China’s contradictory wish-list of reforms

Discussion in 'China' started by Ray, Nov 19, 2013.

  1. Ray

    Ray The Chairman Defence Professionals Moderator

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    UNCERTAIN AT THE TOP

    - China’s contradictory wish-list of reforms


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    Chinese politics has been on a roller-coaster in the past week. First, Chinese sources let the media know that the 22,000-word communiqué at the end of the third plenum of the 18th congress of the Chinese Communist Party would announce the long-awaited road map for the next phase of China’s reforms. Up to now, Xi Jinping’s leadership had been hard to define, but this document would finally provide the clear, detailed information that would define what his term at the head of China’s party-state would be about. Then, last Tuesday, the announcement came, and it was a damp squib: a vague and contradictory wish-list of reforms with no real sense of how to achieve them. But then, on Friday, two announcements came that spelled important changes in the Chinese political system: the effective end of the “one-child” policy, and the abolition of the system of “reform through labour” that led to the notorious laogai labour camp system.

    The Plenum communiqué provided plenty of fodder for China-watchers. The statement that China would allow markets to take a “decisive” role in the allocation of resources suggests a speeding up of economic reforms in a whole variety of areas. For instance, rural land is still state-owned. By allowing farmers to own their own land and develop it, a whole new element of growth may be opened up in the countryside. Another clearly-stated intention was to set up a new national security bureau, although it was not clear whether this was something along the lines of America’s National Security Council, or something more dedicated to breaking up internal dissent. Also provoking discussion was the decision to set up a small group to steer reforms. How would this group operate? Which members of the top seven figures in Chinese politics, the standing committee of the politburo, will actually be on this committee? There has been plenty of discussion in the media outside China (along with some fairly acid comment on Weibo, China’s Twitter), but little hard information.

    For this discussion could not conceal a wider reality: the document gave little real indication of policy direction and even contradicted itself in certain places. The communiqué suggests both that free markets will be given more leeway to operate in China, but also that the large state-owned enterprise sector will continue to play a central role in the economy. More seriously, the report gave little clues on promised reforms in areas such as liberalization of financial services or reform of the banking sector.

    Most clearly absent was any sense of political reform in a more liberal direction. In recent years, Chinese officials have spoken frequently of rule of law as a core value, yet it has also been made clear that there is no prospect of a judicial system being established that can override the ultimate will of the party. Since Xi Jinping became general secretary, China’s media have felt an increasingly chilly wind as they are reminded that even China’s increasingly commercialized broadcasters and newspapers must stay away from certain topics. So, any serious investigation of the extraordinary fall of Bo Xilai, the former party secretary of Chongqing city, or querying of the motives of China’s top leaders, is out of the question. There has been a flurry of anti-corruption campaigns in China in the past few months, as officials are told to serve no more than “one soup and four dishes” at any meal. Yet, these changes in political tone, though real, serve to consolidate the party’s rule, not to liberalize or pluralize it.

    So on Wednesday morning, as the world analysed the communiqué, the verdict was that it was something of a damp squib. However, nothing could have been further from the reaction just two days later when the Chinese government announced changes in two of the policies that have defined its rule for decades. For years, China has operated a “one child” policy that has been the largest demographic experiment ever conducted in history. For years, more and more exceptions have been permitted, particularly for rural families. But now, it has been announced that any parents who are themselves only children may now have two children. This applies to some 75 per cent of Chinese, meaning that the policy is effectively at an end. The change in policy is a recognition of a particular reality: China is getting old very quickly. By 2050, a quarter of the population will be over 65, meaning that there will be many fewer younger Chinese workers to support a huge population of elders who need pensions and healthcare. Many of the other emergent economies in the world, such as Turkey and Iran, have young populations which will not age so quickly. China knows it has to deal with the danger that it will get old before it gets rich.

