Is Xi Jinping moving China into a new era of Maoism?

This is an audio transcript of the FT News Briefing podcast episode: Is Xi Jinping moving China into a new era of Maoism?

Marc Filippino
Good morning from the Financial Times, today is Wednesday, September 8th. And this is your FT News Briefing.

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Marc Filippino
Pfizer’s top scientist is defending the company’s Covid-19 vaccine. The Taliban has formed a new government in Afghanistan and a member of the Federal Reserve doesn’t see any reason why the US central bank should change its asset taper timeline. Plus, Xi Jinping is extending the Chinese Communist Party’s dominance over civil society, and it feels pretty Maoist.

Tom Mitchell
He is a true believer in the necessity of party control and his control over the party.

Marc Filippino
We’ll take a look at the future of China under President Xi. I’m Marc Filippino and here’s the news you need to start your day.

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Marc Filippino
The pharmaceutical company Pfizer has come under attack lately over its Covid-19 vaccine. Some scientists and global health officials have criticised Pfizer for urging governments to adopt vaccine booster programmes. But Pfizer’s Philip Dormitzer defended booster shots when he spoke to the FT recently. Dormitzer is Pfizer’s chief scientific officer and he said there was good reason to be proactive when it came to booster shots. He said if Pfizer waited until there were just widespread breakthroughs of severe disease, the company would be way too late. The US is preparing to roll out booster shots later this month. American Covid hospitalisations and deaths have been rising because of the Delta variant of coronavirus, especially in areas with low vaccination rates.

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Marc Filippino
Yesterday, the Taliban announced that it has formed its first government since the US and its allies left Afghanistan. The caretaker cabinet includes men sanctioned by the UN for terrorism and an interior minister on the FBI’s most wanted list. Notably, the government had few women and members of Afghanistan’s ethnic groups. And the FT’s Stephanie Findlay says the lack of diversity could make the Taliban’s relationship with the international community complicated.

Stephanie Findlay
An inclusive government was one of the, you know, so-called preconditions of international recognition that the US but also other regional powers laid down in order to give the Taliban government legitimacy, which is seen as key to unlocking humanitarian aid for economic and humanitarian crisis that is spiralling out of control. The Taliban has said that this is a caretaker government. They have suggested that it will be more inclusive in the future. But experts and observers have told me that a caretaker government doesn’t necessarily mean that it will be changing any time soon. And the fact that we’re seeing such senior members of the Taliban leadership taking these key roles means that any dramatic change is probably unlikely.

Marc Filippino
That’s the FT’s Stephanie Findlay.

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Marc Filippino
There was an abrupt slowdown in US jobs growth in August. Two hundred and thirty five thousand jobs were created last month, but that’s down after back-to-back months of roughly one million new jobs in both June and July. But this news isn’t rattling the St Louis Fed president James Bullard, especially when it comes to the US central bank’s timeline for tapering its asset purchases. Bullard spoke to the FT’s Colby Smith yesterday, and she joins me now. Colby, why wasn’t Bullard deterred by the most recent US jobs report?

Colby Smith
I think for him, he saw it as yet another sign that the labour market recovery is continuing. We are still seeing job gains, even though it’s at a slightly slower pace than than what we’ve seen in the previous two months. And something that he reiterated to me was that, you know, it’s better instead of looking month to month, it’s better to look at job gains in the aggregate. So for him, he said he’s he’s really interested in seeing job gains that average out to around five hundred thousand a month this year. And that’s roughly the current pace that we’re at even once you factor in August’s slow report.

Marc Filippino
Now, Colby, do you expect any other Fed presidents to push for asset purchases to continue at the same pace instead of quickening the pace?

Colby Smith
It’ll be interesting to see how other Fed officials approach the most recent jobs data. A lot of them had said that they needed to see, you know, a string of very strong job gains over, you know, the current period in order to set themselves up to be comfortable with the Fed pulling back on that support. So the August number does in a lot of ways, you know, put off maybe an earlier taper timeline. So it’ll be interesting to see over the coming days. And we’ll hear from a lot of different Fed officials about how they are thinking about the outlook. And one in particular, later today, we’ll hear from New York President John Williams. And he’s, you know, slightly on the more dovish side of the Fed, has long kind of advocated for a more patient approach when thinking about reducing the Fed support. And it’ll be interesting to hear from him in particular.

