As the 1.3 billion Chinese people celebrated the “golden week” National Day holidays with a plethora of activities, the Communist Party leadership lost no time in taking big strides on various fronts, preparing for the upcoming policy-setting third plenum of its central committee in November.
The week kicked off with a low-key opening of the Shanghai Pilot Free Trade Zone, the first of its kind in China, on Sunday. Despite the absence of leaders from the central authorities at the ceremony (which was officiated by the city Party Secretary Han Zheng), few people would have played down the importance of the pilot zone in the country’s next stage of reform and opening up.
Just as Shenzhen Special Economic Zone was given the pioneer role in China’s reform drive more than three decades ago, the piece of 28 kilometers of land in the eastern coastal city has surfaced as the land of hope and change for the new leadership to try to further liberalize the mainland’s economic system.
In a move that shows the leadership has taken a serious and practical approach in the Shanghai experiment, officials have cited corporate tax as an example to demonstrate their intention of copying the success of policies in the free-trade zone to other parts of the mainland. They said the idea of lowering corporate tax to 15 percent was dropped because conditions for the tax cut, even if there is a successful showcase in the free-trade zone, were not ripe for adoption in other parts of the mainland.
The cautious approach could explain why some highly complex and bolder measures in the liberalization of exchange rate and interest rate policy and relaxation of control over Internet access are off the list of new policy initiatives for the experimental zone, at least for now.
The modest take-off of the FTZ will give more time and space for bolder steps to be taken after the conclusion of the Party central committee’s November plenum, during which the ruling elites are expected to give a stamp of approval to a pro-reform policy direction and agenda.
About the time the Shanghai FTZ was launched to usher the start of a new stage of economic reform spearheaded by Premier Li Keqiang (Li gave his blessing to the FTZ during a visit in March), President Xi Jinping was giving a clear message that the ongoing campaign against corruption and malpractices, in order to build a clean government and decent work styles, will continue for a long period of time.
Official media reported this week that Xi and the other six members in the Politburo Standing Committee have chaired a series of so-called democratic life learning sessions among senior officials in some provinces between September 23 and 25. The party leaders, the reports said, gave instructions on how to implement the crackdown against the so-called “four decadence”, namely formalism, bureaucratism, hedonism and extravagance, and chaired self-criticism sessions among local officials.
Xi said at a session attended by officials in the Hebei province: “The eradication of ‘four decadence’ is a long-running, arduous task. We must persist. We must not become lax, lower our standard and lessen our effort.”
The intensified campaign to unify the thinking of officials and keep up the fight against decadence is aimed at bolstering public trust and support for the ruling party, which is facing an increasingly skeptical populace in the mainland.
The chronic problem of corruption and abuse of power by cadres at all levels has eroded the authority and damaged the image of the ruling party in their governance.
Rebuilding public trust will remain a key task of the Xi-Li leadership ahead of and after the third central committee plenum.
Meanwhile, on the diplomatic front, Xi pledged more investment initiatives to bolster ties with the Southeast Asian countries in a speech to the Indonesian parliament, the first of its kind by a foreign leader on Thursday. Xi said China plans to boost trade volume with the Association of Southeast Asian Nations (Asean) bloc to US$1 trillion by 2020.
While playing the economic and trade card, Xi in his speech avoided the issue of disputes with some Asean countries over territorial rights in the South China Sea.
Beijing took new foreign policy initiatives to bolster ties with the Asean countries even as it stood firm over the stance on the territorial dispute over Diaoyu islands, which Japan refers to as Senkakus. Not surprisingly, there is no arrangement for Xi to have a separate casual, not to mention a formal meeting, with Japanese Prime Minster Shinzo Abe, during the Apec leaders’ summit in Jakarta.
Chris Yeung is Hong Kong Economic Journal’s deputy chief editor. This column appears every Friday.
– Contact the writer at [email protected]