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China: Pre- Party Plenum Scenario

| by D. S. Rajan

( November 12, 2013, Chennai, Sri Lanka Guardian) In the background of no official information forthcoming so far on the agenda fixed for the four-day third Plenary Session of the 18th Chinese Communist Party (CCP) Central Committee which began in Beijing on 9 November 2013, speculations are ruling the day on what is going to happen during the gathering.

Hu Jintao, general secretary of the Central Committee of the Communist Party of China (CPC) and Chinese president, delivers a keynote report during the opening ceremony of the 18th CPC National Congress at the Great Hall of the People in Beijing, capital of China, Nov. 8, 2012. The 18th CPC National Congress opened in Beijing on Thursday. Photo: Xinhua
This being so, possibilities of making some possible tentative projections on the Plenum, do exist thanks to the availability in China at the current stage of a spate of high level statements, authoritative policy documents as well as the analysis appearing in the Chinese state-controlled media.

Pre Plenum Scenario

2. The Pre-Plenum scenario needs to be addressed first considering that it has a bearing on the outcome of the session. Taking economic situation first, the leadership seems to have realised the fresh need for evolving a road map of reform acceptable to diverse sections of the society. In the political sense, the CCP chief Xi Jinping appears to have been able to consolidate his leadership position as a result of his ability to bring Bo Xilai affair to a close, both politically and legally. Xi seems to have succeeded in tackling ‘corruption’ at high places; demonstrating this is punishment meted out to ‘corruption tigers’ like Jiang Jiemin, the Director of the State-owned Assets Supervision and Administration Commission (SASAC) and a former chairman of the country's biggest oil company, the China National Petroleum Corporation (CNPC) as well as the Environment Minister Zhou Shengxian . The country's former security chief and Politburo Standing Committee member ZhouYongkang is reportedly being investigated for ‘discipline violations’.

3.There are also firm signs in the run-up to the session of ideological disunity in the party implying some pressure on Xi Jinping; the ongoing internal debates on key subjects like ‘constitutionalism’, media freedom, party history and reforms and a ‘ideological struggle’ drive launched by the party centre, are among them. Under the drive, five targets are being perceived as having potentials to damage the party supremacy- voices appearing in favour of ‘constitutionalism’ in the country under the influence of Western democratic ideas, pleas for Western-sponsored media freedom, tendencies to disobey ideological instructions from the CCP Central Committee , emergence of ‘historical nihilism’ trend and questions on the party’s leadership over ‘reforms and opening up’.

The last mentioned seems to be developing as a major issue. A case in point is a 10000-character full page article entitled "Correctly Treat the Two Historic Periods Before and After the Reform", contributed by the party’s Institute for Historical Research, published in the People’s Daily on 8 November 2013 emphasized on the CCP leading reforms. It echoed Xi Jinping’s views expressed in January 2013 that "one should not use post-reform history to negate the pre-reform years". Giving a warning to those who preach indiscriminate copying of the Western system, it condemned efforts to undermine the party’s legitimacy by “negating” tragedies such as the Cultural Revolution, which preceded the reforms course started in 1978. In any case, it goes without saying that the CCP is expected to keep the ideological debates and drive well within limits in the interest of overall stability in the country.

Issues likely to be deliberated:

4. The atmosphere prevailing prior to the Plenum is also marked by several indicators discernible through open source material to what issues are likely to be deliberated at the plenum; this raises the possibility at the moment is to draw certain tentative conclusions on the progressing party conclave.

5. Firstly, not to be missed is the prevailing high expectation in China on the Plenum taking important decisions on future directions of the country’s reforms policy. Opinions in China believe that the forthcoming session is going to be as ‘historic’ as the previous plenums like the one held in 1978 witnessing the veteran leader Deng Xiaoping launching the programme of opening China to the outside world and the other convened in 1993 during which the then party chief Jiang Zemin activated the’ socialist market economy’ drive, leading eventually to China joining the WTO.

6. Turning to the statements coming from the leadership, appearing most important for obvious reasons are those being made by the CCP chief Xi Jinping. Xi observed (July 2013, survey in Hubei) that “reforms should aim at ‘surmounting institutional barriers in major areas that are restraining growth’. He added ‘for this, needed is even more political courage and wisdom’. Later, he identified financial sector liberalization, support for corporate research and development, environmental taxes, as reform targets for China (speech at the Asia-Pacific Economic Cooperation Summit .Bali, 14 October 2013). Of late, he revealed that a ‘blueprint of comprehensive reform’ will be put forward at the Plenum ’ (speech at a meeting of foreign delegates attending the “21st Century Council” think tank, Beijing, 3 November 2013). Notable also are the remarks (Beijing, 26 October 2013) of Yu Zhengsheng, a Politburo standing committee member that the Plenum would "principally explore the issue of deep and comprehensive reforms and that reforms this time will be broad, with major strength, and will be unprecedented."

