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Politics

Xi's answer to trade war starts with Party supremacy

Speech on 'reform and opening up' underscores turn back to state control

The Communist Party leads everything in China, President Xi Jinping said in a speech Tuesday to mark the 40th anniversary of Deng Xiaoping's "reform and opening up" program.   © AP

BEIJING -- The Communist Party must firmly maintain leadership in all areas of work, Chinese President Xi Jinping declared Tuesday in a speech that, while intended to mark the 40th anniversary of Deng Xiaoping's "reform and opening up," seemed to represent a departure from some of its core ideas.

Although the leader spoke of the need to continue Deng's economic reform policy, the defiant tone of his speech signaled that tensions with the U.S. over trade, technology and global influence were likely to continue into the foreseeable future.

In his address at Beijing's Great Hall of the People, which was attended by Alibaba Group Holding founder Jack Ma Yun and Tencent Holdings CEO Pony Ma Huateng, Xi cited the importance of party leadership as the first of the lessons learned from four decades under the program, calling it the "most essential attribute" and the "greatest strength" of socialism with Chinese characteristics.

"It is by upholding the centralized, unified leadership of the party that we have been able to achieve the historic transformation" and "usher in a new era of reform and opening up," he said.

Deng introduced the policy in 1978 to rebuild an economy battered by the Cultural Revolution. In the 40 years since then, China's gross domestic product has swelled 220-fold. The secret of success for the reform program was scaling back the state control established in the planned-economy years while gradually giving the market a larger role in determining the flows of people, goods and money.

Xi, meanwhile, has allowed market-oriented reform to fade into the background while strengthening his control over the economy in the name of "party leadership." Despite the central role of markets in Deng's program, the current leader used the word "market" only a handful of times in his 80-minute speech.

"The party, government, military, civilian, academic and everything in the east, west, north and south ... the party will guide," Xi declared. This language, which originated with Mao Zedong, was added to the Communist Party charter at the twice-a-decade party congress last year.

This leadership naturally extends to markets and private-sector companies. At the ceremony, Alibaba's Jack Ma and Tencent's Pony Ma received awards for their "contributions to reform and opening up," publicly demonstrating that not even China's largest enterprises can escape the party's influence.

Going forward, "what to change and how to change ... must be based on whether it improves and develops socialism with Chinese characteristics," Xi said. "We will resolutely reform what should and can be reformed, and make no change where there should not and cannot be any reform."

Xi dropped language about the country's doors "only opening wider" that had been included in his speeches at the Boao Forum for Asia in April and the China International Import Expo just last month.

China faces growing pressure from hawks in Washington to open up its markets. With views split in Beijing on whether to take a hard line in response, Xi is in a tough position.

Tuesday's speech seemed meant to walk a tightrope between the two sides. Xi aimed a number of verbal jabs in America's direction without singling it out by name, including declaring that China opposes countries "imposing their will on others and interfering in other countries' internal affairs."

At the same time, he stated that "China will never develop itself at the expense of other countries," implicitly addressing concerns in the U.S. and elsewhere about the impact of the Belt and Road Initiative.

Washington and Beijing have put their trade war on hold until the end of February in an effort to work out their differences. While the talks deal with specific issues such as intellectual property protections and forced technology transfers, the dispute is rooted in American concerns about a Chinese economic model in which state involvement distorts markets. Xi's speech suggests that Beijing is unwilling to budge much on this point, which does not bode well for negotiations.

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