Xi Jinping’s speech on the 40th anniversary of the creation of the Shenzhen Special Economic Zone—the first of China’s market reform policy SEZs—outlined his vision for an increasingly domestically-oriented economy, better able to weather a turbulent world. Facing “great changes unseen in a century,” changes which in Xi’s eyes have been accelerated by the coronavirus pandemic and its accompanying global recession, Xi proposed China embrace “dual circulation” strategy as its guiding economic principle. The theory “envisions a new balance away from global integration (the first circulation) and toward increased domestic reliance (the second circulation).” Although the speech contained few new policy proposals and was delivered in Xi’s normal staid style, it may serve as an indication of China’s future economic policy. From Chris Buckley at The New York Times:
Mr. Xi’s speech in Shenzhen gave a likely preview of a Communist Party leaders’ meeting late this month, when he will lay out China’s economic strategy for the next five years, including harnessing more domestic innovation and consumer spending.
Mr. Xi pledged to make Shenzhen a proving ground for upgrading China’s economy and strengthening innovation, citing plans to step up spending on technology research. He stressed Shenzhen’s importance in a regional economic initiative that also encompasses Hong Kong, a strategy that could enhance Chinese influence over the former British colony and underscore its reduced importance for Beijing.
Mr. Xi’s speech and other comments during his trip this week to Guangdong Province, which includes Shenzhen, have also underscored his effort to redefine China’s decades-old strategy of “opening up.”
Past leaders stressed drawing in foreign capital and technology to help China catch up; Mr. Xi wants to shift the balance by taking Chinese technology, investment and power to the world. [Source]
Xi intimated that in the future Hong Kong’s development might be guided by that of Shenzhen, saying, “Shenzhen should also promote development of Guangdong, Hong Kong, Macao — (the) Greater Bay area — and enrich the new practice of ‘one country, two systems’.” Telling of the re-ordered relationship between Hong Kong and the mainland, Chief Executive Carrie Lam postponed an annual policy address in order to attend Xi’s speech.
Carrie Lam will delay her annual policy address from Wednesday to next month, citing an upcoming trip to Beijing that may unveil new economic aids. Xi Jinping's Shenzhen trip is the obvious conflict. The late change and mushy explanation all telling of the HK government's status
— Austin Ramzy (@austinramzy) October 12, 2020
— Chris Horton 何貴森 (@heguisen) October 14, 2020
The delay is unprecedented. Kenji Kawase of Nikkei Asia explained the history of the annual address:
Hong Kong’s policy address traces its history back to the colonial period in 1972 when then-Governor Murray MacLehose delivered the first one, entitled the “Address by H.E. His Excellency the Governor” and modeled after the Queen’s Speech in the U.K., in order to strengthen communications with local residents following leftist riots in 1967.
The speech became known as the annual policy address in 1986 and the event was inherited by the city’s chief executive after the 1997 handover. Article 64 of the Basic Law, the territory’s mini-constitution, stipulates that the government of Hong Kong, headed by the chief executive, “shall present regular policy addresses to the Legislative Council.” [Source]
At The Washington Post, Eva Dou and Shibani Mahtani report on Xi’s warning about the precariousness of Hong Kong’s favored status:
To the south, Hong Kong was the outward-facing one, an English-speaking center of finance and trade that was allowed — until recently — a greater measure of free speech.
Beijing is now pushing the balance in favor of Shenzhen, with a new blueprint to turn the city into a world-class hub for finance, trade and other sectors that have long been Hong Kong’s remit.
It is, in effect, doubling down on its domestic economic experiment, while leaving the prospects uncertain for the other one across the river, the former British colony that continues to resist Beijing’s rule.
[…] The top-level support for Shenzhen was meant to be a message for Hong Kong, said Victor Gao, a chair professor at China’s Soochow University and a former Foreign Ministry official.
“If you do not have stability, if you are caught up in revolution, or great turmoil, or anarchy, then you will lose out on whatever advantages and resources you may have previously had,” Gao said. “Then your economic development will reverse course.” [Source]
During his speech, Xi encouraged Hong Kong youth to move to China, saying “fully utilize the important platform of Guangdong-Hong Kong-Macau cooperation to attract more young people from Hong Kong and Macau to study, work and live in the mainland.” Youth discontent with mainland interference has long fueled Hong Kong’s protest movement. Polls conducted by the Hong Kong Public Opinion Research Institute show that only 3.7% of Hong Kongers between the ages of 18 and 29 viewed themselves as “Chinese” in June 2020, while support for Xi Jinping has fallen among all age groups from 65.5% in 2017 to 39.9% in 2020. The sea capture by Chinese authorities of 12 young activists fleeing perceived persecution in Hong Kong has reinvigorated the protest movement. The “Hong Kong 12” are currently being held in Shenzhen.