Marc Filippino
Colby Smith is the FT’s US economics editor.

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Marc Filippino
Is China entering a new political era? The Communist party under President Xi Jinping is taking a more domineering role in society, and it’s caused some to compare today’s China with the Maoist political campaigns of the 1960s. Today’s Beijing has cracked down on China’s biggest technology companies. It’s limited the amount of time kids and teenagers can play video games, and it declared it necessary to regulate excessively high incomes in order to ensure, quote, “common prosperity” for all. Tom Mitchell is the FT’s Beijing bureau chief and he joins me now to discuss this. Tom, tell us about Xi’s economic goals.

Tom Mitchell
Well, he definitely wants to keep China on its rising trajectory. He wants it to be a strong first rank, economic power, best in the world and research and development equivalent, if not better than the capabilities of the US and Western Europe. However, one of the things they do not admire about the US in particular is the degree to which they believe special interest groups dominate politics and reinforce social inequality. And Xi in particular, is determined to avoid that. Of course, not at the expense of the one very dominant vested interest in China, which is, of course, the Chinese Communist party.

Marc Filippino
So, Tom, what’s President Xi doing to close the wealth gap in China?

Tom Mitchell
Well, ironically, he hasn’t done very much, and I think that explains why you’ve had such a high volume offensive in terms of multiple policy initiatives to enforce what is referred to by Xi and others as a “common prosperity”. The problem is, if you really want to redress social inequity in China, which is far greater than what currently exists in the US, you have to do very difficult things. You know you’re just not gonna get that big a result from going after a few or even many high-profile taxpayers who may have cheated here or there. It’s even difficult to achieve what he wants to achieve through tax reform alone. So there are huge structural issues which, to be honest, the party under Xi has not even really tried to address.

Marc Filippino
Now, Tom, we’ve seen some intimidating moves by Beijing that reminds some people of the Mao Zedong era. Recently, some popular media stars were denounced or, you know, even removed from the public’s eye. How far do you think this will go? And could it eventually stifle the creativity that’s in the private sector?

Tom Mitchell
Well, some of the things we’ve seen with regards to criticism of entertainers and their presence being wiped off the Internet, things like that, are not hugely unusual. It’s it’s happened before. There have been tax crackdowns before. I think the most interesting thing is that we have yet to see any high-profile arrests or detentions of business figures, private sector business figures. If something like that were to happen, then that would be a huge development and represent a potential real shift in Chinese society. Just the other day Liu He, who’s arguably the second most powerful man in China, he is Xi’s long-term economic and financial adviser. He was out trying to reassure a forum that the government’s support of the private sector has not and will not change. But when someone like Liu He has to go out and say, hey, there’s no problem here, we still support you, you know that there’s a problem.

Marc Filippino
So I guess bottom line, Tom, do you think there’s a real shift in China?

Tom Mitchell
I think what’s changed is the momentum. Previously, you had a lot of policies like this where the result was a continuing squeeze on various interest groups, on various industries. It was kind of a slow and steady pressure building. And I think that is something that’s been going on for two or three years. But what we’ve really had over the past year and really even over the past month is a sudden acceleration in this. It’s as if Xi’s gone from squeezing these interest groups he wants to get under control to just hammering them with punch after punch after punch. And that’s kind of what Chinese civil society and private sector businessmen and even officials themselves who are worried about the direction this is going. They just kind of feel a little bit overwhelmed at the moment. The question is, will that pace continue or have they gone too far? And do they need to lighten up a bit? Whatever the answer is, it’s gonna be a very interesting period in Chinese politics. And the next year when we get to the party Congress, where Xi is expected to get his third term as head of the party and the state.

Marc Filippino
Tom Mitchell is the FT’s Beijing bureau chief.

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Marc Filippino
You can read more on all of these stories at FT.com. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.

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