China's wealthiest man has his say on third plenum
Now that a reform Leadership Group has been established by the party, it has to come up with some achievements, tycoon Wang Jianlin says
How is the third plenum going to change China? Your columnist found some of the best insights from the mainland's wealthiest man, Wang Jianlin, both in terms of what he said and what was not said.
This is a man who has built a US$14 billion conglomerate from scratch. He knows the game.
Wang was speaking to the local media because the full policy paper of the Communist Party plenum was announced yesterday evening. His comments remain valid. Here is part of the transcript.
How forceful will the reform be?
The party leadership has at least established a reform Leadership Group. It's a sacred move. On behalf of the party leadership, it is to lead and co-ordinate the reform.
Now that the group is established, it has to have some achievements. It has to make a difference. It is impossible to have a leadership group for three years and come up with no policy. How are you going to explain that to the foreign community, the party and the people?
(That's true. By establishing the committee, President Xi Jinping is taking over the job of economic reform from Premier Li Keqiang. That comes with responsibility and blame, too. That is the strongest political commitment to reform you can get in China.)
Only by being independent [from the State Council] can the group revolutionise those people. The problem with the early directives [to facilitate and grow the private sector] was to let the ministries formulate their only reform plan and details. How will you expect anyone to revolutionise oneself?
(After all, the state sector and the ministries are the two faces of the same man. It is OK to ignore the premier who doesn't decide who gets the job or keeps his or her life. When the party leadership makes an order, it's a different game. Xi is to move some stones.)
But where are those people (working on the group) going to come from?
The group will be led by the central leader. The execution will be done by people from various ministries or even company managers and economists. Anyway, I have high hopes on that.
(What a telling "anyway"! No one in China's corridors of power is insulated from the complicated web of interests. Will an official seconded from a ministry to the group completely ignore the interest of his or her former boss who has groomed his or her career? Is Xi the "philosopher king" going to look at every detail? Anyway, having some reform is better than none.)
Are you seeing any change to the traditional power balance between the state and the non-state sectors, judging from the plenum's announcement?
Absolutely. It said the two are equal. It said both [the state and the non-state sectors] are the fundamental elements of the economy. That means equality between the two.
Private enterprises grow from stone crevices. We blossom when there is sunlight. The third plenum is another spring for the private enterprises.
(However, that's not a fundamental change in the balance of power.
After all, the plenum maintained that the state sector remains the "core" of the Chinese economy.
The plenum promises to remove all unreasonable rules and hidden barriers to non-state enterprises as well as encourage their stake holding in state-owned enterprises.
If implemented, this will mean a better life for the private firms and greater efficiency for the economy.)
It is regrettable that there is no specific measure on the reform of state enterprises. That's disappointing. Most of us have been expecting some "surgery" on the SOEs. Look at the corruption scandals of PetroChina. The consequence of a giant SOE-turned-monopoly is very devastating.
(While the State Council directives in 2005 and 2010 have mentioned the opening up of the telecommunications and petrochemical industries to the private sector, the plenum no longer asks for that.
Instead, it called for the separation of state and the corporate in the operation of the state monopolies.)
Is it a compromise?
When we say the reform has entered a deep-water area, we mean the interest groups. The central-level SOEs make up the biggest interest group. They can influence the policy. We cannot.
(Despite mounting pressure, the SOEs have given in a little. Among them is the increase of their dividend payment from no more than 15 per cent to 30 per cent in 2020 to pay the welfare bill. How many exemptions will continue to exist is not known yet.
In return, they have managed not only to keep their monopolies, but also the green light to become investment holding companies. The latter will further expand their turf and flexibility because they will no longer be constrained to a particular industry.
In short, you can keep your jar of cookies as long as you share.)