Step-by-Step – China’s roadmap of reform

Thirty-five years after Premier Deng Xiaoping announced market reforms and “opening up” that revolutionised the Chinese economy and society, the Communist Party of China has deepened the reforms towards the creation of a more equitable society.

The Communiqué released by the Third Plenary of the 18th Central Committee has drawn generally positive analysis that is upbeat about the direction and objectives that will guide the policy of party and government for the next decade under the leadership of President Xi Jinping, who is secretary-general of the party, saying it would be “sequenced” and conducted step-by-step.

The language of the communiqué is the language of reform, the word was mentioned more than 50 times in the document, and the objective is a more balanced economy that will strengthen opportunities and benefits across a broader spectrum of the population.

 

Balancing inequalities

 

The reform is a continuation and deepening of the policies initiated by Premier Deng in 1978, and has three main elements that are economic, social and political, with the current objective being to balance the inequalities in the economy in various ways.

Commentators have described the 1978 policy decisions as a revolution implemented slowly over time in a well-directed manner, saying the current decisions represent a deepening of those policies, building on achievements to date.

A main thrust across all sectors is towards balance. For example, having strengthened various sectors of the economy including state-owned enterprises to be more competitive, the current goal is to work towards competition with the private sector in a market economy.

The 10-year plan also calls for strengthening of linkages between geographical areas and various sectors, introducing a new type of relations between industry and agriculture, for example, and between urban and rural areas, including significant land reform measures.

There are general and specific lessons for Zimbabwe and other African and developing countries, and perhaps the main one is to develop a long-term planning process and stick to it, incorporating reviews and adjustments through analysis of results at regular intervals.

Economic reform is key to the current plan as it has been for the past three decades, and the core focus is the relationship between government and the market, leaving the market to play the decisive role in allocation of resources and redefining the regulatory role of government.

Decisive results must be achieved in key sectors, and a “well-developed, scientific, procedure-based and effective framework must be in place by 2020 to ensure that institutions in all sectors can be “more mature”, according the communiqué released after the meeting, held in the Great Hall of the People in Beijing from 9-12 November.

This has echoes and lessons for implementation of the Zimbabwe Agenda for Sustainable Socio-Economic Transformation (Zim Asset), which has the theme “Towards an Empowered Society and a Growing Economy”.

China will promote an economy with diverse forms of ownership while retaining the dominant role of public ownership, and government will continue to play a leading role through shareholding in state-owned enterprises, while “encouraging, supporting and guiding the non-public sector, enhancing its vitality and creativity. …

“Both public and non-public sectors of the economy are important components of the socialist market economy and significant bases for economic and social development,” reads the statement released after the Third Plenary closed recently.

The property rights protection system will be improved and state-owned enterprises will adhere to modern corporate practices, supporting competitive development in the economy.

Related decisions include the establishment of a modern financial system that tackles local debt and supports the initiatives of both central and local authorities. The CPC leadership agreed that China needs to improve its budget management and taxation systems in a bid to make responsibilities of government agencies match properly with what they spend.

Among the adjustments to the economic framework are plans to raise funds from property taxes instead of land sales that have seen prices escalate, strengthening the technology sector and “grassroots democracy”, as well as slimmer government.

The Chinese government should also relax investment restrictions and accelerate the construction of Free Trade Zones.

With regard to the functions of government itself, the party has decided that government functions must be transformed in an equitable and orderly manner to establish a law-based and service-oriented government.

Thus the modernisation of the “governance system” and “governance capacity” is envisaged, to be guided by a specialised high-level group.

This high-level group will be established to design and coordinate the current phase of reform and “opening up”, and this is expected to be an even higher-level body than the former Economic Reform Commission.

The economic reform commission was merged with the former State Planning Commission 10 years ago to establish the current National Development and Reform Commission.

The communiqué calls for the introduction of systems to effectively prevent and end social disputes and to improve public security, and for the establishment of a state security committee to improve systems and strategies to ensure national security amid threats from at home and abroad.