Shenzhen is home to many of China’s most important “tech champions,” including Huawei, ZTE, and Tencent. The city’s new five-year plan, unveiled before Xi’s speech, “showered” the city with preferential economic policies. For the South China Morning Post, Josephine Ma and Gui Rui report on Xi’s desire to oversee a second Shenzhen “economic miracle” in the face of heavy U.S. pressure:
In the audience on Wednesday was Ren Zhengfei, founder and CEO of Shenzhen-based Huawei Technologies, whose manufacture of mobile phones and devices suffered a serious blow after the US banned chip exports to China.
Cao Zhongxiong, director of the New Economy Research Centre at the China Development Institute, said Xi was hoping that Shenzhen’s edge in innovation could provide a way out for the country’s hi-tech industries that have been hit by US sanctions.
“In this critical moment when international supply chains have blockaded China, how can Shenzhen come up with its own innovation supply chain? … This is a task for Shenzhen,” Cao said. [Source]
Huawei’s founder Ren Zhengfei gets a front row seat as Chinese President Xi Jinping deliverers a speech in Shenzhen to commemorate the creation of the special economic zone. #huawei #China #Shenzhen #xijinping #hk pic.twitter.com/EgVB2J4o1y
— Gao Yuan (@GaoYuan86) October 14, 2020
Ren Zhengfei’s daughter, Huawei CFO Meng Wanzhou, is currently undergoing extradition proceedings in Canada. She is wanted in the United States for fraud charges relating to Huawei’s alleged business dealings with Iran.
Xi made only one oblique reference to his own family legacy in Shenzhen:
While Xi may be reluctant to openly invoke his father's legacy in Shenzhen's economic development, others have publicly done so on his behalf. @WSJ story from 2018, when China marked the 40th anniversary of "reform and opening up." https://t.co/F0vrKEFURj https://t.co/gzwyjA9y6Z
— Chun Han Wong 王春翰 (@ByChunHan) October 14, 2020
Despite Xi’s reticence on the subject, the Chinese public is well aware of Xi Zhongxun’s role in Shenzhen’s early Opening and Reform history. In 2018, the painting “Early Spring” went viral after netizens mistakenly believed it showed Xi Jinping lecturing Deng Xiaoping on the best practices of economic reform. In fact, the painting was of Xi Zhongxun, and the meeting, as depicted, never happened. In a 2018 post China Media Project detailed the rise of Xi Zhongxun as a public historical figure, at the expense of his fellow reformer Hu Yaobang.
In fact, the key supporter for the SEZs in Beijing at the April 1979 meeting mentioned in XJP's speech was not Deng Xiaoping, but Hua Guofeng. In his later years, Xi Zhongxun privately complained that Deng should not be given credit for everything.
— Joseph Torigian (@JosephTorigian) October 14, 2020
Private grumblings aside, Xi publicly honored Deng Xiaoping by laying a basket of flowers at the base of Deng’s statue and bowing towards it. Notwithstanding Xi’s publicly pious attitude towards Deng, Xi’s subordinates used language that indicates “Xi Jinping Thought” might soon be elevated above his predecessor’s eponymous theory. At the China Media Project, David Bandurski analyzed the significance of the phrase “raising high” as a preface to “Xi Jinping Thought on Socialism with Chinese Characteristics for the New Era”:
A quick look through the text of Xi’s Shenzhen speech suggests little or nothing of fresh import. It is very much worth noting, however, that Guangdong’s top provincial leader, Party Secretary Li Xi (李希), talked shortly after Xi’s speech about the need for “raising high the great banner of Xi Jinping Thought on Socialism with Chinese Characteristics for the New Era” (高举习近平新时代中国特色社会主义思想伟大旗帜).
Why is this significant?
This is in fact the first time since the onset of the Covid-19 epidemic in January this year that a member of the Politburo, the elite 25 officials who oversee the CCP, has aggrandized Xi (this is what the “raising high” in this case accomplishes) in his presence with reference to his banner term. And even before January, the use of this phrase was exceptionally rare.
[…] Not at all unlike the Cultural Revolution era phrase, “Raising high the great banner of Mao Zedong Thought” (高举毛泽东思想伟大红旗), once the shortening of Xi’s banner term has been successfully achieved, the phrase, “Raising high the great banner of Xi Jinping Thought” can be introduced normally into media and official discourse. [Source]