing with some doubts about Mr Xi’s programme. It is hard to see how an anti-corruption drive can truly succeed without a free press, rival political parties or truly independent institutions to act as a check on party officials. And while Chinese leaders routinely stress their commitment to global peace, the fact is that tensions with Japan are rising dangerously. Any clash would be disastrous for the settled trading system on which China depends.
Finally, environmental concerns are growing. But it is far from clear that a system that is superb at producing growth is also capable of providing clean air and water.
Yet the record of the past 30 years should encourage some humility in sceptical foreigners such as myself. Predictions that the Chinese economy is about to crash – or that the political system will soon implode – have been a regular feature of outside analysis of China for 20 years and more. So far the country’s political leadership has regularly proved the sceptics wrong. Given that record, it would be a brave person who bet against the success of the Xi reform programme.
Copyright The Financial Times Limited 2013.