Experts said the security committee is unlikely to remove power from existing State structures, but would have a co-ordinating role, as the country is facing increased social conflict due to a widening wealth gap and corruption, and threats from terrorism.

Li Wei, director of the anti-terrorism centre at the China Institutes of Contemporary International Relations, said this is likely to be a structure that “has the power to coordinate government organs at the highest level to respond to a major emergency and incidents that pose threats to national security, such as border conflicts and major terrorist attacks”.

Judicial reform is also on the cards to “better protect the rights and interests of the people”, including reform of relevant laws.

Social issues that are challenging people in China include medical care and pensions.

Medical care is specific to home areas, and in a country where workers often migrate long distances to other provinces, these workers are prejudiced as they have to return to their home area to get medical care or reimbursements.

This will be adjusted in this period into a medical plan that is acceptable across the country, with the possible introduction of a national card for this purpose.

Pension systems will be reformed as they differ radically between public and private sectors, with the former receiving automatic pensions of up to 90 percent of salary while the latter contribute eight percent of salary but receive only 50-60 percent as retirement benefits.

The Third Plenary of the party Central Committee meetings have traditionally been identified with economic reform, since the Third Plenary of the 11th Central Committee in 1978 when Premier Deng Xiaoping summed up the country’s recent historical experience and drew a basic conclusion that ideology must be integrated with concrete realities, and China must blaze a trail of its own, building “socialism with Chinese characteristics”.

China has moved slowly but steadily in stages from Deng’s plan for socialism with Chinese characteristics through the socialist economic blueprint presented in the 1990s to what is now called a “socialist market economy”.

Because 80 percent of China’s population lives in the countryside, it was there that reform began, tried first in two provinces of Sichuan and Anhui and, based on the successful experience there, was rolled out nationally.

Thus the productive forces expanded through the opportunities extended to 800 million peasants, with a large number of small enterprises emerging in villages and township, and the standard of living rising significantly in rural areas.

Three years later, reform began in the cities but this was cautious based on analysis that urban reform was more complicated than rural reform.

Premier Deng urged that this should be explored “boldly but with great care and prudence”. Four special economic zones were established and 14 coastal cities were opened to external trade. After inspecting the results, he confirmed that the policy was working well.

Premier Deng then announced the roadmap for China’s development over the next 30 years, presented in historical records as follows.

“On the basis of equality and mutual benefit, he declared, China should vigorously expand its economic cooperation with foreign countries, absorb their capital and introduce their advanced technologies and managerial skills, so as to accelerate the development of its own economy.

“The private sector should be developed properly as a supplement to the socialist sector, which would remain dominant in China’s economy. He also urged that some regions and some people be allowed to become prosperous first, through hard work, so that others would follow their example.

“If all these policies were applied, he believed, the whole economy would make rapid progress, eventually enabling all the Chinese people to prosper.

“He constantly stressed the need to forge confidently ahead with the reform and the open policy and to move even faster.”

The leadership of 35 years ago headed by Premier Deng defined two specific and ambitious goals for China. The first was to quadruple the 1980 Gross National Product over the next 20 years, by the end of the century, so that the Chinese people could enjoy a comparatively comfortable standard of living.

Second, on the basis of that achievement, the GNP should be quadrupled again during the next 30-50 years so that China would reach the level of the moderately developed countries.

“When China has realised these goals it will have pointed the way for all the people of the Third World, who represent three-quarters of the world’s population.”

President Xi who heads the collective leadership that is now ushering China into this new historical period, has moved around the country meeting farmers and workers as well as business leaders, strengthening visibility and direct consultation, and rapidly establishing his reputation as a “man of the people”.

Under a system adopted 20 years ago, the Secretary-General of the party also becomes President of the country. He was elected secretary-general at the party Congress one year ago, and formally sworn in as President in March this year. 

He made his first visit to Africa in the same month, beginning with Tanzania, and attending the Summit in South Africa of the BRICS group of emerging economies – Brazil, Russia, India, China and South Africa. – sardc.net

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