Jayadeva Ranade
Hindustan Times
November 11, 2013
Two hundred and five members of the Chinese Communist Party (CCP)’s Central Committee (CC), who were elected at the 18th Congress of the CCP in November 2012, convened in Beijing for the 18th CC’s three-day Third Plenary session beginning November 9. The session will reveal the ruling philosophy of CCP CC general secretary Xi Jinping and his Premier Li Keqiang, and enable people to discern the degree of economic liberalisation proposed within the tough political regime now being imposed.
Seven plenary sessions of the party’s CC are usually held during the five-year term of each party Congress with the Third Plenum focusing mainly on the economy. While details of the decisions taken at the Third Plenum could take months to filter out as it is a closed-door session, certain indications are already available, including that there will be no easing of political controls.
Security for CCP leadership meetings is always stringent, but vigil has been enhanced for this session because of a series of recent public demonstrations of popular dissatisfaction. On October 1, hundreds of petitioners were detained after they tried to protest in Beijing’s Tiananmen Square. Later, a group of 70 retrenched bank employees gathered outside Zhongnanhai, the walled compound where China’s top leaders live, to protest. More alarming was the incident on October 28, described by Chinese security authorities as a “terror attack” by eight armed Uyghur “terrorists” from the restive Xinjiang-Uyghur Autonomous Region who, despite the installation of 800,000 closed-circuit television security cameras in Beijing, drove an SUV into the gate of the Forbidden City killing five people and injuring 40. Those alive among the “terrorists” were arrested within a day. Meng Jianzhu, the Politburo member who oversees China’s security apparatus, blamed the banned East Turkestan Islamic Movement. Indicating the seriousness with which the incident is being viewed, the provincial newspaper Xinjiang Ribao quite unusually publicised within days that Xinjiang Military Region Commander, General Peng Yong had been removed from his party posts and that the Xinjiang Party Secretary had been ‘criticised’. On November 6, small bombs were detonated outside the CCP headquarters in Taiyuan, the capital of the Shanxi province. More recently, a disgruntled farmer destroyed 10 cars with a bulldozer in the port town of Ningpo.
Security authorities have detained numerous dissidents and several hundreds of people, who arrived in Beijing to voice their grievances and submit petitions, in ‘black’ prisons or externed them from the capital. Quoting a veteran of the People’s Liberation Army (PLA) from Zhejiang, Radio Free Asia (RFA) reported that more than 300 former People’s Liberation Army (PLA) personnel who were hoping to have their cases heard ahead of the Third Plenum were “sent home under escort, while more than 1,000 are under tight surveillance or house arrest by authorities in all cities, provinces and autonomous regions”. The party leadership is particularly sensitive to the problems of retired military personnel and cadres were urged last year to sort out their problems relating to non-payment of dues or re-employment.
There is widespread expectation, prompted by remarks of senior Chinese leaders like Yu Zhengsheng, Politburo Standing Committee member and Chairman of the Chinese People’s Political Consultative Congress (CPPCC), that the scope of the reform package will be “unprecedented” and its impact on all aspects of the economy and of society will be “profound”. They suggest that the Third Plenum will provide an unprecedented push for economic reforms and growth.
Statements by President Xi Jinping and Premier Li Keqiang in the days preceding the plenum were more restrained suggesting that the leadership is content with a 7 to 7.5% rate of growth, which is adequate to double China’s economy and potentially make it the world’s largest by 2020. Li Keqiang has pledged, though, to “deepen reform comprehensively” by promoting changes in the “fiscal, financial, pricing and enterprise fields”. This could mean cut-backs in subsidies on energy, electricity, capital and water. Reckless borrowing by provincial governments may be curbed while allowing them greater room to experiment. Both leaders have commented on tackling structural economic problems like industrial overcapacity and retraining for the millions of workers laid off by State-owned Enterprises (SoE). Restructuring of the 117 central SoEs is unlikely. At most they may be reined in to allow more opportunities for the growing number of private enterprises.
While Xi Jinping has dismissed talk of China falling into a ‘middle-income trap’ and the leadership seems confident of avoiding a ‘hard landing’, it is probable there could be moves for greater rebalancing of the economy away from investment towards consumption and services. Urbanisation is likely to be the next key driver of economic growth with continued efforts for upgrading China’s industrial capabilities and innovative capacity. Agricultural reform, including monetisation of farmers’ land holdings, and relaxing the ‘hukou’ (residence permit system), which will benefit 250 million migrant workers, are under serious deliberation. None of this will, however, be at the cost of compromising the CCP’s central role.
The most important document of the plenum, namely the communiqué, will have economics as its central, but not sole, theme. The ‘Master Economic Plan’ will be China’s economic blueprint for the next decade. While past practice has been to leave economics to the Premier, since the time of his appointment Xi Jinping has taken direct interest in economic policy and the draft communiqué will this time be approved equally by Xi Jinping and Li Keqiang. The group drafting the communiqué is also more powerful and headed by Wang Huning, Politburo member in charge of the Policy Research Office of the Party Center and close associate of Xi Jinping. Liu He, another policy economist and close associate of Xi Jinping is also associated with drafting the communiqué. The draft will probably comprise five main subjects namely, economic reform, administrative reform, cultural reform including education and technology, social welfare policy, and environment which includes global warming. The Third Plenum is additionally important for Xi Jinping to shore up his credentials as an economic ‘reformer’.
Jayadeva Ranade is a member of the National Security Advisory Board (NSAB) and former Additional Secretary in the Cabinet Secretariat, Government of India.
