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Opinions
Special> Third Plenary Session of 18th CPC Central Committee> Opinions
UPDATED: November 4, 2013 NO. 45, NOVEMBER 7, 2013
A Horizon of Reform
The upcoming Third Plenum of the 18th CPC Central Committee could cement big changes
By Josef Gregory Mahoney
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With the Third Plenary Session of the 18th CPC (Communist Party of China) Central Committee scheduled for this November, many observers are ready for a potentially history-making meeting, one that might provide new direction for key reforms as China faces new challenges under new leadership. While it remains uncertain what changes November might produce, we will discuss here why the meeting is important and review a number of possible areas for reforms that the meeting might address.

First, let's shed some light on this discussion by reviewing history. In recent times, Party congresses have generally begun with a meeting that confirms new Party leaders—this is the first plenary session—with the most recent one having taken place in November 2012. Typically, the first session is followed by a second several months later, when the Party prepares itself for the upcoming National People's Congress (NPC), when new Party leaders are formally elected to positions in the state apparatus. The most recent second session took place in February 2013, and was followed the next month by the NPC. Subsequently, a third session is held, usually within the same year. These third sessions are commonly used by new leadership teams to initiate discussions that can eventually lead to important reforms. For example, we date Deng Xiaoping's "reform and opening up" to the Third Plenary Session of the 11th CPC Central Committee in 1978, and development of the "socialist market economy" to the Third Plenary Session of the 15th CPC Central Committee in 1993. Of course, these meetings never produce in full the reforms that follow, but they do help define the Party's thinking and direction as it moves forward.

Like most countries, China is currently facing many challenges that are related to sustaining growth and development while controlling corruption and improving social and ecological justice. National leaders have already signaled that November's meeting will focus primarily on economic and not political reforms. In fact, economic reforms are always political. This is one of the reasons why major economic reforms have languished in recent years, when the Party was unable, at times, to transcend its own competing visions for progress. This led to a political gridlock of sorts, one that was further hampered by the global financial crisis. However, recent political developments suggest a new opening for reforms. Xi Jinping's earlier-than-expected consolidation of the three top leadership positions indicates that the Party has found a true consensus leader. Therefore, we will likely see the Party rally around Xi as new reforms are discussed and, eventually, crafted and implemented.

During the November meeting, Xi will deliver a work report from the Standing Committee. Many expect this report to discuss a new vision for moving forward, and touch on many areas for concern, such as reforming China's banking system and financial industry; improving the fiscal and taxation systems; accelerating the internationalization of China's currency; confronting off-balance sheet activities by state-owned enterprises; marketizing interest rates; establishing better land use and property rights; addressing problems associated with the household registry (hukou) system; stimulating domestic consumption; de-emphasizing export-led growth; encouraging "green" and sustainable development; implementing changes to both the Party and the nation's administrative systems; and responding effectively to concerns for social justice and welfare. Many expect Xi will discuss the Party's ongoing effort to address corruption in its own ranks as well as within the government and society at large. Corruption can undermine any new reforms; therefore, economic reforms and measures to control corruption, particularly graft, must go hand-in-hand.

Taken as a whole, if November's discussion touches on several if not all of the topics noted above, we will see that the Party is thinking in terms of a comprehensive vs. piecemeal approach to reform. While China's approach to development has been very successful, it periodically requires significant reforms and adjustments. Frequently, such reforms are encouraged by necessity. On the one hand, there has been a tremendous disincentive to radically alter a system that has produced and sustained some of the highest growth rates in modern human history. On the other hand, it is widely recognized that both China and the rest of the world have changed too much to continue with business as usual. Furthermore, there are other concerns that remain outstanding, as China's approach to reform is generally phased in such a way as to address specific issues at one point in time while understanding that such changes will provoke new needs down the road. In one sense this is described as "crossing the river by feeling the stones." Sometimes, however, circumstances require taking several steps simultaneously, in close coordination with each other. Many experts believe that November's meeting will show that a comprehensive approach to reform is coming.

Let's now take a closer look at some of the challenges facing leaders as they take a comprehensive approach to reform. We can't examine all of the issues here, but we can take one issue and see how other areas of reform touch upon the same. For example, let's consider problems associated with the hukou system and its relationship to promote greater economic fairness. First, many view reforming income distribution and the hukou system as two sides of the same coin, one that likewise requires reforms to the tax system, state-owned enterprises, and includes addressing real urban-rural divides related to employment opportunities and benefits, as well as access to better healthcare and education. The goal in part is to vitiate a worsening wealth gap that often traces directly to those who are allowed to register legally as living in one city or another, as opposed to being restricted officially to a rural-based residency. Those with a Shanghai hukou, for example, can avail themselves more fully of economic opportunities while also using, when necessary, government support and services that are restricted, for the most part, to legal residents of Shanghai. On the one hand, China has maintained the hukou system in part to better manage urbanization. The idea was that hukou restrictions would discourage migrants from flooding certain cities and overwhelming city services and causing instability. On the other hand, while the hukou system has prevented some migration, a historically unprecedented level of rural-urban movement has occurred nevertheless. Much of this movement has fueled Chinese development in recent years. Unfortunately, hukou restrictions have harmed migrant workers insomuch as they are not allowed to fully benefit from some of the wealth they helped create. While this has not been a desired outcome, it has been one cause of growing inequality.

Such inequality in turn has numerous implications, especially related to China's progress toward socialism. When reform and opening up began in the late 1970s, the Party understood that "some individuals and regions would get rich first." It also understood that at various points in the future it would have to use the gains some had made to help others who had been left behind. No one has ever thought that making such transitions would come easily, either economically or politically. How does one build up one part of the country and populace, and then use part of that wealth and experience to build up the rest? Of course, this is not simply a matter of redistribution. This is not a matter of taking the wealth that one part of the country has generated and giving it to others. Some of this happens, of course, but it can happen only on a limited basis as it would quickly prove unsustainable. Rather, the real question is how to open new opportunities for growth and development for those who need it most without sacrificing the gains others have made.

In tandem with hukou reform, many believe the November meeting might also discuss problems associated with rural land rights. Some rural residents will choose to stay in the countryside, and further, some should, given the possibility that new opportunities could be stimulated there that can both drive national growth and help solve urban/rural divides. A concern that has caused many rural residents and the Central Government much grief over the years is the practice of some local governments selling land, sometimes with little to no benefit for rural residents and sometimes leading to unrest. There are many different ways to tackle this problem. One way is to restrict the rights of local governments to sell land; another is to reform how rural residents are compensated when land is sold; another is to better secure rural residents' property rights; still another is to allow additional marketization in a way that can make rural areas more attractive to better investors, but without fueling unwanted speculation. More likely, a combination of measures would be encouraged, that could in turn be tailored to fit local conditions. But working all of this out as a matter of policy and then effectively implementing it, as one can see, presents a formidable challenge and will require both discipline and resolve.

But addressing such concerns in a comprehensive way is vital for moving past current challenges and onward to realizing the "Chinese Dream." Although the global economy remains tenuous, domestic economic growth is cooling, and any shocks to the system in the form of deep reforms might prove disruptive, many seem to believe—for the first time in a long time—that reforms are both desirable and unavoidable. Hopefully, November's meeting will give us the first clear glimpse of what's to come.

The author is an associate professor of politics at East China Normal University; research fellow with the Center for the Study of Contemporary China at the Institute for Advanced Studies at Fudan University; and assistant editor of U.S.-based Journal of Chinese Political Science

Email us at: liuyunyun@bjreview.com



 
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