China at a crossroads: can Xi Jinping’s trip south get the economy moving?

After months of anticipation and speculation, Chinese President Xi Jinping has finally embarked on his long-awaited trip to Guangdong, with the country at a major crossroads after an almost four-decade economic boom.

Many have hoped the trip will build on late paramount leader Deng Xiaoping’s Southern Tour in the spring of 1992, which revived China’s commitment to reform amid isolation from the West over its bloody crackdown on pro-democracy protesters in 1989.

Despite the high hopes, however, most observers are sceptical that Xi’s visit – his second to Guangdong since coming to power in late 2012 – will have the same impact as Deng’s and get stalled reforms moving.

There are similarities between now and then: an hostile external world, an ailing private sector at home and a whole lot of confusion about the country’s future path.

Today, US President Donald Trump is threatening to escalate a trade war against China unless Beijing changes its “unfair trade practices” – from government subsidies to state firms to alleged theft of technology. The risks of disintegration are on the rise as hostilities between Beijing and Washington spread to other, non-economic fronts.

At home, growth has slowed to 6.5 per cent – its lowest rate since 2009 – amid a mountain of debt, a yawning wealth gap and a rapidly greying population. China’s private economy, which contributes about 60 per cent of the country’s GDP, is losing ground to the state sector and slipping under increasingly tight grip of the ruling Communist Party.