    The abolition of China’s system of “reform through labour” is also significant, as it has been described by the authorities as part of their desire to “improve human rights and judicial procedures”. As part of this move, the government also announced a reduction in the use of the death penalty (China currently executes more people than any other country). However, the party’s determination to hold on to its monopoly on rule means that arbitrary arrests, particularly by corrupt and hard-to-control local officials, will continue to be a constant in China for years to come.

    What does this array of changes mean? The confused nature of the communiqué suggests that there is still uncertainty at the top of government. The direction of Chinese politics has been very clear for two decades: economic reform with minimal political liberalization. Yet, within the leadership, there are very clear differences of emphasis. Some stress economic reform and liberalization of markets as the top priority. They see the need for China to turn from export-oriented growth toward growth based on much greater domestic consumption, particularly by China’s growing urban middle class (some 300 million people, and rising). Others see that China’s prosperity has been accompanied by growing inequality and that if this is not dealt with, then social unrest may rise. Since 2009, rural pensions and a basic healthcare scheme have been political priorities for the government, and social welfare is one of the areas that the post-plenum communiqué stressed as being of crucial importance.

    But the proposed reforms show weakness in one particular area: they fail to recognize how far China now has to operate in conjunction with the outside world. Making China’s economy more open is essential, and is the stated aim of the government: yet, to do so also makes China more vulnerable to fluctuations in the global economy. China needs to create stability for trade and diplomacy by integrating itself into the wider Asian regional community, yet its confused and contradictory signals to its neighbours have encouraged the sense that China does not itself understand what its foreign policy is supposed to achieve. Perhaps the most important consequence of China’s immense growth in the past ten years is that its domestic policy is much more tied up with events in the rest of the world than was true twenty or even ten years ago. The problem is that the Chinese Communist Party’s latest roadmap suggests that they understand very well what the problems before them are, but are still unable to articulate clearly what they think the solutions might be.

    The author is professor of the history and politics of modern China at Oxford University and has written China’s War with Japan, 1937-1945

    Uncertain at the top

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    This article does highlight the woolly headed enunciation that instead of answering the problems, is more on the esoteric and on a perplexing plane.

    Something like the Bengali ditty:

    If jadi, is hoi, but kintu, not noi, what mane ki!
     
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  3. Ray

    Ray The Chairman Defence Professionals Moderator

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    Beijing Rethinks Formula for GDP
    Methods to Make It Easier for Farmers to Sell Land


    Nov. 18, 2013 8:06 a.m. ET
    BEIJING—China is studying new ways to measure the size of its economy to reflect ambitious reform plans to make it easier for farmers to sell their land and to take into account property values.

    The new methods, which dovetail with an economic blueprint for reforms agreed on at a key meeting of Communist Party leaders that ended last week, are likely to increase the size of China's economy, already the world's second largest, according to the National Bureau of Statistics.

    "We need to revise the method of calculating the size of our domestic economy to make it conform with a new economic structure, the latest economic developments and…international standards," the statistics bureau said.

    Officials didn't specify how much the new calculations might change China's headline numbers, or whether it is likely to speed up or slow growth rates. The statistics bureau will announce gross-domestic-product estimates using the new method along with revised historical data, the statement said.

    China's Communist Party leaders unveiled a broad program of reforms last week. One of their objectives was to make it easier for farmers to sell the right to use some of their land. Farmers don't own their land, but have the right to use it. Among a number of changes outlined in a document released Friday, China's leaders pledged to boost income for rural residents by giving them more property rights, allowing them to mortgage their property and envisioning experiments in letting farmers sell their land.

    Given the rapid growth in the property market, the statistics bureau also wants to gain a more accurate assessment of higher land and housing values in calculating GDP, using market rates and bringing its calculations more in line with international practice, it said.

    The authorities have already begun the new calculations in some parts of the country on a trial basis. The statistics bureau will announce the GDP estimates using the new method along with revised historical data, the statement said.

    The Chinese economy was estimated at 51.89 trillion yuan ($8.52 trillion) in 2012. It grew 7.7% in the first nine months of 2013, compared with the period in 2012.

