SHANGHAI—As a Marxist thinker who sees the world in terms of titanic struggles between opposing social forces, Xi Jinping has put his finger on China’s main challenge.

It is, he told a Communist Party gathering in October, the conflict between people’s desire for a better life and “unbalanced and inadequate development.” In a commentary, Xinhua News Agency explained that if such a “principal contradiction” is left unresolved, “it can lead to chaos and eventually, as Marx predicted, to revolution.”

The...