Date
16 August 2017
Mainland analysts say Xi Jinping's bigger role in economic reform has been driven by the need to wade into the so-called deep-water zone of vested interests. Photo: Bloomberg
Mainland analysts say Xi Jinping's bigger role in economic reform has been driven by the need to wade into the so-called deep-water zone of vested interests. Photo: Bloomberg

WEEKENDER: Xi takes economic helm to steer reform

When the Chinese Communist Party’s Central Committee announced it was setting up two top-level committees at the end of its third plenum last month, the common view among China watchers was that the one on security would be chaired by President Xi Jinping and Premier Li Keqiang would head the other on reform. Those observers look certain to be proved wrong.

Having already taken over the party helm as general secretary, the state as president and the military as Central Military Commission chairman, there are signs aplenty that Xi will not just head the national security committee, but also the newly established leading group convened to deepen reforms.

The growing power of Xi, dubbed China’s fifth-generation leader, became more apparent at the end of the annual Central Economic Work Conference last week. Xi wrapped up the four-day meeting with a speech that outlined China’s domestic and external economic environments, summarized the economic tasks in 2013 and mapped out the major work targets for 2014.

It included six major tasks for the next 12 months: ensuring food security; overhauling the industrial structure; preventing and regulating government debt risk; coordinating regional development; beefing up social security and livelihood work; and further opening China to foreign investment.

In a departure from previous work conferences where the premiers made the concluding speech, Li spoke mainly on macro-economic policies and detailed work plans for 2014, including the need to ensure reasonable gross domestic product growth while proceeding with economic restructuring.

Even though Li will remain the key person in the Politburo Standing Committee in charge of economic affairs, Xi looks certain to play a more active role in leading the country’s next stage of economic reform.

Mainland analysts said the party chief’s bigger role in economic reform has been driven by the strategic and practical need to wade into the so-called deep-water zone, where dangerous vested interests lurk.

Some of the key areas of reform, including the model of economic development and innovation, hinge not only on economic policies but on other non-economic areas such as government systems and practices. Strengthening the party’s leadership in this area could help resolve some of its chronic problems.

The marked change of the roles of Xi and Li says a lot about the complexity and difficulty facing the ruling party in its drive to reorient the economy and remove the bottlenecks to sustainable and balanced growth.

Put simply, the reform blueprint adopted at the Central Committee plenum represents not just a package of new finance, trade and foreign investment initiatives, it delves into some all-important and sensitive areas of the country’s existing systems.

Speaking at the Everbright-Century China Forum in Hong Kong Thursday, Liu Shijin {劉世錦}, vice chairman of the State Council’s Development Research Center, underlined the push to modernize China’s governance system as one of the plenum’s five important decisions.

One of the key areas of governance reform they could learn from Hong Kong, he said, was the establishment of an independent anti-corruption body similar to the city’s Independent Commission Against Corruption.

Another significant conclusion, Liu said, was the equal economic importance accorded to the public and private ownership systems. Doing so will give greater protection to privately owned property, he said. It will also bolster the confidence and expectations of the private sector.

The senior mainland official also underscored the importance of new thinking about the role of government in managing the economy as pioneered in the Shanghai free trade zone. Under the “negative list system” in the FTZ, enterprises are allowed to venture into any areas not covered in the government’s “can’t-do list”. The new initiative is expected to give market forces more room in economic development.

For those key reforms to succeed, one vital factor is that the ruling party be in a strong position to help change the mindset of local government leaders and ensure effective implementation of policies at local levels.

The communiqué of the third plenum said a leading group on deepening reform will be set up under the leadership of the Politburo Standing Committee. It said local governments should designate a body to be held responsible for deepening reform.

It all adds up to more signs that the ongoing reform program will reach well beyond the economy to be a party-led transformation of the 1.3 billion-strong nation.

Chris Yeung is deputy chief editor of the Hong Kong Economic Journal. This column appears every Friday.

– Contact the writer at [email protected]

SK

 

He was editor-at-large at the South China Morning Post and, more recently, deputy chief editor of the Hong Kong Economic Journal.

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