Monday, November 18, 2013

Major Chinese reforms in the works?

China values stability, and China’s fear of luan, or disorder, helps account for an old, tired Communist Party’s continued rule over the world’s newest superpower. Look at the picture below of China’s current Party Central Committee, taken last year. Compare it to the picture that follows of the 1969 Central Committee, installed in the midst of Cultural Revolution turmoil--a very different world:

Central Committee of the 18th Chinese Communist Party Congress

Central Committee of the 9th Chinese Communist Party Congress

After 43 years, little change. Mao’s picture has been replaced by a Communist Party hammer and sickle, not significant, since the Party still honors Mao.

The picture below is one of the current Politburo Standing Committee, photographed at last week’s 18th Congress, 3rd Plenum. Note the leadership’s uniformity, used to project stability: all male, all with slick-backed black hair, dark suits, white shirts, neckties, all voting "aye."

(L-R:) Wang Qishan, Yu Zhengsheng, Li Keqiang, Xi Jinping (blue tie), Zhang Dejiang, Liu Yunshan, Zhang Gaoli
 The Economist is somewhat excited about this 3rd plenum:
Third plenums have a special place in Chinese politics as the venue for big changes in direction—and President Xi Jinping had hinted that this one would be no different. Xi, like his predecessor, Hu Jintao, has learned to talk a good reformist game. But Hu failed to change much, partly because he never found a way round the . . . state-owned enterprises (SOEs) and local governments, who benefit from the current system and so stand in the way.
the [third plenum’s] communiqué calls for the market to play a “decisive” role in allocating resources. Until now, party literature has said the role of market forces should be “basic”. [The change to "decisive"] is a sign that Xi wants the market to play a bigger part in shaping the economy; [possibly taking] on the SOEs, which squander vast amounts of capital. [A] new “leading small group” to oversee reforms [could] bang together the heads of obstructionist SOE bosses and provincial leaders to make them work together better, and Mr Xi himself could well chair it.
China is rich, corrupt, successful, developing unevenly, gripped by the need for market economy reforms, burdened by powerful stakeholders in the SOEs and provinces who like China’s unreformed political structure just the way it is.

Confucius says, “The gem cannot be polished without friction.” Will we see the necessary friction, for which the Economist wishes?


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