    The proposed revisions by the statistics bureau are part of an effort to implement reform guidelines unveiled at the Communist Party meeting, which ended last week, said Xu Xianchun, the statistics bureau's deputy chief, in a statement on the bureau's website.

    Income of corporate employees from options and shares issued by their employer also will be included into the new measuring system, Mr. Xu said. At present, there are no indicators to measure such income, he said. Consumption measurements also will be revised to include some services paid by the government, such as for education and medical treatment, the statement said.

    A final plan will be announced at the end of next year or in early 2015, according to the statement.

    China Studies New Ways to Measure Size of Economy - WSJ.com

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    Here it goes.

    After all that hoopLa of unfolding great reforms, even before the print is allowed to cool after coming out of the hot press, they are now again thinking!

    They could not think earlier than this, since it is one man circus?

    But good they have given themselves an years time before getting into action.

    After all, the tortoise won the race!
     
  4. Ray

    Ray The Chairman Defence Professionals Moderator

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    Xi Jinping has a plan to change China's economy – at his own pace

    Immediate hopes were dashed by an anodyne Communist party statement, but there are clues to significant reforms


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    'Xi Jinping wants to be sure of his political power before he embarks on changes that would bring clashes with vested interest.'

    It has been the big question of the year for China: will the world's second biggest economy undertake a serious policy of reform under its new leadership?

    The need for change is evident as the old cheap-labour, cheap-capital, export-driven model runs into the sands of time. Workers no longer come so cheap and capital costs more and export markets are not what they used to be. This is why many commentators had high hopes of significant reform initiatives from a key meeting of the ruling Communist party that ended this week. Any big changes would have serious implications for the world economy, which relies for much of its growth on the last major state under communist rule.

    Immediate hopes were dashed by an anodyne statement that was long on intentions but short on detailed policy proposal. Whatever the exaggerated hopes from investment bank analysts and media writers, the plenum of the party's central committee held in a military complex in Beijing was never going to come up with a blueprint for change. Yet between the complex lines of the statement are pointers to how the leadership intends to move – and to the contervailing pressures on party chief Xi Jinping and his colleagues.

    For Xi, the most powerful Chinese figure since the paramount leader Deng Xiaoping, the prime concern is to buttress Communist party power, which he sees as having been sapped by elitism and corruption. As a good Leninist, he puts political power first and he knows that the structural economic reforms his country needs – to land ownership, the labour system, financial markets, state enterprises and resources pricing – would compromise the growth the regime needs and would risk boosting inflation.

    So the plenum struck a cautious course to avoid shocks to the system. Its final statement disappointed advocates of swift alterations – though a further document may put flesh on the deliberations in the coming weeks and there will be further discussion at the annual Economic Work Conference in December.

    The key element is that Xi and the prime minister, Li Keqiang, believe they have time to implement the changes they know China needs. They are ready to embark on some changes, such as increasing energy prices and, probably, to the hukou registration system for rural residents working in cities.

    But Xi wants to be sure of his political power before he embarks on changes that would bring clashes with vested interests, especially the state-owned enterprises and those who have done well financially out of the present system. Throughout, the political consideration of maintaining and strengthening the authority of the party and its leader remains the number one priority.

    The plenum's single concrete decision – to create a national security committee – went in this direction and chimed in with Xi's efforts, described in the communique, to bring the police and legal apparatus under his own control. If there was any doubt about the primacy of party politics it was dispelled by the admonition in the opening paragraph of the statement issued at the end of the four-day session on Tuesday night to "Hold high the great banner of socialism with Chinese characteristics!"

    Behind the usual phrases and rhetoric – some dating back 20 years – there were statements of intent that should be taken seriously.

    First was the statement that the reform of the relationship between the government and the market would be "deepened" to allow the market to participate more actively in the allocation of resources, striking a positive note for the long-term sustainability of economic growth. The misallocation of resources at the hands of the state has proven a major stumbling block in the much-needed consolidation of heavy industry. The lack of factor price reform has led to extreme wastefulness of natural resources which has now created a devastating impact on the environment – an issue that political leaders are beginning to realise they must address.

