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Xi Jinping

Chinese President Xi Jinping to visit Qianhai economic test bed as US trade war takes toll

  • Trip comes as Beijing confronts slowing growth, falling share prices and mounting debt
  • Observers say entrepreneurs might not be sold on official attempts to reassure them about their role in the economy
PUBLISHED : Monday, 22 October, 2018, 6:37pm
UPDATED : Tuesday, 23 October, 2018, 5:32pm

Chinese President Xi Jinping is expected to visit a testing ground for economic innovation on his trip to southern China this week, as Beijing tries to allay fears over its economic direction and an escalating trade war with the United States.

Sources with knowledge of the trip said the visit to the Qianhai pilot economic zone in Shenzhen was part of Xi’s first trip in nearly six years to Guangdong province, the birthplace of the country’s market-oriented reforms.

The trip got under way on Monday afternoon with a tour of a hi-tech industrial estate in Zhuhai and will include the opening ceremony for the new Hong Kong-Zhuhai-Macau bridge on Tuesday.

The sources said the president would also head to Qianhai in Shenzhen, a former a sleepy fishing village that became China’s first special economic zone and a thriving manufacturing hub of 13.6 million people.

Qianhai, a sprawling district of 15 sq km on the southern edge of Shenzhen, was earmarked in 2011 to foster closer cooperation between mainland China and Hong Kong and innovation in the service industry. It has since attracted nearly 165,000 companies, mainly financial and logistics firms, with tax breaks and other incentives.

Xi’s trip to the area carries great symbolic weight, with China at a major crossroads after four decades of reform and opening up. The country is growing at its slowest pace since 2009, as it battles headwinds from the prolonged trade war as well as mounting debt and plummeting share prices at home.

Doubts have also been growing about Beijing’s commitment to economic liberalisation, with the ruling Communist Party taking an increasingly tight grip over the private economy while continuing to expand the state sector.

Xi’s trip – his first to Guangdong since he visited Shenzhen in December 2012 soon after coming to power – is expected to be trumpeted by state media as a sign that China remains committed to economic reform and opening up, a policy introduced by late paramount leader Deng Xiaoping in 1978.

Xi Jinping promises to protect China’s private businesses to ensure a ‘better tomorrow’

While in Shenzhen, Xi is also expected to visit an exhibition celebrating the 40th anniversary of the economic reforms.

The visit comes after Xi wrote an open letter to the country’s private business owners, pledging Beijing’s “unwavering” support and recognising its historic contribution to China’s development as “indelible” and “indubitable”.

But observers said entrepreneurs were unlikely to be assured by Xi’s letter or the high-profile trip.

Christopher Balding, an associate professor at Fulbright University Vietnam, said Chinese businesspeople were much more focused on action than on rhetoric.

“They’ve learned that Beijing’s propaganda is a poor indicator of what’s going to happen,” Balding said.

“I think state media is going to sell it very hard as a message that ‘we’re opening up; we’re supporting entrepreneurs’, but the reality simply doesn’t match the rhetoric and I don’t think most people will believe it.”

Chinese President Xi Jinping set to visit Guangdong to boost confidence in economic model

In Sunday’s letter, Xi also praised businesses involved in poverty alleviation – one of his three key economic priorities along with financial risk control and fighting pollution.

He is expected to visit to Guangdong’s rural backwaters to assess poverty relief work, according to a source.