Xi promised economic reform but critics are still waiting
BEIJING — For years, China’s president, Xi Jinping, has talked the talk of economic reform. In January, he dazzled business executives in Davos, Switzerland, with a defense of international trade. Last month, he urged officials to “seize hold of reform and make it an even bigger priority.” And the annual meeting of China’s legislature, starting Sunday, appears sure to echo that theme.
But as Mr. Xi nears the end of his first five-year term as Communist Party leader, his record has not lived up to the bold statements, critics say.
The question now is whether he was ever really serious about taking the painful steps needed to repair the economy, or merely paying lip service to reform to justify his tightening grip on power.
Mr. Xi’s defenders argue that he had to consolidate his authority first, before he could make the potentially wrenching decisions needed to open markets and trim bloated state-owned industries. With weak growth in the rest of the world and demand for China’s exports flagging, they contend, there was little margin for error and caution was warranted.
The proof will be in the second term, they say, when Mr. Xi finally has the power to push through difficult economic adjustments.
Mr. Xi is already China’s most powerful leader in decades. He has repeatedly used his authority, though, to undercut reforms he says are necessary, ordering heavy-handed intervention in the stock market, for example, and restrictions on the movement of money abroad and property prices.
The problem, critics say, is that Mr. Xi’s demands for centralized control, stability and political conformity have often drowned out hesitant steps toward economic liberalization. And his second term is likely to bring more of the same, they say.
“I’m highly skeptical, since I don’t think it’s a lack of authority or the opposition of special interests that have kept him from moving in that direction so far,” said Scott Kennedy, director of the Project on Chinese Business and Political Economy at the Center for Strategic and International Studies in Washington. “Rather, he’s operated according to his instincts in the face of economic challenges. And I don’t expect his instincts or those challenges to change much.”
Many economists, executives and policy advisers in Beijing do not disguise their disappointment about what has happened to Mr. Xi’s promises of an audacious overhaul of the economy.
In 2013, he and his premier, Li Keqiang, laid out big plans to give markets and entrepreneurs more room to grow. The market would play a “decisive role” in allocating resources, Mr. Xi declared.
Wu Jinglian, one of China’s most prominent economists, said at a recent meeting in Beijing that “the direction of reform laid out in these documents is clear, and the measures are right, but the problem has been implementation.”
“Putting it relatively tactfully,” he continued, “it hasn’t been vigorous enough.”
Economists abroad have been less tactful. “Virtually across the board, China is falling short of its own self-declared objectives for reform,” said Daniel H. Rosen, a founding partner of the Rhodium Group, an economic research company. “Even the GDP growth that we have is ever more reliant on debt, and this is a consequence of falling short on reform.”
To be sure, the Xi years have not been static.
China has loosened controls on its domestic bond market, allowing more foreign participation. The policy that limited most urban households to one child was abolished and replaced by a “two child” policy and even measures to encourage couples to have two children. Mr. Li, the premier, has made it his mission to cut down paperwork and regulations that weigh on small businesses.
“I feel that a lot of changes actually have happened,” said Jianguang Shen, a China economist in the Hong Kong office of Mizuho Securities.