7. There are also official documents in China the contents of which have hinted at the nature of likely initiatives at the Plenum. Among them is the “383” report, released by the National Development Research Centre (NDRC) of the State Council in end-October 2013. Jointly authored by Liu He, Advisor to Xi Jinping and Li Wei, aide to former Premier Zhu Rongji, it sought to redefine and reduce the government's role in the economy. The given name 383 needs to be understood in the context of the report’s recommendations- favouring reforms in the three fields of market, government and corporations, reforms in eight core sectors of finance, taxation, state assets, social welfare, land, foreign investment, innovation and good governance and three reform packages aimed at relaxing control over market access, establishing a basic social security package and allowing sales of collectively-owned rural land. The “383” report specifically asks for the internationalisation of the Yuan within a decade and the liberalisation of interest rates within three years, making a demand in addition to expand urbanization in China, along with gradual phasing out of the old household registration system (hukou), which continues to discourage migration.

8. Prominent among messages on the Plenum’s likely decisions being conveyed through the Chinese official media, include the one which disclosed that the Plenum is slated to adopt the already well-publicised CCP politburo ‘socio-political’ proposal , i.e to finalise ‘ a new comprehensive strategic direction and programme for next 10 years, the specific aim of which will be the realisation of the Chinese dream of national rejuvenation’ (China Daily, 25 September 2013). Another one (Xinhua, People’s Daily, November 6 and 8, 2013) said that the gathering would deal with China’s reform which has entered a ‘deep water zone’ and accelerate “new round of reform, which is expected to steer the country into an historic turning point and transform its growth pattern, while simultaneously handling intricate problems and conflicts brought along by its past development, like the heavy cost of land, energy consumption, environment and cheap labour”. As yet another message, a comment (Global times, 9 November 2013) implicitly endorsed the need for the State to pass control over major sectors to civil society in the interest of fairer competition for all enterprises and predicted that the Plenum will push China to take historical steps forward through ‘pragmatic and orderly’ decisions. . As per a view subsequently noticed (Global Times, 10 November), “ the biggest obstacle in the path of reform is not whether reform is needed, but rather, formulating a road map of reform accepted by most groups in society, which has to be both progressive and balanced”.


9. Taking together the statements from leaders, contents of official documents and media pronouncements n China as given above, the following broad picture on the outcome of the Plenum seems to emerge:

(i) Terminologies like ‘ new round of reforms”, “comprehensive”, “unprecedented’, “historic turning point”, ‘transformation of growth pattern” etc used officially while referring to the Plenum indicates the chances of Xi Jinping leadership taking bolder reform initiatives than before, in the current Plenum.

(ii) Formulations are likely to be announced in the plenum to address the issue of how to reduce the government control over economy.

(iii) Care will be taken to arrive at a consensus in the party on decisions to further deepen reforms, keeping in mind the existence of various interest groups like state-owned enterprises, local governments, the economic-policy bureaucracy, family members of political elites well-connected businessmen as well as political institutions. Xi Jinping’s mention of the need for ‘political courage’, signals that reaching a consensus may not be easy. Meaningful in this regard is the current reference to the Plenum taking ‘pragmatic and orderly’ decisions.

(iv) Judging from Xi Jinping’s calls in recent times for the party to promote a ‘mass line’ approach, the emphasis being seen in China on waging ideological struggles and tightening control over the internet and media , coupled with reiteration in party dailies to conduct reforms under the CCP leadership, one can rule out any advance in the Plenum over the issue of political reforms; the rhetoric on ‘political restructuring ‘will however find an echo on the occasion.

(v) It is probable that a target date may be fixed in the Plenum for internationalisation of Yuan currency. Xi Jinping’s mention to financial sector reforms, is notable in this context.

(vi) A strong possibility is adoption of fresh rules in the Plenum with regard to ‘Hu Kou’ system, (household registration system) for easing existing regulations on migration. This will be in accordance with the recommendations given by the NDRC in June 2013 to transform rural residents fitting certain criteria into urban residents by lifting the hukou control of all small cities and towns and easing the limits on the hukou of middle-level cities in an orderly way; the NDRC ‘s logic is that the Hu Kou system puts agricultural population in an inferior position compared to the urban labour and works against the declared goal of healthy urbanization in the country.

(vii) No major statements or media articles have been noticed so far on the desired further reforms in the State Owned Undertakings (SOEs). The SASAC is striving to make the SOEs competitive internationally. In order to achieve this, profit margins are taking centre stage. At the same time SOEs are still expected to fulfil strategic goals (i.e. resource security). How the contradictory goals of profits and strategy are going to be reconciled? One has to wait for the conclusion of the Plenum for an answer.

(viii) The Plenum may decide on new land reform policies that would allow farmers to sell their rural properties and (ix) Tax reform and family planning rules, environmental issues and the question of corruption may also be on the agenda of the Plenum.

(The writer, D.S.Rajan, is Director of the Chennai Centre for China Studies. Email: director.c3s@gmail.com)