China’s Communist Party plans reform and rise combined with tight security grip
Ending months of speculation before the meeting of the Communist Party’s Third Plenum and days of suspense since its conclusion, Beijing has revealed its reform plan. A 20,000-character document, called the “Decision on major issues concerning comprehensively deepening reforms,” presents a sweeping 60-point plan to normalize China.
The plan leaves no doubt that reforms were designed to strengthen the party’s control, with ever-so-cautious language hinting at an effort to contain internal critics on the left and wide-ranging decisions that go far beyond the economic realm.
In some ways, China is moving towards easing criticism on the human-rights front by abolishing the reeducation through labor prison camp system, easing the one-child-per-family restriction, and making the judiciary more professional and less dependent on local governments.
But the country is still run by the Communist Party, which shows few signs of willingness to ease its tight security grip. To safeguard control over implementation of reforms, the party established a new body called a Leading Small Group for the Comprehensive Deepening of Reform. No doubt, it will be headed by Xi Jinping, both party leader and state president.
In fact, to strengthen the party’s hold on power, the plenum announced the setting up of a National Security Council which, unlike its American namesake, will be responsible for both external and internal security dealing, in the words of the Chinese Foreign Ministry spokesman, Qin Gang, with “terrorists” and “separatists.” Xi is likely to head this body, too.
Displaying cautiousness in moving towards a free market, Xi explained what was perhaps the most important economic reform made at the plenum: acceptance of the “decisive function” of the market in the allocation of resources. He recalled that in 1992, when the party put forward the concept of a “socialist market economy,” its position was that the market “has a fundamental function in resource allocation under the macro-level control of the state.” With the experience of the last 21 years, he said, the time has come “for creating a new expression concerning this issue” and so the “fundamental function” of the market in resources allocation has been changed to “decisive function.”
The party has decided that the state should step back and allow the market to lead – a major breakthrough. While in the past the government set prices, the plenum decided that in the future the government will allow prices to be determined “mainly by the market” for such basics as water, petroleum, natural gas, electricity and communications and telecommunications. Nonetheless, the plenum declared that the state sector is “the mainstay of the economy.”
State-owned enterprises have been widely criticized both in China and abroad for enjoying an unfair competitive advantage, with access to state funding and other subsidies not available to private enterprises. Among western governments and business, there is a strong suspicion that aSOE priority is to achieve state goals, such as gaining access to natural resources, rather than make profits.
The plenum called for a mixed economy and supported development of the private sector, saying that it plays a role “in supporting growth, promoting innovation, expanding employment, and increasing tax revenues.” The plenum also said the public sector should accept private investment and both domestic and foreign investors should be permitted to establish small- and medium-sized banks and other financial institutions.
But clearly, the state sector will remain dominant. The lengthy, detailed document doesn’t use the term “private sector,” calling it the “non-public sector.” Similarly, the Anti-Secession Law of 2005 talked about use of “non-peaceful means” – not force – against Taiwan if necessary.
Such terms as “private property” and “private sector,” it seems, remain politically sensitive, just as the party feels more comfortable in criticizing rightists but denounces the “left” in quotation marks – as though it’s correct to be genuinely left.
Many of the plenum’s decisions had been discussed previously, but the fact that they are now declared policy means that the party has decided to grasp the nettle, though in most cases no timeline was announced for action.
Still, the Communist Party clearly sees the need to restructure the economy as it moves from the export-led model of the last three decades towards promoting greater consumption and tackling issues such as an aging population and environmental challenges.
Meanwhile, China intends to continue opening its markets and, as the decisions document said, “speed up the building of infrastructure projects linked to countries and regions in our periphery,” such as the countries of Central Asia and Southeast Asia – building what China calls the “Silk Road economic belt” and the “maritime Silk Road economic belt.”
China’s agreement to negotiate a bilateral investment treaty with both the United States and the European Union reflects its willingness to open more sectors of its economy. Chinese leaders also accept the need to allow interest-rate liberalization and the renminbi to appreciate over time.
The economic reforms are likely to result in relatively high growth in China, say, of 6 to 8 percent a year, for the next five years. Chinese economic power will grow and, along with that, political, diplomatic and military power as well.
Greater economic strength quite likely means that China will be more assertive internationally, possibly aggressive where it feels that its core interests, such as Tibet, Xinjiang and Taiwan are concerned. Other issues, such as territorial disputes in the East China Sea and the South China Sea, may be elevated to “core” interests as well.
The plenum document suggests that China will continue to seek increasing international influence through the official media, such as CCTV and Xinhua News Agency. It will also use Confucius Institutes, which it finances and which are usually run as part of foreign universities, to expand its soft power through teaching of Chinese language and culture.
Other countries may find it challenging to influence a rising China. There is a danger that China will become more nationalistic and less willing to accept foreign views. China does not react well to criticism, domestic or foreign, though in the early years of reform it was more receptive to western advice.
Despite such concerns, many countries will accept China’s growth not as a threat but as an opportunity, at least in public. Susan Rice, US national security adviser, said in a 20 November speech at Georgetown University that Chinese reforms provide “an opportunity we must seize.”
Hopefully, as China continues to rise, it will play a greater role in helping resolve global issues such as climate change and proliferation. Up to now, China has preferred to focus on its own problems and take the position that resolving its domestic problems contributed to the world.
Its measly initial response to the Typhoon Haiyan’s devastation of the Philippines, $100,000, was not reassuring. Instead, China’s actions reflect a lack of generosity of spirit and unwillingness to aid a neighbor struck by a severe natural disaster, presumably because Manila is challenging Chinese claims to sovereignty over islands and reefs within the exclusive economic zone of the Philippines. China did eventually increase that contribution by more than tenfold.
If China wants to be accepted by the world as the next superpower, it must show willingness accept the responsibilities along with the privileges of being a great power.
Frank Ching is a Hong Kong–based journalist and writer whose book, “Ancestors: 900 Years in the Life of a Chinese Family,” was recently republished in paperback. Follow him on Twitter: @FrankChing1.