China’s Xi Jinping revives Maoist call for ‘self-reliance’

Chinese President Xi Jinping has invoked a long discarded Maoist slogan to call on state-owned enterprises to make advanced components that are now mostly imported.  Even as Mr Xi has sought to position China as a champion of globalisation amid the US retreat into protectionism, the call for “self-reliance” highlights how Mr Xi is also advocating mercantilist policies that could reshape global supply chains.

The US commerce department’s ban on US companies selling components to Chinese telecoms equipment maker ZTE earlier this year, though subsequently lifted, exposed China’s vulnerability to such sanctions. “Internationally, advanced technology and key technology is more and more difficult to obtain. Unilateralism and trade protectionism have risen, forcing us to travel the road of self-reliance,” Mr Xi told workers in September during a tour of China First Heavy Industries in north-east Heilongjiang province, known as the heart of China’s rust belt. Notably, state broadcaster China Central Television edited the video of Mr Xi’s remarks for its flagship evening news programme to remove the first part of Mr Xi’s statement. The same redaction occurred in the overseas edition of People’s Daily, the Communist party mouthpiece.

Some political observers interpreted the redactions as reflecting concern by propaganda authorities that Mr Xi’s statement would be seen as an admission that China used coercion and theft to obtain foreign intellectual property, as the White House and other critics alleged.  The choice of China First Heavy as the backdrop for Mr Xi’s speech carried strong symbolism.

The company was founded in 1954 with assistance from the Soviet Union as part of China’s first five-year plan. That plan, a blueprint for establishing a Soviet-style planned economy, envisioned a long struggle against the US following the Korean war. Today a large statue of Mao Zedong still stands in front of the factory headquarters. Mr Xi repeated his call for “self reliance” on a visit to appliance maker Gree Electric in Guangdong province, China’s technology heartland, last month.

“By reviving the Maoist concept of self-reliance, Xi’s comments signal that state-owned enterprises will play an even greater role in the economy by leading efforts to achieve supremacy in key technologies,” said Wendy Leutert, a postdoctoral fellow in Chinese politics at Columbia and Harvard universities who co-authored a recent Asia Society report on state-owned enterprises.  The term self-reliance has carried different meanings at different points in the history of Communist party rule over China. During the cultural revolution, Mao used the term to advocate isolation from exploitative capitalist and western forces. But Deng Xiaoping and other reformers later repurposed the term to promote greater integration in the global economy.

China’s “ Made in China 2025” plan to encourage “indigenous innovation” in key sectors such as semiconductors and electric vehicles, unveiled in 2015, reflected the Communist party’s desire to reduce reliance on foreign technology well before the sanctions on ZTE and US tariffs. But that plan was largely motivated by economic considerations: enabling Chinese companies to compete globally in emerging industries and to reduce payments to foreign groups through component imports and royalty payments.

By contrast, Mr Xi’s revival of “self reliance” shows how the push to master advanced technology has taken on geopolitical significance. It also illustrates the unintended consequences of export controls and foreign-investment restrictions designed to keep technology out of Chinese hands. “The US has export controls for national security. That leads to industrial policies by the Chinese to duplicate the same technologies on an indigenous basis because we won’t sell them,” said Craig Allen, president of the US-China Business Council in Washington. “So there’s an internal contradiction between those two points.”

Source: Financial Times