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Xi stokes economic reform hopes in China

China's new leader Xi Jinping at the Great Hall of the People on November 15, in Beijing, China.

Story highlights

  • China's new president Xi Jinping visited southern China in his first official trip outside Beijing
  • During the trip, Xi spoke forcefully about reforming the Chinese economy
  • The Chinese economy is poised to record its slowest annual expansion rate in a decade
  • Many investors worry that without reforms the economic growth could slow more sharply

Xi Jinping, China's new leader, has issued a rousing call for fresh economic reforms, using his first official trip outside Beijing to visit the southern province at the forefront of the country's economic transformation over the past two decades.

"We can brook no delay" in pursuing reforms, Mr Xi told an audience in Guangzhou, according to state media reports Tuesday. "We should not avoid conflicts or cover up problems. Starting from a tough spot, we should strive for better results," he told local officials and businesses in the southern city.

"We need to have more political courage and wisdom, and not waste any more time," Mr Xi was quoted as saying in a separate report. A "stronger sense of peril", he added, was needed to carry out "deeper reforms".

The five-day visit to Guangdong province and the cities of Shenzhen and Guangzhou which concluded on Tuesday is rich in symbolism. Deng Xiaoping's 1992 "southern tour" launched the reform programme that triggered the acceleration of China's economy.

During a stop in Shenzhen on Saturday Mr Xi laid a basket of flowers in front of a statue of Deng in a local park. Mr Xi said he had gone there to "revere" the statue and push "new breakthroughs and new steps in boosting reform," according to a state media account.

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"Shenzhen is synonymous with economic reform," said Willy Lam, professor of history at the Chinese University of Hong Kong. "His message to the outside world is 'I am the heir to Deng, I am not a conservative'."

    Shenzhen is also where Mr Xi's father, a famous revolutionary, earned a reputation as a reformer in the 1980s. Xi Zhongxun helped to create the special economic zone that transformed it from a village of rice paddies into a metropolis of 10m people. The trip took place at the weekend but Mr Xi's comments on economic reform were not widely reported until Tuesday.

    In contrast to his predecessor Hu Jintao, known for his wooden demeanour and slogan of "scientific development", Mr Xi has adopted a more casual style in his first few weeks in power, coining the phrase "China dream" to describe his goals for the country.

    The Chinese economy is this year poised to record its slowest annual rate of expansion in a decade, with growth falling to 7.4 per cent in the third quarter.

    The World Bank and others have warned that China needs to embark on a fresh round of reforms in order to avoid falling into a middle-income trap and seeing its development stall. Many investors are concerned that without reforms to ease the state's grip on the economy growth could slow more sharply.

    Mr Xi is hardly the first Chinese leader to talk about the need for reform. But the tone of the pronouncements emerging from his weekend trip has been more forceful than those employed by past leaders.

    Among some China watchers that has stoked optimism that long-delayed needed updates to economic management, from freeing up the household registration system to making government budgets more transparent, could be in the pipeline.

    Yet others point out that since taking his new role as Communist party head last month Mr Xi has yet to introduce any substantive policy changes.

    "Lots of Chinese are very positive about Mr Xi and now have very high expectations," said Dong Xian'an, president of Peking First Advisory, a consultancy. "I'm a little more prudent. There's a big difference between talk and action."

    If Mr Xi pushes hard for change, he is likely to bump up against powerful vested interests, including state-owned companies and the country's 6.9m civil servants, who want to preserve the status quo.

    "It doesn't matter how good the top-level leaders are. They are part of a very big framework," Mr Dong said. "China's government is not a one-man organisation."

    Mr Xi has overseen a change in official tone since taking on his role. Last week he launched a campaign against official excess, calling for top officials to pare down feasts and ribbon-cutting ceremonies and eliminate "empty talk" in order to hold shorter, more efficient meetings. He has also launched an anti-corruption campaign that has already claimed a senior party official in Sichuan province.

    On foreign policy, Mr Xi, who is due to replace Mr Hu as president in March, has adopted more nationalist rhetoric than his predecessors.

    While Deng and other leaders stressed that China should keep its head down and "bide its time" in international affairs, Mr Xi has spoken emphatically of the "great revival of the Chinese nation". The phrase has unnerved neighbours from Vietnam to Japan who have territorial disputes with China.

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