China’s pace of reform
CHINA’S ambitious plan to revamp its economy has bogged down. Flabby state conglomerates have thwarted attempts to whip them into commercial shape. Rules that treat millions of city-dwelling rural migrants like second-class citizens have barely budged.
Such criticisms are common from sceptical foreign economists who have long argued that President Xi Jinping’s efforts to remake China’s economy and fix pernicious social problems have been too slow and tepid.
But these withering findings on China’s reforms come from a startling place: from within the government itself.
This unflattering report card from a Chinese state think tank faults misconceived “toplevel design” in policies, as well as local bureaucrats and state managers reluctant to change.
It concludes: “Reform has to some extent fallen into stalemate.”
The report brings into focus a sharpening debate in China about economic priorities. Experts inside and outside China say the country’s economy needs to be overhauled to continue growing fast enough to provide jobs and higher incomes for its people.
Blunt public warnings from Chinese government institutes are uncommon, but some officials have argued that reform efforts are moving too slowly.
The report comes ahead of a Communist Party leadership shake-up later this year that is likely to further solidify Xi’s hold on power.
Most prescriptions call for China to ease reliance on exports and government spending, nurture its growing ranks of middle-class consumers and let companies make decisions based on market forces instead of political mandates.
Chinese leaders say they have struck the right balance between maintaining robust growth and fixing problems threatening long-term growth, such as dependence on state investment. Their catchphrase is “progress through stability”.
But critics argue that the policy changes have slowed or foundered. The report indicates that some government insiders agree.
“There must be more political courage and wisdom,” the report said. It credits the government with some progress, including trimming red tape and abolishing the “onechild” policy that limited most urban families.
But the researchers also urge the government to become more open and consultative in drawing up policy – something that may not come easily to Xi, who has centralised power and warned officials against bending orders.
“Give local officials more room to explore and experiment,” the report said. “Don’t settle scores with them even if their efforts fail.”