    The guidance date of 2020 for bringing about change mentioned in the plenum communique reflects the long-term thinking China's leaders prefer on such occasions – though they can be as short-term as any western politicians in their immediate responses to problems and preside over a system that is far less efficient than their admirers pretend. Miracles can happen – the sky over Beijing was clear and blue throughout the meeting and it was not until it ended that the city was enveloped once more in the smog which is reckoned to reduce life expectancy by 5.5 years. But Xi has nine more years at the helm and will take advantage of that to move at his own pace, balancing political and economic needs as highly accomplished pragmatist.

    How will it turn out? Who knows? Not even Xi.

    Xi Jinping has a plan to change China's economy –-at his own pace | Jonathan Fenby | Comment is free | theguardian.com

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    The real story emerges. There is many a slip between the lip and the chair!

    In short, 'Xi Jinping wants to be sure of his political power before he embarks on changes that would bring clashes with vested interest.

    It is all very well to play to the gallery, but it is a shade more difficult to hold onto the chair, when there is hungry contenders biting at the bit and the country is shrouded in a gameplay environment of secrecy, intrigue, suspicion, draconian ways and no political transparency.

    The Chinese labour have realised their worth and no amount of all that claptrap of Communist sloaganeering of the Nation and such tripe impresses them. They have smelt money and their ancient genes of greed has become animated, bouncy, bubbly, perky, frisky, zestful. The Chinese labour Juggernaut is own the move!

    Costs go high, exports flounder and the dream bubble bursts! Princelings go wild and angry too! Xi is thus Jumping!

    And so, to calm the Princelings, no more execution of the corrupt. Just jail them, but not in Laogai either since they might get het up about that!

    Xi realises as a good Communist that political power first and the Communist Party has to be supreme. And he knows that the structural economic reforms his country needs – to land ownership, the labour system, financial markets, state enterprises and resources pricing is an anathema to holding onto power, since it will allow the Chinese people to go hysterical, beside oneself with total abandon at the 'freedom' that the Free World has!

    And that is bad news!

    On his path to consolidated power for himself, he has cleverly themed a national security committee, as if for the Nation's good, but in actuality, to bring the police and legal apparatus under his own control. Same thing Jyoti Basu did and he hung on for two decade plus, and that too in a democracy!! Xi will live his lifetime in power in a dictatorship! But the crux remains - What Bengal thinks today, China thinks tomorrow! ;)

    How will it turn out? Who knows? Not even Xi.
     
  5. W.G.Ewald

    W.G.Ewald Defence Professionals/ DFI member of 2 Defence Professionals

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    Only the Guardian would use a word like "anodyne."
     
  6. Ray

    Ray The Chairman Defence Professionals Moderator

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    anodyne = not likely to cause offence or disagreement and somewhat dull.

    Brevity is the soul of wit and newspaper space! :)
     
  7. amoy

    amoy Senior Member Senior Member

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    Party Vows to Get SOEs to Turn over More Profits, Ease One-Child Policy -
    Veteran Economist Says He's Optimistic Plenum Made Progress -
     
  8. amoy

    amoy Senior Member Senior Member

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    What's in a Communiqué? -

     
  9. Ray

    Ray The Chairman Defence Professionals Moderator

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    Here it goes again.

    Here is what is guiding China

    An old Chinese proverb''

    不闻不若闻之,闻之不若见之,见之不若知之,知之不若行之;学至于行之而止矣
    Literal Translation: Not hearing is not as good as hearing, hearing is not as good as seeing, seeing is not as good as mentally knowing, mentally knowing is not as good as acting; true learning continues up to the point that action comes forth.

    Means: I hear and I forget; I see and I remember; I do and I understand.

    Moral: You can only understand something by trying it yourself.

    Revised: Tell me and I [will] forget. Show me and I [will] remember. Involve me and I [will] understand.

    In other words, when it actually happens, then only will the reform have taken place.

    Till then hopes to lift the moral.
     

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