Time for Beijing to implement bold economic reform
The third plenary session of the Central Committee beginning in Beijing today has raised great expectations of reform. The outcome could set the tone and agenda for the country's development in the next decade or more. Officials themselves have fanned high expectations. Fourth-ranked leader Yu Zhengsheng recently declared the reform measures to be considered at the meeting to be unprecedented. The Politburo has vowed to accelerate developments in five areas, including democratic politics.
This suggests the plenum will not focus as expected just on economic reforms. Supporters of political reform see it as necessary to safeguard past achievements. But there is a gap in perception of meaningful political reform between China and outsiders. And there have been conflicting signals. Soon after becoming party head President Xi Jinping called for "greater political courage and wisdom to deepen reforms". Later, however, the authorities tightened control of the internet and media, dampening hopes for change.
The nation is at a critical point for putting the economy on a sustainable path. The leadership, therefore, has no choice but to pursue bolder economic reforms. The question is to what extent they can ultimately be effective without political implications. Advocates of political reform include Zhu Lijia , a professor with the Chinese Academy of Governance, who counts anti-corruption efforts, transformation of government functions and restructuring of government organisations among political reforms. In this respect, the government has already promised to reduce intervention in markets and cut business red tape.
But it remains to be seen whether such broad headings tackle harder subjects like pushing ahead with rebalancing the economy away from an investment-led to a demand-led model; breaking up state monopolies and their stranglehold on cheap financing in order to liberate innovation and job creation by the private sector; transforming the tax system and weaning local government off financial dependence on land grabs and sales; rural land reform; and reform of the hukou, or the iniquitous household registration system. Such goals may be remote from Western liberal ideas of reform, such as universal suffrage and checks and balances on power. But they pose challenges the party must answer to maintain the momentum of economic growth that underpins its political legitimacy.