China's reformers must be ready for a protracted battle with interest groups

Hu Shuli says the central leading group on reform, headed by Xi, will have to remain above the fray and resolute in pushing for change

PUBLISHED : Wednesday, 08 January, 2014, 12:14pm
UPDATED : Thursday, 09 January, 2014, 2:24am

The turn of the year brought news that President Xi Jinping will take the helm of the newly formed leading group for overall reform.

This group is a key part of China's reform drive. As soon as its formation was announced at the third plenum, speculation followed over its structure, operation and membership, all of which would affect its effectiveness.

Having Xi lead the group is surely the best guarantee that the government is serious about "deepening comprehensive reform".

The group has four key tasks, according to the plenum's resolution: design a holistic plan; facilitate co-operation between the different agencies involved; implement the plan as a whole; and monitor its progress. All four steps will upset vested interests.

By penning the resolution, the government has made a good start towards completing the first task. We are confident the final plan will impress in both scope and ambition.

The next three tasks are far more challenging. From co-ordination to implementation and oversight, reformers will be opposed at each stage by interest groups. Thus, when carrying out their job, they must strive to be professional, decisive and politically savvy. Above all, they must take responsibility and see the job through.

In the past, resolutions on reform have remained paper tigers for two reasons. One, no consensus on reform could be reached; and, two, interest groups invariably put up a fight to prevent meaningful implementation. This time, despite orders from the top, some local governments are already quietly pushing back. In some places, further restrictions on private enterprise were announced just days after the third plenum plan was unveiled.

The central government must put its foot down to ensure all local officials are on board. The leaders recognise this, too, it seems. In a Xinhua commentary published on New Year's Eve carrying Xi's byline, the president called on all party members to embrace a common purpose for reform.

Over 30-plus years of reform, interest groups have become more entrenched, and turf-guarding and red tape in the bureaucracy commonplace. As a result, many important rules, regulations and even laws have languished in the making.

In cases where initiatives were launched, a lack of strong institutions meant there were usually too many agencies involved, each pulling in a different direction, with little co-ordination. In some cases, officials even openly quarrelled in a naked power grab.

The central government must put its foot down to ensure all local officials are on board

China's communications industry is a case in point. With the advances of technology, we've seen the rise of, first, broadband, then digital television and social media. In the process, some streamlining and co-ordination between the telecommunications, broadcasting and internet sectors would allow companies to share the costs of innovation and resources, and also allow a more seamless provision of services to consumers.

Instead, none of this has happened over the past 20 years, despite some desultory efforts to boost co-operation. Industry players were too busy guarding their rent-seeking opportunities and monopolistic advantages.

As a result, China today has a fractured, underdeveloped telecommunications industry that does not befit its position as the world's second-largest economy.

Reform is hard; holistic reform will be even harder. The leading group must brace itself for a protracted battle against interest groups.

At the third plenum, Xi acknowledged the complexities of comprehensive reform, pointing out that no one government department could do it alone. This is a clear sign the leading group will not simply be a resurrection of the State Commission of Economic Restructuring of old.

In today's China, reforms can't be comprehensive without being thorough; and they cannot be thorough if they aren't comprehensive.

The third plenum's pledge to develop the market economy, democratic politics, a progressive culture, a harmonious society and ecological consciousness is a sign of the times. Not only have the problems and contradictions afflicting China's economy become more obvious over the years, it is clear today that they come tied with the country's political, social and environmental problems.

Thus, China's reform drive has to target all areas, and it is right that a designated central government agency led by no less than the party general secretary himself is spearheading the efforts.

The leading group has a mammoth challenge. It has to stay above the fray, fulfilling all the reasonable requests of the different government agencies and remaining unmoved by the power play between interest groups. To realise the reform blueprint, it must be firm and decisive.

We await news now on more details about the leading group, including its make-up. By 2020, we hope to see - as the blueprint pledges - the successful outcome of key reforms.

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