The Communist Party of China (CPC) has to acknowledge the market's
decisive role in allocating resources as it is proven to be the most
effective, said President
Xi Jinping when explaining a key document about reforms.
China
will deepen its economic reform to ensure that the market will play a
"decisive" role in allocating resources, according to a decision on
major issues concerning comprehensively deepening reforms, approved by
the
Third Plenary Session of the 18th CPC Central Committee on November 12.
Entrusted
by the Political Bureau of CPC Central Committee, Xi, also general
secretary of CPC Central Committee, explained the decision at the
session. His explanation was published in full on Friday.
Xi considered the definition of the market's role a major theoretical achievement of the decision.
A proper relationship between the market and government remains the core of China's economic reform, Xi said.
To
build such a relationship is to settle whether the market or government
plays a decisive role, he said, adding that the market is proven to be
the most effective.
Over the past some 20 years, China has established a socialist market economy but there are lots of problems, Xi admitted.
The
market is not orderly and many seek profits through illegal means. The
market for key production factors, such as labor, capital and land, are
lagging behind, he said.
Market rules are not unified and there
are prevailing departmental and regional protectionism, he warned,
adding that a lack of full competition stops the inferior from being
eliminated.
China has to follow the basic law of the market
economy and work on the problems of an underdeveloped market system,
excessive government intervention and weak supervision of the market, he
said.
Accepting the market's decisive role will help the Party
and society develop a correct idea about market-government relations,
help the country transform the economic growth pattern, help the
government change its functions and help curb corruption, he said.
However, Xi noted that to let the market decide does not mean to let it decide all.
"The socialist market economy needs both the market and government but they play different roles," he said.
The
government will maintain a stable macro-economy, provide public
services, safeguard fair competition, supervise the market, keep market
order, promote sustainable development and step in when the market
fails, he said.
The market had been defined as a "basic" role in
allocating resources since the country decided to build a socialist
market economy in 1992.
For a long period of time after 1949, the idea of market had been a taboo associated with capitalism.
Even after the reform and opening up in 1978, the country had
struggled to define the market and some dogmatists still questioned whether socialism could accommodate the market economy.
It was not until the 14th CPC National Congress held in 1992 that a socialist market economy became a consensus.
At
the 15th CPC National Congress in 1997, the Party noted that the
market, under state macroeconomic control, should be the basic means of
allocating resources.
At the 16th CPC National Congress in 2002,
the Party said it should leverage to a greater extent the basic role of
the market in allocating resources.
At the 17th CPC National
Congress in 2007, the Party decided that it should introduce
institutions to give better play to the basic role of market forces in
allocating resources.
At the 18th CPC National Congress in 2012,
the Party said it should leverage to a greater extent and in a wider
scope the basic role of the market in allocating resources.
"Now,
the CPC Central Committee believes that the condition is ready to bring
up a new theoretical expression of this issue," Xi said. - Xinhua
China stays on road to reform
Staying on course: A souvenir with an image of President Xi Jinping (left) and the late leader Mao Zedong on sale at Tiananmen Square in Beijing, during the meeting of the Central Committee of China’s ruling Communist Party, at which major reforms were discussed. — EPA
THE business of China-watching intensified lately for the Third
Plenary Session of the 18th Central Committee of the Communist Party of
China.
This was a special occasion in also doubling as the first
anniversary of President Xi Jinping’s leadership of the party and of
China’s Central Military Commission.
It is a measure of China’s rising global status that such domestic
occasions should attract serious worldwide attention. The same does not
apply for other countries.
Some analysts believe that the world’s second-biggest economy will,
by the end of Xi’s term in a decade, become the world’s biggest – and
continue to outpace the US and other economies thereafter.
Since economics remains the prime determinant of a nation’s various
attributes, China’s economic achievements are closely watched because
they indicate its prowess in other spheres as well.
For this particular occasion, there is another reason for Beijing as
the world’s centre of attention – Third Plenums are traditionally the
stamping ground for new priorities and directions. That it coincides
with a new leadership makes for a packed global gallery.
Speculation about Xi’s leadership peaked in the lead-up to this
occasion. Opinion was divided over whether China would lean towards
reform and further opening up, or veer towards Maoist conservatism.
Xi’s personal style was no help to the betting classes. In keeping
his cards close to his chest, he was not one to telegraph his intentions
and preferences ahead of time.
Then there was the complication of the Bo Xilai affair. The fall of
the former rising star was said to be a sideshow obscuring internal
party politicking.
Bo’s supporters tended to look past his controversial hardline
tactics, corruption allegations, his wife’s involvement in murder and
his Maoist-inspired opposition to Beijing’s reforms. In his defence,
they instead questioned Xi’s commitment to reform.
