Xi Jinping

Leaders not immune to a focus on quick fixes, populist policy

PUBLISHED : Monday, 12 December, 2011, 12:00am
UPDATED : Monday, 12 December, 2011, 12:00am

There is a popular belief among admirers of China's authoritarian model for economic growth that one-party rule has ensured the leadership does not have to pander to short-term demands from fickle voters and can sacrifice civil and political rights to focus on development and to achieve long-term benefits.

Indeed, Chinese leaders like to boast that the mainland's socialist model with Chinese characteristics means the government has been able to quickly marshal national resources and push through politically difficult but economically crucial policies, thereby steering the nation to become one of the world's top economic powers in just 30 years of double-digit growth.

As the central government marked the 10th anniversary yesterday of China's accession to the World Trade Organisation, it had much to celebrate.

Ten years ago, the mainland faced overwhelming challenges - inefficient state-owned enterprises, struggling state banks weighed down by soaring bad debt, and merely US$212.2 billion in foreign exchange reserves.

The mainland's leadership, under former president Jiang Zemin and then-premier Zhu Rongji, overcame strong political opposition and risked accusations of 'selling out the country to foreign powers' by pushing for accession to the WTO.

China has risen more rapidly than most had anticipated, with its economy now the world's second-largest and forex reserves totalling US$3.2 trillion, the world's largest.

Yesterday, at a forum in the Great Hall of the People to mark China's accession to the WTO, President Hu Jintao pledged that China would broaden its horizons to further integrate itself into the international community and vowed deeper economic reforms.

But the reality is that the vision of the mainland's leaders is getting shorter, and they are more pre-occupied with short-term issues.

While China's leaders may not have to answer to the electorate, the institutionalised leadership succession means that leaders on the mainland, be they at the central government or local level, may focus during their terms of office on short-term solutions and populist policies at the expense of long-term benefits, not unlike their democratically elected counterparts in Western countries.

The present leadership under Hu and Premier Wen Jiabao will give way to a new leadership line-up next autumn.

Starting today, the central government is expected to hold its annual economic work conference to map out economic growth and investment strategies for next year.

But the thrust of these strategies is already known, after the Politburo of the Communist Party met on Friday to set the tone for the conference.

The leaders were at pains to insist that macroeconomic policies, featuring an active fiscal policy and prudent financial policy, would remain the same for next year.

But their priorities have already shifted: the leaders listed 'promoting economic growth' as their top priority for next year, replacing the previous priority of 'combating inflation', which was set at the beginning of this year.

While the leaders have made 'adjusting the economic structure' their second priority and vowed not to relax measures to control property prices, the message is clear that the short-term goal of boosting growth trumps the long-term goal of economic restructuring.

This means the government will probably delay major economic reforms further to again ensure a sterling economic growth rate and create a favourable climate for the leadership change. That is too bad.

China's WTO membership set off a chain of reforms that gave the mainland a golden decade of development, but unfortunately that process has stalled.

Now mainlanders have no choice but to pin their hopes on the new leadership under Xi Jinping and Li Keqiang to kick-start the reform process again after they come to power late next year.

The inevitable delays will make the economic restructuring more difficult and painful.