Mr. Shangkong
PUBLISHED : Monday, 17 March, 2014, 2:27am
UPDATED : Monday, 17 March, 2014, 8:59am

Shanghai 'revolution' may be uphill battle for Premier Li

War on bureaucracy may be a tougher fight than the No 2 leader imagined based on the absence of discussion on free-trade zone at political summit

BIO

George Chen is Managing Editor for SCMP.com International Edition and Mr. Shangkong Columnist. George has covered China's political and economic changes since 2002. George is the author of two books: This is Hong Kong I Know (2014) and Foreign Banks in China (2011). George has been named a 2014 Yale World Fellow. Follow George on Twitter: @george_chen.
 

Premier Li Keqiang has a tough job. From the new war on air pollution to maintaining strong economic growth in a more realistic manner, nothing is easy for the country's No 2 leader after President Xi Jinping.

The press conference Li conducted last week at the closing of the annual political summit in Beijing was only the second one hosted by him as premier but the first that showcased his own policy preferences as he steps out of the shadows of his predecessor after a year in office.

One of the highlights of Li's tenure so far, I would say, is the launch of the Shanghai free-trade zone, the mainland's first such zone modelled on Hong Kong's free-port system.

It also shows that in the premier's war on bureaucracy, his power is still limited

The free-trade zone, announced by the State Council in July last year, could be something for Li to show off as part of his ambition to restructure the economy.

It is widely known as Li's baby. But surprisingly, he didn't make any mention of the Shanghai project even after a reporter from state broadcaster China Central Television asked how he planned to cut down on government bureaucracy and boost administrative efficiency.

As Li himself and many top officials from the central bank, the commerce ministry and the Shanghai government itself have already repeatedly said, the reasons why China at this moment needs a new special zone like the one in Shanghai is largely because the government wants to make it a test ground.

Through it, the government wants to show how old-fashioned bureaucratic government approval and registration processes can be shortened or even abolished completely so businesses - home and abroad - can function more efficiently, helping create jobs faster and more easily.

Some officials have already called such a reform in Shanghai akin to a "revolution" - stripping the government of some of its powers and handing some of them back to the business world.

If I were an aide to Li, I would have suggested he take on the CCTV reporter's question and show off the progress made by the Shanghai free-trade zone since its official launch at the end of September last year. But I can understand a sense of disappointment or lack of confidence perhaps on Li's perspective about the free-trade zone so far.

It has been about half a year and we do have a few foreign banks that have already opened their branches in the free-trade zone - after they were heavily lobbied by the banking regulator to give the government some face. Apart from those branches with little actual business, there have been many suggestions and guidelines - but what on earth has the free-trade zone really achieved?

Anything significantly new on the foreign exchange reform or tax waiver front? Officials will probably tell you more or less the same thing: "We're still studying those plans." Doesn't this just sound like the same old bureaucratic response?

Li must have his reasons for not mentioning the Shanghai zone and one of these could be a lack of confidence in how far this reform or so-called "revolution" in Shanghai can go. On the other hand, it also shows that in the premier's war on bureaucracy, his power is still limited.

 

George Chen is the Post's financial services editor. Mr. Shangkong appears every Monday in print and online. Follow @george_chen on Twitter or visit facebook.com/mrshangkong

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