Last month, China’s ruling Communist party enshrined “Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era” into its constitution. The constitutional amendment was primarily about politics and power, especially the party’s power over all social spheres including corporate activity.
As with most Communist slogans, “Xi Jinping Thought” is a conveniently vague concept. One of Mr Xi’s predecessors, Deng Xiaoping, used the phrase “socialism with Chinese characteristics” to provide ideological cover for a series of essentially capitalist and market-orientated reforms that weakened party control over China Inc. Mr Xi is using the same phrase, with a “new era” twist, to reassert party control over state-owned enterprises and private sector groups. For such companies, the president’s assertion that “north, east, south and west — the party is ruler of all” has some very immediate consequences.
After three decades in which China Inc was given ever greater autonomy at home and abroad, that liberalising trend is decisively over. In Mr Xi’s new era, the interplay between the party and business will instead resemble an endless game of whack-a-mole.