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  • Dec 20, 2014
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PUBLISHED : Thursday, 08 November, 2012, 12:00am
UPDATED : Thursday, 08 November, 2012, 7:22am

China needs a master plan for reform

Hu Shuli calls on leaders to seize the opportunity at a time of transition to draw up and roll out a blueprint for change, aided by experts and scholars

The 18th Communist Party congress opens today to high hopes that its leaders will endorse a new approach to reform that supports comprehensive, fundamental change in the coming years. At this historical turning point, could this be the breakthrough China will see?

The policy of opening up has been in place for more than 30 years, a subject of discussion at no less than six party congresses. It has transformed China's rigid planned economy into a lively, albeit still improving, market economy. But with economic growth slowing, the ills of social conflict, corruption, unfair wealth distribution and environmental degradation grow clearer by the day. Equally obvious are the problems arising from half-hearted reform.

Reform fatigue has set in. Some people even blame the problems on the reform drive itself, saying that such efforts bring more harm than good. The best answer to such suspicion is to push harder for change.

Relationships between different interest groups have grown more complex. As well, people's expectations of the government have become more varied. In a Xinhua survey of people's concerns, the issues of income distribution, a pension system, equal access to education and corruption all drew attention. The subject of economic growth was not even in the top 10.

Clearly, the basics of a home and three square meals a day are no longer enough to keep people happy; many more now want a say in decisions that affect their lives, and are more ready to advocate for their rights. Their reasonable demands cannot be ignored.

People want reform. While they don't agree on the specifics, almost all back a push for comprehensive change. Policymakers should respond by drawing up a holistic plan to co-ordinate such all-around reform.

The call for a reform blueprint, proposed in the 12th five-year plan, is now widely accepted. Having a blueprint means setting clear targets and designing a system to implement change. The challenge lies in deciding which reforms to pursue, how to implement them and in what order. A big-picture view is essential, not only because China is in the midst of transforming its model of economic development, but also because evidence-based best practice requires such an approach.

The government should not be content with sloganeering or making cosmetic changes. It's not enough, now, to cross the river by feeling the stones. So, while we encourage innovation and risk-taking at the grass roots, our policymakers must tap the expertise of analysts and scholars to draw up a blueprint for change.

There is a precedent for such a plan. Twenty years ago, when China was similarly at a crossroads, the idea of developing a socialist market economy was proposed at the 14th party congress. Leaders at the time acknowledged the role of the market in allocating resources, and agreed on the need to improve regulation of the macroeconomy. A year later, at the third plenary session of the 14th Central Committee, the government released a set of guidelines that spelled out the rules, variously, for modern enterprise, market function, macroeconomic control, distribution and social security - the five pillars of a socialist market economy.

The targets, rationale and steps to be taken were clearly set out, and this blueprint guided China's reforms for the next 20 years.

Of course, change is easier said than done. Today, the government must first identify the priorities for reform, focusing on those areas where change is most urgently needed and would have the most impact, then draw up in detail the implementation plan for these priority areas. This targeted approach has been shown to work. After the third plenary session of the 14th Central Committee, for example, the government simultaneously rolled out tax, financial system and foreign exchange reforms in one such targeted approach.

Today, China must break up its industry monopolies and reform the price of land, labour and capital. To do this, we must change the role of government and strengthen the rule of law. These should now be the key elements of a package of reform.

Designing the package is not an exercise for the elite. It should involve the experts and scholars who have boldly proposed solutions; the government officials who listen to public views; the media that risk reprisals to voice support for reforms; and leaders who are open-minded and determined to bring change.

This task is more complex and more challenging than ever before, and it demands both stamina and an open mind from government leaders. At the same time, change on the ground should not be ignored, because such bottom-up change can reinforce the top-down drive for reform, and vice versa.

Crucially, a reform blueprint - so necessary to efforts to direct and co-ordinate change - must not be held hostage by interest groups. Thus, the government should consider re-establishing an agency with sufficient authority to set and carry out policies, and monitor their implementation.

The crisis China now faces is an opportunity to take reforms to the next level. And the window of opportunity to act, which has just begun with the opening of the party congress, will last until the third plenary session of the 18th Central Committee next year. Our leaders would be wise to make full use of it.

This article is provided by Caixin Media, and the Chinese version of it was first published in Century Weekly magazine. www.caing.com

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