Xi Jinping delivered the “first lesson for the New Year” at the opening of the 11th study session attended by principal officials at the provincial and ministerial levels at the Central Party School (National Academy of Governance) of the Communist Party of China (CPC) on January 16, 2024. Xi’s speech was themed on boosting the high-quality development of the financial sector and aimed to continue the agenda of the Central Financial Work Conference in 2023. Xi stressed the need to coordinate and resolve risks related to the real estate sector, local debt and small and medium-sized financial institutions and to resolutely hold the redline of forestalling systemic risks. The content of Xi’s speech put more emphasis on ideological work such as expanding the influence of mainstream values and seizing the initiative, dominance and discourse power in values than on specific economic policies. Summarizing the attributes of these themes shows that there is, on the one hand, dialectical duality as the CPC tries to ensure the socialist way of production while maintaining capitalist values and market size. On the other hand, it also shows that regulatory power is necessary, but it is imperative to prevent the alienation of power and potential harm to the rights in the public domain. It can be seen that the CCP's promotion of financial regulation is full of dialectical duality in theory and practice.
Qiushi, an official journal of the CPC Central Committee, published a special article coauthored by the Office of the Central Financial Commission and the Central Financial Work Commission on December 1st, 2023. Titled "Unswervingly Follow the Path of Financial Development with Chinese Characteristics", the article explicitly repeated that China's financial control and regulation “must unwaveringly uphold the Central Committee’s centralized and unified leadership over financial work as well as uphold and strengthen the Party’s overall leadership over financial work." The article in effect detailed Xi Jinping's closed-door speech at the Central Financial Work Conference on October 30th, 2023. The 2023 conference put technology finance in the first place and laid out pension and digital finance for the first time. Green and inclusive finance were already emphasized in 2017. Meanwhile, the original National Financial Work Conference was upgraded to the Central Financial Work Conference. The Third Plenum of the CPC Central Committee often convened in the same year as the Central Financial Work Conference in recent years. Top officials would formulate China’s economic policy for the next five years. However, the Third Plenum in 2023 may be postponed to 2024, triggering speculation that China's economic policy is in uncharted waters. In fact, summarizing the focuses of previous conferences shows that China’s financial regulation is full of duality in theory and practice. It not only demonstrates the contradiction between regulation power and the alienation of power but also reflects the duality of having to learn from the experience and lessons of Western financial development even though the socialist production model is fundamentally different from Western financial model.
Neither the 2023 Central Financial Work Conference nor the Qiushi article offered specific policy solutions to China’s major financial woes, including soaring debt, widening budget deficits in local governments, collapse of large trust banks and insolvency of real estate developers. It is worth noting that the Qiushi article particularly emphasizes that "finance detached from the real economy is like water without a source and a tree without roots" and that [China must] "firmly hold the red line of forestalling systemic financial risks." However, the paradoxical duality here is that, compared with the real economy, the virtual economy like Alipay and the platform economy represents higher systemic risks for China’s party-state system. Therefore, the Qiushi article should be seen as delivering an ideological political statement rather than offering public policy recommendations. Xi Jinping stressed the need to make greater efforts to rectify corruption in power-concentrated, capital-intensive and resource-rich areas such as finance, state-owned enterprise, energy, medicine, and infrastructure project sectors at the Third Plenary Session of the 20th Central Commission for Discipline Inspection on January 8th, 2024. Xi said that it is imperative to tackle risks and hidden dangers and punish the “corruption of flies and ants.” Xi also pointed out in the “first lesson for the New Year” of 2024 that corruption must be resolutely punished and moral hazard must be strictly prevented in the process of risk management. It is because that politics influences all major areas for the CCP’s rule. Economic or financial issues have mutual restraint with political issues.
（Chiu-lung Huang, Adjunct Associate Professor of Department of Public Security at the Central Police University）
（Translated to English by Cindy Li）
