Saturday, November 30, 2013

Small steps rather than a Great Leap

The outcome of the Third Plenary meeting of the 18th Central Committee of the Communist Party of China (CPC) which ended on Wednesday in Beijing is like a typical iceberg - you see some of it above the water, but most of it is below.
But there should be no doubt, going by the work report couched in typical Party-speak by General Secretary Xi Jinping at the end of the meeting, that the implementation of the decisions will fundamentally transform China.
This transformation will be evolutionary. People who expected big bang reforms will be disappointed. But the Chinese communists are essentially conservative people. They have run one of the most successful programmes of economic growth in history, and they are not about to blow it by undertaking large-scale reforms which could destabilise the economy and along with it the polity, which is the jealous preserve of the Communist Party.


China's President Xi Jinping wants to transform China - but through evolution, not revolution
China's President Xi Jinping wants to transform China - but through evolution, not revolution

The decisions of the Plenum have a resonance in India. Because many of the issues the Chinese are aiming to tackle also affect us, whether it is the idea of "big bang" reforms, or those of the financial sector, corruption, or of taxation and a government system which delivers.
But to go by the past, you can be sure that at the end of ten years, most of the decisions taken will have been implemented in China, while in India, it could be here or there.
Among the key decisions of the Plenum were those to: 1. Establish a State Security Committee, something like a National Security Council, with a view to "improving systems and strategies to ensure national security."
2. Allow the market to play a "decisive" role in allocating resources within the country.
3. Set up a high powered group of ministers and party bosses for "comprehensively deepening reform."
4. Create a modern financial system.
5. Transform governance style "to establish a law based and service oriented government."
6. Develop and modernise an army that "obeys the Party's command, is capable of winning battles and has a sound work style."
There are other aspects of reforms in the political, social and ecological and institutional fields which will become clearer over time.
It needs to be noted that the report outlines the general party decisions, couched in Party language.
The details of many of the decisions will be fleshed out in the coming days. It is something like the legislation that is passed in our Parliament which is really fleshed out when the ministries concerned notify its rules.
The official aim of the Plenary session was "to improve and develop socialism with Chinese characteristics and push on with modernisation of the country's governing system and capabilities".
But shorn of the rhetoric, the aim was to put Xi Jinping's stamp on the Communist Party, to show that his new leadership is firmly in command and that it does not lack the energy or appetite for change.


Equally importantly, the goal of the Plenum was to undertake urgently needed measures to correct the imbalances and structural weaknesses in the Chinese economy before they reach a point where they could trigger a larger crisis which could have significant political consequences.
The Chinese economy has been growing at a frenetic pace for the past thirty years, averaging 10 per cent per annum. It is now two thirds the size of the US economy, but is growing five times as fast. This growth has been led by the Chinese government and local authorities who have played the role of decision makers, investors, franchisers, regulator and supervisors all in one.

Simultaneously, the country is facing increased social conflict due to a widening wealth gap, corruption and arbitrary actions of the state. Separatism persists in the form of protest immolations by the Tibetans and acts of terrorism on the part of the Uighur minority of Xinjiang.
There is also a threat from non-ideological militancy, such as the incident of November 6 when one person was killed and eight injured when homemade bombs were set off near a party office in Taiyuan, the capital of Shanxi province.


Indeed, as much was admitted by a Xinhua commentary on the eve of the Plenum.
"The faltering economy, intertwined with a widening wealth gap, rampant corruption and rising social conflicts, put the world's most populous nation and the second largest economy at a crossroads… China no longer has the luxury to delay much-needed reform. If the CPC wants to retain its power and win the hearts of the people, it is time to do something significant," it said.
But it also added: "The Chinese leadership is aware of this."
The decision on the security committee reveals the concerns of the Communist Party relating to security, especially internal security.
It is not surprising therefore that the Plenum communique had a section which addressed the need of the party to clear the obstacles before the People's Liberation Army, which will be encouraged to modernise in terms of equipment and doctrine, but which "obeys the Party's command, is capable of winning battles and has a sound work style."
The bottom line assessment is that the Plenum outcome keeps Chinese economic and political developments on an evolutionary path. In other words, it has sought to tweak policies, rather than offer up a radical menu.
The latter may have to wait for the 19th Party Congress which is expected in 2017, roughly half-way in Xi's tenure.
The Communist Party leadership is aware that the omnipotent role that it has played in the government and economy of the country has become an drag on the political stability and economic efficiency.
While there is no question of the CPC giving up its monopoly of power voluntarily, the leadership knows well that if crucial reforms of the financial sector and of creating a legal governance regime, are delayed, the Chinese economic miracle could well turn into a nightmare.
Mail Today November 13, 2013

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