A month after the conclusion of the Chinese Communist Party’s (CCP) 18^th National Congress, the new Secretary General of the CCP and Central Military Commission, comrade Xi Jinping, left Beijing to visit Shenzhen, the first foothold of China’s economic reforms. He placed a wreath on the bronze statue of comrade Deng Xiaoping, who had initiated those reforms twenty years earlier from the same place. Xi said, “The Party Central Committee’s decision to launch Reform and Opening was correct. From this day forward, we will continue down this correct road, this road that has been building China’s national power and increasing the people’s wealth. And we will make new progress.” His comments both paid tribute to his predecessors and expressed his ambition to take Reform and Opening down a new road.

On the critical 20^th anniversary of Deng Xiaoping’s “Southern Tour,” Xi’s trip to the south signaled the whole country and the world that China will continue its establishment of a modern political culture and firmly follow the Reform and Opening road envisioned by Deng Xiaoping and his colleagues. The high-level leadership of the CCP has already reached a consensus and will promote reform systematically, integrally, and cooperatively. The Party’s leaders have the political courage and confidence to tackle difficulties to come.

Twenty years ago, comrade Deng Xiaoping traveled south to Wuchang, Shenzhen, Zhuhai, and Shanghai, and delivered speeches essential to China’s economic reform and social development during the 1990s. Taking advantage of various domestic and international forces, Deng’s speeches in the south ended the debate over socialism vs. capitalism, and made building a market economy and promoting the rule of law and a civilized political order unshakable goals of the CCP.

Over the next twenty years, China began to experience problems related to the after-shocks of launching the reforms, and these were multiplied by problems intentionally or unintentionally evaded while “crossing the river by feeling the stones.” On the one hand, the pie of Chinese economy was growing—its GDP increased by a factor of four, surpassing Germany and Japan to become second only to the United States. According to British economic historian Angus Maddison, China might regain its status as the No. 1 economy in the world by 2015, and China’s GDP may account for 23 percent of the world’s in 2030. He even optimistically predicted that China’s per capita income would rise to more than one third of the world’s average level. Although it is true that China is not too far from becoming the world’s largest economy, its per capita income has not kept pace.

Therefore, in today’s China, another question is more pressing—namely, why hasn’t economic growth dispelled society’s grievances? If we examine the question more deeply, we have to admit that an unbalanced mode of development has manifest itself during China’s thirty-three years of Reform and Opening: economic reform flourishes while political and social reforms stagnate. As a result, while China has grown economically, Chinese society has become less equal. Meanwhile, the division between interest groups is becoming more and more apparent. The rules of the game are opaque, unfair, and inimical to social mobility. Vested interest groups’ status are increasingly entrenched, while people at the bottom rungs of the social hierarchy and their offspring are losing their aspirations and motivation. As a result, the most staggering challenge is not so much the income gap between rich and poor or between officials and ordinary people, so much as the fact that these kinds of class divisions are being passed down to successive generations. The bureaucracy, the rich, the poor, and the peasantry are categories handed down from one generation to another as in the caste system in ancient India. China today is witnessing alarming socio-economic immobility. The people at the bottom of the class ladder have both lost the possibility of upward mobility and are becoming worse off due to intensifying inflation. Middle-income people have developed a sense of deprivation related to things like the high price of real estate. The newly formed upper class has a strong tendency to emigrate. The “special interest group” at the nexus of government office and business is in a frenzy of profit seizing.

Some people say we’re living in an era of “pindie,” or “staking it on Dad,” an era when what you do isn’t as important as who your father is and what kinds of connections he has. From education to employment to entertainment, the game of “staking it on Dad” is spreading. After the increasingly frequent school-bus accidents in China, there is an air of sarcasm online—people say, American school buses are safe because perhaps one of the kids on the bus will grow up to be President of the United States. They say the reason China’s school buses are so flimsy is because you can be sure China’s future leaders won’t be on any of them. The public has become accustomed to venting its dissatisfaction about the “generational heredity” of property and power in response to all kinds of incidents. Even when the Chinese government drafts rules to regulate school bus safety based on American standards, netizens’ responses still brim with distrust.

Apart from these emotional manifestations, China also faces the following other “aftershocks” of Reform and Opening that have triggered the strongest public indignation:

—The gap between the rich and the poor has widened in the absence of a fair and rational system to distribute China’s economic prosperity.
—Social welfare lags behind economic development, failing to establish a social security system capable of benefiting all in society.
—The public’s sense of happiness is decreasing as a result of failures in tackling problems of basic livelihood, like education, healthcare, housing, employment, etc.
—Environmental pollution is worsening as high investment and high-pollution industries continue to emerge. Food, water, and air are polluted. The sharp conflict between economic development and environmental protection is on the verge of explosion and has triggered many mass protests.
—Corruption takes root not just in economic activities, but also in officialdom, the administration of justice, the media, and education. The corruption is directly correlated with institutional defects.

