Focus on politics and the pace of growth

PUBLISHED : Monday, 04 October, 2010, 12:00am
UPDATED : Monday, 04 October, 2010, 12:00am

While ordinary mainlanders enjoy a week of leisure and sightseeing over the National Day holidays, there's no rest for the country's political elite.

All eyes will be on the Communist Party's annual plenum of Central Committee members, which starts on October 15. The four-day meeting in Beijing has far-reaching implications for the direction of the mainland's economic growth and its political leadership in the coming years.

The fifth plenum of the party's 17th Central Committee is important for two reasons. The first, well-publicised one is that the meeting will discuss and approve a draft of the nation's 12th Five-Year Plan - the only item on the agenda according to the official announcement.

The second reason - which has not been officially announced but is the subject of wide speculation - is that the plenum will also confirm the promotion of Vice-President Xi Jinping to vice-chairman of the party's Central Military Commission, paving the way for him to take over the nation's top leadership post in two years.

The five-year plan, one of the few relics left over from the command economy days, is less potent than in the past. Then, the production of everything from transistor radios to locomotives was fixed without taking into consideration market conditions. Now, its implications are still huge as the plan sets the tone and direction of the economy for the five-year period.

The 12th plan, which covers the years from 2011 to 2015, is important as the mainland leadership is reportedly planning to push for a roadmap which outlines major structural changes in the way the economy grows.

It comes at a time of growing consensus that the policy of pursuing faster economic growth at all costs has hit a dead end amid discontent over widening income gaps and other social inequalities as well as worsening environmental degradation.

In recent months, state media and official economists have frequently noted the need to slow the economy and accept higher inflation to pave the way for pricing reforms as part of a plan to make economic growth more sustainable.

They have also heaped praise on President Hu Jintao for embracing the catch-phrase 'inclusive growth' in a speech last month. The phrase, reportedly coined by the Asian Development Bank in 2007, calls for economic policies that ensure everyone can participate in the growth process and share in its benefits.

Many expect the phrase to become a leading guiding principle for the plan. And, of course, how successful the party is at effecting that change will have huge global implications - not least because the mainland has overtaken Japan as the world's second largest economy.

But this is easier said than done. Try to imagine changing the direction of a giant ship on choppy seas which has been set on one direction at full throttle for the past 30 years. It's a process that is fraught with difficulties and risks.

For one thing, many observers at home and abroad have agreed that those significant structural changes will require genuine political reforms. Analysts have long concluded that the leadership under President Hu and Premier Wen Jiabao has lacked the courage needed to undertake any major political reform.

Since they came to power in 2002, powerful groups with vested interests - including the senior executives of state firms and the children of senior officials known as princelings - have consolidated their stranglehold over the economy.

That explains why the overseas media have been fascinated by Wen trumpeting the urgent need for political reform at least seven times in the past 40 days.

Since Wen is the only top mainland leader publicly advocating this, some overseas analysts have begun to wonder if there is a serious fissure within the top leadership.

This sounds unlikely. With the era of the paramount leaders long gone, today's leadership rules by consensus and it is hard to imagine Wen pushing for such a key and sensitive issue so publicly without the support of the eight other members of the party's Politburo Standing Committee - its highest decision-making body.

It is more likely that Wen's job is to release the trial balloon and kick off the debate.

Looking at this from another perspective, the significance of the next five-year plan and political reforms should also be seen in the context of the current leadership under Hu and Wen preparing to hand over power to fifth-generation leaders like Xi and Li Keqiang in 2012, the second year of the plan.

Xi's promotion to a top-ranking military position at the upcoming plenum will finalise the succession; he will be ready to take over from Hu having already held top party and government posts.

It was widely rumoured that Xi would be anointed to the military position at last year's plenary session. When that didn't happen, it contributed to speculation at the time about factional infighting.

Sources say Xi's promotion was not on the agenda last year, but it will be this year. In this regard, one could argue that the successful implementation of the 12th five-year plan and any meaningful political reform will largely depend on the wisdom and courage of Xi, Li and other new leaders.

But their true colours remain to be seen because - like previous leaders in waiting - Xi and Li have been biding their time and refraining from any controversial remarks or moves.

Some analysts have begun to express optimism that the new generation may have fewer inhibitions to push for political reforms - and they may be right.

But it must not be forgotten that the same optimism was also expressed for reforms under Hu and Wen when they first came to power about eight years ago.

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