The 19th Congress of the Chinese Communist Party (‘CCP’) was held in late October of this year, marking five years of Xi Jinping’s leadership, as well an outline for China’s sustainable economic growth into the next five years of Xi’s presidency. Not only was Xi’s leadership consolidated at the 19th Congress of the CCP, the pursuit of Xi’s project on shared economic growth, the Belt and Road Initiative (‘BRI’), was also formally added to China’s constitution. With Xi remaining at the helm, and with a constitutional map guiding the way towards further international trade and investment, China has continued to sail unchallenged towards the leadership of the free trade world.
Just over two weeks after the 19th Party Congress, Xi Jinping went on to deliver his keynote speech to the APEC CEO Summit, where he emphasised his support for multilateralism and for interconnected economic development. Notably, Xi’s position, which has been made clear in the past through China’s leadership in initiatives such as the Regional Comprehensive Economic Partnership, stood in stark contrast to US President Donald Trump’s continued push for bilateral trade arrangements and protectionist policies. Indeed, with Trump having successfully left the Trans-Pacific Partnership dead in the water and continuing upon his warpath against NAFTA, Xi’s vocal support for multilateral cooperation has positioned China in the unlikely situation of being a defender of free trade and investment against an inward-facing US.
At a time when the UK’s Theresa May is beleaguered by Brexit, and Germany’s Angela Merkel has been confronted by a coalition conundrum, the more traditional champion nations of trade and investment have more pressing domestic issues to deal with. Yet for Xi, there is no more pressing domestic issue than China’s continued economic growth.
Although China generates an enviable amount of internal activity, its future growth will undoubtedly be linked to external trade and investment. Indeed, Xi’s stance on openness and multilateralism may very well be driven by the ultimately selfish need to counter China’s ballooning debt with more sustainable forms of growth. Regardless of his motives, Xi is poised, both in a global and regional sense, to fill a conspicuously empty leading role in the future development of free trade.
Although Xi has been proactive in the pursuit of increasing China’s trade opportunities, China’s actions in other areas have created several speed bumps on the (belt and) road to free trade leadership. As noted by Australia’s recently published Foreign Policy White Paper, China’s history of following a rules-based international order has arguably left some room for improvement, particularly in dealing with issues such as the disputed South China Seas.
Beyond international security concerns, foreign investors are also never far from losing confidence in the Chinese government. With China’s attempts to further control the stability of the yuan and to curb transfers to offshore accounts, investor confidence has been undermined again and again. Between having wary neighbours and skittish foreign investors, Xi has a lot of work to do before China’s soft power can catch up to its ability to lead through raw economic might.
With investors crying out for a free trade hero in this increasingly protectionist world, Xi has heard the call and is doing his best to respond. Burdened as he is with the weighty ball and chain of China’s own investment controls and activities that undermine the international rules-based order, however, Xi may find it difficult to respond to this cry for help in good time. Fortunately for Xi, it looks like he has at least five more years to save the free trade world from the threat of protectionism. In this day and age of superhero movies, Xi will need to hope that the next five years don’t turn out to be a DC production.
Dylan Hubbard is the International Trade and Economy Fellow at Young Australians in International Affairs.