By preemptively claiming the mantle of patriotism—and by pursuing an aggressive course toward Japan—Xi also insulates himself from accusations that have previously dogged reformers. Zhu Rongji, Jiang Zemin's reformist premier and enforcer, was labelled a “traitor” for embracing globalization, liberalizing the economy, and leading China into the WTO.

Strategy Four: Generate a “sense of crisis” within the Party

When speaking to insiders, Xi has a different task: convincing them to give up some of their privileges. To explain why this is necessary, he has promoted the paranoid message of Document Number 9, an internal Party document, which recounted a litany of threats to Party rule inside and outside China’s borders. He has therefore suggested that the fate of Party rule is staked on the success of his agenda. Its implementation, he said “will be a new test for the Party’s ability to rule and lead the country.”

Xi has called upon cadres to treat the situation as a crisis. In a June 18 speech about the mass line campaign he called for “a sense of urgency at all levels.” His political campaigns against corruption, and an ongoing crackdown on liberal dissent, have also served to generate this feeling. While the widespread anticorruption campaign threatens officials with “double detention” (shuanggui)—disappearance into feared Party prisons—the crackdown on dissent feeds paranoia by identifying new threats, and demonstrates the Party’s commitment to defending its members from them.

Strategy Five: Create new constituencies in favor of reform

Central authority, however, is not enough to effect change on a national scale. Chinese officials have decades of experience at evading oversight, submitting optimistic reports while concealing actions and outcomes that go against the priorities of their superiors. In order to effect change, previous top leaders have made calculated decisions to create new interest groups with incentives to support reform.

Deng Xiaoping demonstrated the possibility of a new basis for growth by playing the countryside against the cities through the creation of Town and Village Enterprises (TVEs), and then pushed past vested interests in Beijing by creating new constituencies for reform in the coastal provinces which housed the new Special Economic Zones (SEZs) of the 1980s. By creating opportunities for local authorities to get rich by sponsoring market enterprises, Deng harnessed self-interest to create allies at the provincial and local levels.

Some reformist voices have been explicit in calling for the leadership to emulate Deng’s strategy. Zhou Qiren, Dean of the National School of Development at Peking University and a well-known economic reformer, speaking at Caijing’s annual conference in Beijing in November 2013, argued that the successful implementation of reforms will rely not only on overcoming existing vested interests, but on the ability of this generation of reformers to create “new vested interests in favor of reform,” just as the leadership succeeded in doing with rural reform in the 1980s.

Under the current leadership, this strategy is most closely associated with Li Keqiang and the Shanghai Free Trade Zone (FTZ), which many see as his personal initiative. Announced soon after the new administration came to power, it looked at first like the FTZ would be the flagship policy of this generation of reformers. Events over the last six months have called this into question, however, especially the fact that Li Keqiang did not attend the Zone’s opening ceremony, as well as discontent at the contents of the Zone’s “negative list” for foreign investment which failed to deliver meaningful concessions for investors.

More recent developments suggest that it is too early to write off this particular strategy, however. China’s provinces have been vying for the approval of their own proposed zones - at least twelve applications have been filed so far. The Third Plenum itself also endorsed FTZs as a means of promoting reform and, most recently, Xi Jinping publicly encouraged Shanghai’s flagship zone when meeting with the city’s delegation at the National People’s Congress (NPC).

Strategy Six: Change the context for actors too powerful to reform

State-owned enterprises have long been public enemy number one for proponents of reform, both inside and outside China. While the current leadership includes SOE skeptics, such as Liu He, a prominent economic reformer and close advisor to Xi, the overall agenda appears to favor continued state ownership in key sectors of the economy. Last November’s Plenum document itself, while calling for a “decisive” role for market forces, also stated that “public ownership” should be the “core” of China’s economic system. Xi Jinping himself is on record referring to SOEs as “an important foundation of Communist Party rule” in a 2009 speech at Daqing oilfields.

