Halfhearted in Beijing
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Xi's policy vision is vague and omits key reforms, but the disappointment follows from high expectations.
The disappointment with the first policy blueprint from Chinese President Xi Jinping, released at the end of the Third Plenum of the 18th Central Committee of the Communist Party of China (CPC), results from the myth the third plenary has built around itself. Ever since Deng Xiaoping's opening up of the economy in 1978 and the reinvention of China as a "socialist market economy" in 1993, the CPC's third plenary has been the forum where every new Chinese leadership unveiled its decadal policy. In Xi's case, the session had acquired a stature almost rivalling 1978 and 1993 because of the all-round conviction that a new economic direction — based on largescale reforms — was necessary.
In the end, the communiqué issued was vague on specifics and concrete on rhetoric. It called for a "decisive role" of market forces as well as strong CPC control. Before the plenary began, it was generally agreed that the areas needing urgent attention were financial sector liberalisation, increasing competition and reforming state-owned firms, boosting urbanisation through household registration reforms, reforming land laws and local government funding, and tackling environmental damage. While the communiqué did endorse reducing investment restrictions, more farmers' rights and greater transparency in taxing and spending, it omitted financial sector reforms, urbanisation (a priority for Premier Li Keqiang), and even the word "private sector", which Beijing is still politically loath to use.
China's challenge, not least as the global economic driver, is formidable. It's a maturing economy threatened by the "middle-income trap", an ageing population, mounting debt and corruption. An increase in localised protests, a suicide attack at Tiananmen Square and a bombing outside a CPC office have exposed the dangers of instability. Plans to set up a National Security Committee, modelled perhaps on the KGB, could see Xi Jinping emerge more powerful than his predecessors Jiang Zemin and Hu Jintao. However, on the economy at least, more and less ambiguous details are expected to emerge over the next few weeks.
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