China’s new leader Xi Jinping has only been in office a month, but he’s already turning heads.
He’s launched an anti-corruption campaign, and he’s just returned from a trip to the Southern city of Shenzhen, a journey that many in China believe is a signal that he is prepared to implement big economic reforms.
The visit is significant because Shenzhen — which borders Hong Kong — was the site of China’s first experiment with a free market system. One big question is what exactly the new leader is looking to reform within the Chinese economy. He’ll have to go head-to-head with large, state-owned companies in order to shift more capital to the private sector.
While they may be difficult, the reforms are necessary, says Jim McGregor, author of “No Ancient Wisdom, No Followers,” a book that details the challenges confronting China’s economic system.
“The economy can’t keep growing with the current state-owned enterprise centered model,” McGregor argues. “[Xi Jinping] has to reignite private enterprise and regain the confidence of foreign businesses, who are doing business here but have lost confidence in the government and the government’s willingness to even give them a decent chance here.”
If he fails, McGregor concludes China will likely become less attractive to foreign companies looking to do business there.
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