Nonetheless, there has been considerable discussion of SOE reform, and the anticorruption campaign has hit SOEs hard. The leadership is clearly not satisfied with the state sector as it is. Xi appears to consider them corrupt, inefficient, and overly reliant on monopoly rents. Xi’s reform goals call for making them competitive—transforming them from cash cows for cadres into streamlined enterprises capable of acting as “national champions” in global markets. Xi summarized this goal at this year’s NPC when he told the Shanghai Delegation that, “deepening the reform of SOEs is a major task; not only should SOEs not be weakened, they must be strengthened.”

In the 1990s, Jiang Zemin and Zhu Rongji faced a similar challenge in getting the People’s Liberation Army out of the economy. Bloated and sprawling, it was less a military than an enormous conglomerate with soldiers working in its factories and farms. Unable to force the PLA to give up its business interests, Jiang and Zhu instead changed the context in which they operated. By reducing China’s tariff levels, they reduced incentives for smuggling—a major source of PLA income until that point. This cut off a major source of its money and power, making further reforms easier. During Jiang’s term, the PLA eventually reduced its force size by half a million, and gave up most of its previously vast subordinate businesses, focusing on developing itself into an effective military.

Reforms introduced in the Plenum document and NPC likewise aim to push SOEs into remaking themselves as efficient businesses. The Plenum document introduced limited reforms aimed at encouraging financial discipline among SOEs, including forcing them to pay higher dividends to the state (30 percent by 2020, up from 5-15 percent today), and expanding private investment in state-owned companies.

More importantly, the leadership has followed the example of Jiang and Zhu by removing regulations that protect SOEs from competition. The Plenum laid out measures to reduce barriers to entry in state-dominated markets by removing cumbersome administrative approvals, allowing private companies easier access to credit, and forcing SOEs to pay market prices for key inputs such as land and energy.

Most recently, the leadership appears to have made a push for interest-rate liberalization, first embracing new online investment vehicles, such as Alibaba’s Yu’e Bao, as a means of putting pressure on state-owned banks to accept liberalized interest rates. The People’s Bank of China (PBOC) has so far rejected a series of regulatory proposals from the banks that would limit the growth of funds like Yu’e Bao—although there are reports that the central bank is pursuing some limits on these funds despite having identified them as desirable innovation. On March 12, the PBOC announced plans to bring more private competition into the finance sector, seeking fully liberalized interest rates within two years. In addition to directly putting pressure on banks to make a desired change, interest-rate reforms could could have consequences throughout the state sector by unwinding a system that effectively taxes Chinese savers in order to provide subsidized access to capital to SOEs.

Strategy Seven: Use external leverage to lock in reforms and push further.

In the face of significant domestic opposition to reforms, Jiang Zemin and Zhu Rongji used the promise of WTO membership to win support for domestic reforms and used membership itself as a way of locking in their achievements.

The Xi administration has shown signs of emulating this strategy. Shortly after entering office, the administration signaled its willingness to enter into Bilateral Investment Treaty (BIT) negotiations with the United States on the basis of a ‘negative’ investment list. This suddenly made the possibility of negotiating a BIT with China, an initiative stuck in the weeds since the George W. Bush administration, a much more realistic possibility. The administration has also made more positive noises about the possibility of joining the Trans-Pacific Partnership (TPP), the Obama administration’s landmark “21st Century trade agreement.”

Members of the Party’s top leadership have also been explicit in spelling out this strategy. A Politburo meeting on August 27, ahead of China’s Third Plenum meeting, called on the Communist Party to “fully mobilize all positive factors that can be mobilized inside and outside the country to form a great cohesive power for promoting reform.” Key figures in Xi’s inner circle have also addressed this strategy. Liu He told China’s Caixin magazine in 2010, “Domestic drive often needs to be activated by external pressure.” Explicitly drawing lessons from previous reform efforts, Liu explained, “From the perspective of China's long history, a unified domestic drive and external pressure has been key to success.”