Together, these problems form a social backdrop similar to the one against which Deng Xiaoping undertook his Southern Tour—the consensus on reform formed by integrating various forces doesn’t just face a daunting challenge, it is in danger of falling to pieces. The focus of the debate is no longer a pure ideological battle between socialism and capitalism. The more serious challenge is, to a great degree, the struggle among different interest groups that have grown gradually during the period of reform. The intensity of the contest even surpasses that of the ideological clash during Deng’s tour.

China’s reform and development once again stand at a crucial juncture.

Thus, three major tasks should be the priorities in the Xi Jinping administration’s reform agenda.

The first task is to establish an efficient social security system and solve six major issues related to people’s livelihood on an institutional level:

1. Establishing a complete modern national education system to guarantee that people share fair access to education, one of the critical starting points.
2. Building a social security system that covers both urban and rural areas and provides for people’s basic needs; establishing an unemployment insurance system, pension system, and basic medical insurance system in cities and countryside.
3. Increasing employment, promoting new businesses, and trying to build a rational and fair distribution system.
4. Setting up a basic medical and sanitation system to guarantee that everyone enjoys basic medical and sanitation services.
5. Setting up urban and rural housing systems to guarantee shelter for all.
6. Establishing a pleasant living environment by guaranteeing fresh air, clean water, and clean food.

The second task is to build a stable social structure. The main task is to promote urbanization, to resettle the surplus rural population, and to combine urbanization with new industrialization, information technology, and agricultural modernization to expand the middle class. The new administration should also increase the proportion of non-agricultural output from 85 percent to more than 90 percent, and the proportion of the urban population from 60 percent to more than 70 percent (so far, data from national surveys shows a 51 percent rate of urbanization. But many migrant workers in cities are not accepted as urban citizens), and the proportion of non-agricultural employment from 70 percent to more than 80 percent. All of these efforts could increase the proportion of the middle class, whose annual incomes are between 80,000 and 200,000 yuan (from US$12,825 to US$32,063), from 50 to 60 percent of the whole population. The middle class is the major source of domestic demand. Moreover, strengthening the middle class will largely relieve the pressure caused by the gap between the rich and the poor.

The third task is to construct a mature civil society that consists of three main elements. First of all, the government’s power should be limited. Absolutism should not be an option. The goal of reform should be to establish a limited government, a government that serves the public. The major tasks for such a government are to regulate the economy, to supervise the market, and to provide public order and social services. This would be a reform of society and of politics. Second, the government should provide institutional safeguards for the gradual development of independent groups in society, including religious organizations. In addition, it should also relax its control of non-government-affiliated institutions and groups. Dynamic independent organizations and religious groups are important elements of the social structure. The government should cooperate with them fully. The self-governing rights of people at the local level should be protected, including rural and communal self-governance systems. The people should be allowed to manage, serve, educate, and supervise themselves. China’s commercial and academic associations, foundations, voluntary organizations, rights-protection organizations, and charities need further development. Government should promote, help, and protect them and perfect the relevant laws and regulations instead of regarding them as hostile and alien forces. The new administration should broadly integrate these kinds of organizations into policy-making and encourage them to take on more responsibility to promote social welfare.

Additionally, the market, mainly constituted by public ownership, non-public ownership, and individual industrial and commercial businesses, should play the role of allocating resources. The government’s direct intervention in business should be reduced as much as possible. The government should gradually separate itself from business management, from public institutions, and from capital management. Economics, rather than administration, should form the basis of macroeconomic regulation. Intervention in the economy at the micro level in the name of macroeconomic regulation should be avoided. The wealth-creating capacity of the market should be allowed to play a more robust role.

The crucial question [China] faces today is whether those in power can find a way to be more responsive, more sympathetic, and more responsible in the face of increasingly acute social conflict, suffering, and bitterness on the part of the Chinese people, and the insecure state of people’s rights. The new administration ought to feel a sense of urgency to end stagnation in political reform and to become more courageous and experiment with new ways to continue the epic reforms initiated by Deng.

From this perspective, Xi Jinping’s new “Southern Tour” is not another round of ideological debate, but an exploration of how to push China’s reforms at the core level and solve the country’s complicated social conflicts. Xi and China’s other leaders should first limit the power of the government, empower social organizations, and allow the market more freedom. They should firmly follow the direction of marketization, legalization, and democratization. Public opinion should play a greater role in policy-making. At the lowest rungs of society, where social conflicts are severe, government should pay more attention to public opinion, ease conflicts between officials and ordinary people, and use the Internet to gauge public opinion. China needs to limit the power of public administration and prevent the expansion of privileged interest groups. To prevent Chinese society from disintegrating in the process of reform, China needs to learn how to handle capital with efficient and equitable social and political systems.

In today’s China, it is of paramount significance that the new administration re-establish consensus on the direction of reform and galvanize public support for its continuation. The government should forge a sense of job security in its young people and build good feeling and a sense of belonging among the population at large. The new administration should also focus on continuing to consolidate the nation’s soft power and to improve the sense of cohesion and unity in the Chinese national identity. Comrade Xi’s Southern Tour sends a strong signal that that the new administration has the courage and determination to push back against the unyielding, wade into treacherous waters, surmount ideological obstacles, and breach the defenses of entrenched interest.

Translated by Ouyang Bin and Sun Dilong