However, any antipathy Beijing had to Bo would also be averse to a
Maoist resurgence and therefore be pro-reform. There was also no
question of Xi’s priority in targeting corruption and promoting the rule
of law.
Nonetheless, for many the doubts about China’s leadership direction
persisted. And the question would be settled by the Third Plenary
Session of the 18th Central Committee.
Now those who were never in any doubt about Xi’s reform drive feel
vindicated. Fence-sitters are also more convinced than ever that Xi and
Prime Minister Li Keqiang will take China further along the road of
reform.
Doubters are now puzzling over the general nature of official public
statements from the plenum. They are stumped by an apparent shortage of
specifics.
However, generalities indicate only a lack of details, not a
reversal of direction. And given the presence of conservatives like Bo
still in the party hierarchy, reformist leaders would do well to avoid
advertising their plans to prevent obstruction and sabotage.
Xi is certainly not one to telegraph his intentions and preferences
ahead of time. Former Singapore premier Lee Kuan Yew has observed that
Xi is not demonstrative while still retaining his affable style.
Besides, Third Plenums of the 21st century have also been less
hortatory and more cool and businesslike. A modern China headed by state
functionaries rather than ideological patriarchs is where the Xis and
Lis are at.
Over the long term, it has been a process of evolution for China’s
leadership. In comparisons between Xi-Li and their immediate
predecessors Hu-Wen, Xi is said to be more open and approachable.
Xi and Li are also regarded as more purposeful and cosmopolitan, a
style that matches the contemporary demeanour of their international
counterparts. And style still accounts for much, notwithstanding the
weight of official policies and procedures.
Several views from Hong Kong, as expressed through the
South China Morning Post
newspaper for example, regard Xi’s leadership as clearly Dengist rather
than Maoist. That effectively reaffirms the reformist road.
To that extent, this Third Plenum produced no surprises. Continuity
and consistency are key to China’s development, and Xi is tasked with
ensuring that trajectory in particular.
The polar opposites of Mao and Deng remain a bifurcation – and an
ironic one at that. Their differences are strategic and ultimately
ideological rather than personal.
Deng the Establishment rebel, the last Long March veteran, the final
Paramount Leader and the Other Helmsman who turned China around is
still deeply revered, including by the younger generation.
Young professionals and bureaucrats in their 30s, whether in
official Beijing, bustling Shanghai or rural Hubei province today have
no hesitation to say they are Dengist. They do not denigrate Mao, not
even for his excesses and horrors, they just admire his party alter ego.
This is the political status quo of China today. It should therefore
be no surprise that the party and state machinery, in carefully
reviewing and sifting through contending candidates, has produced
leaders that exemplify this bearing.
Thus Xi is no closet Maoist for prescribing self-criticism and
attempts at censorship. Some tactics may appear conservative, but the
overall strategy is still reformist.
The Third Plenum was clear in promoting the status of the market
from “basic” to “decisive.” For this and similar moves, Xi and Li are
considered pragmatists in moving modern China forward another notch.
In Beijing today, much of this pragmatism amounts to letting the
market determine the economy, allowing the economy to inform governance,
and ensuring that good governance safeguards society’s interests
through due public regulation.
That also approximates to the “socialist market economy” Deng
introduced 35 years ago. Since then, the concept has resulted in moves
like cutting red tape, cleaning up a messy credit market and
establishing a free trade zone in Shanghai.
Many suspect the best days of Xi’s presidency are at hand. His
father is cited as a hero of progressive social development in his time.
Besides the current drive against graft, there is also a campaign
against pollution. It is serious enough to require productive heavy
industries like steel to cut capacity, with larger plans to move away
from polluting sectors in favour of cleaner and more modern industries.
The home-grown company BYD for example not only designs, builds and
markets its range of electric vehicles, but also plans to produce
vehicle batteries for automobile companies around the world.
China is not only a large and rapidly growing economy, but one
focused on the cutting edge of several technologies: ICT, high-speed
trains and renewable energies among them.
Earlier this month, a skeptical BBC asked whether this latest Third
Plenum will prove as decisive as the ones in 1978 and 1998. The short
answer is that it can, depending on the prevailing national interest.
China today differs from the China of Mao’s era in one fundamental
respect. The state will now do all it can to meet the nation’s current
and future needs while delivering what the government wants, more than
simply what the party prefers.
This basic distinction may still escape the understanding of many.
The recent Third Plenum has gone some way to rectify that, but proof of
it is already evident in recent years.
The rest will come soon enough. The point is that a transforming
China with an eye to its future progress has opted for reform not only
because it wants to, but more because it has to.
Behind The Headlines by Bunn Nagara
Bunn Nagara is a Senior Fellow at the Institute of
Strategic and International Studies (Isis) Malaysia. The views expressed
are entirely the writer’s own.