China's ruling Communist Party has begun its long-awaited Fourth Plenum this week -- a four-day closed-door meeting that is expected to set major policies for years to come and discuss crises ranging from Hong Kong to China's nearly 2-year-old trade war with the United States.
In the lead-up to the plenum, President Xi Jinping has called for China to urgently invest in blockchain technology, the innovative but still largely unproven technology behind Bitcoin and other cryptocurrencies. Some analysts are viewing the proposal as a long-shot bid to stimulate an economy that has been hard hit by the trade dispute with Washington.
"We must take the blockchain as an important breakthrough for independent innovation of core technologies," Xi was quoted as having told the Political Bureau of the ruling party's Central Committee last week.
"[We must] clarify the main direction, increase investment, focus on a number of key core technologies, and accelerate the development of blockchain technology and industrial innovation." The remarks sparked a surge in the value of Bitcoin and other blockchain-related products and technologies.
A blockchain is a time-stamped series of immutable data records, managed by cluster of computers not owned by any single entity. The technology relies for security on a highly decentralized network or a democratized system, which runs counter to the Chinese leadership’s usual insistence on centralized power.
“Xi’s rushing to touch upon [blockchain technology] and fueling the blockchain fever shows that he couldn’t find other feasible stories to boost the local economy,” said a Chinese economics professor who spoke to VOA on the condition of anonymity to speak freely about Chinese economic policy.
He added the technology is still in its early stage of development in China, with fraudulent activities being exposed from time to time.
The economist predicted a heated discussion on blockchain during the plenum, given the pressure on the ruling party to find answers to the slowing economy and rising unemployment. But that debate is unlikely to end with agreement on a clear policy direction, he said, given the party’s reluctance to ease its control over the political and economic landscape.
Rivalry with Washington
This week's plenum comes at a critical point in the U.S.-China trade war, with the two countries expected to complete a preliminary deal next month addressing some of the more difficult issues.
Analysts say Xi has no choice but to secure approval at the plenum for concessions that will be included in that deal. But the economics professor doubts the plenum will produce much progress toward a broader resolution of the trade dispute.
Nevertheless, Chinese political analyst Willy Lam said, striking a deal with Washington will remain Xi’s top priority since China cannot afford to go back to being a self-reliant economy. That leaves him little choice but to seek support from the top policy-making body.
Xi "will get the backing of the central committee on reaching a deal with the U.S. through making some concessions regarding opening up the market to multinationals in the financial sector, the protection of intellectual property rights, and also, cutting pay subsidies on certain Chinese state enterprises,” Lam said.
“So these are institutional issues which go against Xi Jinping’s belief in the party’s tight controls over the economy.”
Reaching a deal soon?
On Monday, U.S. President Donald Trump said that negotiations for the so-called phase one of the U.S.-China trade deal were “ahead of schedule.”
“That would take care of the farmers. It would take care of some of the other things. It will also take care of a lot of the banking needs,” the president said.
Trump had previously hinted that China plans to buy $50 billion worth of U.S. agricultural goods and that such a deal could be signed during his planned summit with Xi at the Asia-Pacific Economic Cooperation summit in Chile on Nov. 16-17.
The Fourth Plenum, attended by the party’s roughly 370-member Central Committee, is being held at the Jingxi Hotel in west Beijing. The official theme of the plenum is how to “modernize China’s system and capacity for governance.”
Security around the hotel is tight, with police stopping traffic and searching passersby in the vicinity. Foreign media and many Chinese reporters have been denied access.
Outspoken dissidents including veteran journalist Gao Yu are said to have been placed under house arrest or close surveillance for days.
In spite of the stress on governance in the plenum’s agenda, Lam said little progress can be expected on the issue because Xi is not really interested in reform. He predicted the top leader will take advantage of the meeting to further consolidate his power.
According to Lam, several market-oriented members of the Central Committee during the plenum have urged Beijing to reconsider electoral reforms in Hong Kong by allowing the popular election of the city’s chief executive. But any such proposal will likely be vetoed.
“Xi Jinping’s position is much more conservative. He will not allow political reforms to be discussed regarding Hong Kong. He will emphasize the use of harsh routes: arrest more people because, so far, more than 2,500 protesters have been arrested. So, [he’s] putting the emphasis on the use of police forces including deploying more police officers from Quangdong in Hong Kong,” Lam said.