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Ideas for a fairer world

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"Reform" and China's new leadership

By Dr Tim Summers.

Much of the commentary around China's new leadership, announced on 15 November, has asked what the transition means for "reform". This has involved attempts to categorise as "reformers" or "conservatives" those on the new Politburo Standing Committee (PBSC), the group of seven (previously nine) men at the top of China's political structures which has overall responsibility for strategy and policy.

China analysts rarely reach consensus on such matters. If anything, though, the weight of opinion on the new leadership is gloomy - by this reckoning conservatives outweigh reformers. But is this the right way of analysing Chinese politics? In particular, what does "reform" actually mean at this point in time in the Chinese context?

Firstly, let's look at what the commentariat outside China tends to mean by "reform". For some this is a catch-all phrase which highlights the idea that bold change is needed to deal with the large number of challenges facing the Chinese leadership, from corruption to inefficient state-owned enterprises and political stasis. Alongside this view lies an analysis of the last decade as a wasted opportunity - see Red Capitalism for a prime example of this sort of thinking.

Within China, this thinking is not dominant, though it does exist. There is actually an intense debate about the way forward for China – outgoing Party General Secretary Hu Jintao obliquely referred to this in his 8 November speech to the 18th Party Congress when he said that "[t]he issue of what path we take is of vital importance for the survival of the Party, the future of China, the destiny of the Chinese nation, and the wellbeing of the people". Below the level of the leadership, "reform" is definitely a term which marks political dividing lines between those who think that more marketisation of the economy and structural reforms to governance and administration are needed, and those who feel that the zealous market reforms of the 1990s created many of the problems China faces today, environmental degradation, income disparities, and so on.

At the leadership level, however, "reform" becomes a much more slippery term. Deng Xiaoping reportedly said in May 1989 that "[s]ome people, of course, understand 'reform' to mean movement towards liberalism or capitalism… What we mean by 'reform' is different and still under debate". If the meaning of reform was not clear then – a time of real political crisis – it subsequently became clearer: "reform" as the slogan for a pragmatic developmentalism, in the service of which extensive market reforms were made in the 1990s, but much less so in the 2000s after the PRC's accession to the World Trade Organization marked a high point of policy when it came to liberalization of the economy.

Still, for top Party elites, no-one would admit to not being a reformer, even more so since a new reference to "reform and opening up" (gaige kaifang) has just been written into the Party constitution at the 18th Congress. On one level, this might be seen as an effort to curtail debate (in the traditions of democratic centralism), and new Party General Secretary Xi Jinping has already exhorted cadres to study these constitutional changes which, although they are presented as "theoretical innovations", are heavily Dengist in content (with the important and novel exception of environmental protection, translated in constitutional terms to "ecological civilization"). When it comes to reform there may be little in the way of radical ideas.

That does not lessen the political imperative to adapt to deal with existing and new problems. Indeed, Hu's 18th Congress report and subsequent statements by him and Xi Jinping have both stressed new challenges facing the Party and the country. "Reform" then becomes a useful rhetorical device for rallying the Party around the need to take pragmatic, but innovative, steps to deal with these problems. The actual policy measures taken will, however, be issue specific, and defy easy ideological categorization. Reform is a means, not an end.

Indeed, today's economy is much more complex, organic forces are stronger, and integration with the global economy much more substantial than in the 1990s when a call for radical market reform was politically difficult, but somehow easier to translate into policy. It is therefore not the case that all is lacking today is the policy determination of the late 1990s. The solutions are more difficult to find. Reform in one direction could make other problems more difficult to resolve – for example, energy prices which were fully marketised might increase both the power of certain state-owned enterprises and exacerbate wealth disparities among the population.

What does this mean for reading the leadership transition?

Firstly, the new PBSC consists of experienced cadres, most of whom have engaged with difficult challenges at the provincial level in recent years. There may have been more innovative individuals in the wings, but this top team will still be committed to addressing the challenges the Party faces in its pursuit of economic and social development – particularly when compared to the outgoing PBSC.

Secondly, the more significant part of the transition was probably not the make up of the PBSC, but Hu Jintao handing over control of the military to Xi Jinping on 15 November, rather than some time in 2013 or 2014. This demonstrates a much clearer transition of top leadership than in 2002-4 or any previous one, and strengthens both Xi and Premier designate Li Keqiang. Their ability to take new steps, relatively quickly, to adjust policy should therefore not be underestimated.

Thirdly, below the much-discussed Standing Committee, the rest of the Politburo is indeed of a younger generation. The balance between decision making by the Politburo and its Standing Committee under this leadership remains to be seen. But a government led by Li Keqiang, also featuring Ma Kai and Wang Yang, with a possible key role for Li Yuanchao (the surprise omission from the PBSC), is likely to push forward with policies to restructure the economy.

Finally, political change will likely remain gradual. We should not expect any dilution of the Party's desire to remain the dominant force in Chinese politics at the same time as pursuing goals of building a "well off and strong" (fuqiang) China. Within that constraint, admittedly a fundamental one, some of the ideas that have been discussed to improve governance could well be brought forward. Indeed, Xi Jinping's early rhetorical targeting of corruption, and the placing of the tough Wang Qishan in charge of the anti-corruption portfolio, increases the chances of some progress in that area, although the systemic barriers are substantial.

There is more to be said about the transition, of course, but on the whole, there are reasons to be quietly optimistic. For a start, it took place smoothly and on time (in spite of the political excitement and dire media warnings of the last ten months). Xi Jinping is the unequivocal successor to Hu Jintao. And the wider Politburo membership reflects not just a shift to a new generation of leaders, but also some substantial expertise and interest in addressing the issues which China will face over the next five years.

November 2012