Wed, Jan 08, 2014 - Page 8 News List

China’s three challenges for 2014

By Minxin Pei 裴敏欣

Since ascending to the Chinese Communist Party’s (CCP) top post in November 2012, Chinese President Xi Jinping (習近平) has confounded observers. While his political strategy has entailed tightening the CCP’s control over ideology, cracking down on official corruption, repressing dissent and championing a more nationalistic foreign policy, he has announced an unusually bold economic-reform blueprint.

The world is soon to find out whether Xi’s politically conservative course is intended to facilitate his pro-market economic reforms. Having spent last year consolidating his position and formulating his agenda, this year Xi will have to begin delivering on his promises and demonstrating that he is as capable of applying power as he is at accumulating it. His success will depend on how he addresses three major challenges.

The first challenge confronting Xi this year is undoubtedly implementation of his economic-reform package, which has aroused both excitement and skepticism since it was unveiled in November last year.

Optimists point to the package’s ambitious goals as evidence of Xi’s commitment to reform, while critics cite its vagueness and lack of a specific timetable as grounds for caution.

In order to prove the skeptics wrong, Xi must translate rhetoric into policy, and policies into concrete, measurable results.

This means starting the new year by implementing reforms that require only administrative action, such as granting licenses to private banks, increasing competition by removing barriers to entry for private firms, liberalizing interest and exchange rates, and extending residency rights to migrant workers in small cities and towns.

Xi will have to follow these measures with legislation that formalizes some of the most critical reforms. Here, land reform will be the most difficult issue.

Xi’s agenda offers only vague promises of increased property rights for farmers, while recent government pronouncements indicate that the bureaucracy wants to restrict such rights. In this context, Xi must convince the public that he will not allow vested interests to block change.

The second major challenge that Xi faces this year is sustaining his highly popular — and hugely risky — anti-corruption campaign.

Given that Xi has ruled out mobilizing the Chinese public to support his reform plans, his only means of forcing the bureaucracy to comply with his agenda is the threat of corruption investigations and prosecutions.

However, this strategy will be difficult to execute, owing not only to the vast scale of corruption, but also to its critical role in distributing rents among factions and interest groups. An anti-corruption campaign that targets a large number of Chinese officials is likely to result in alienation, discontent, and division among the ruling elites.

The real litmus test of Xi’s intentions will be whether his government prosecutes Zhou Yongkang (周永康), a former member of the Politburo Standing Committee, the CCP’s highest policymaking body.

According to official reports, Xi’s anti-graft noose has been tightening around Zhou since the arrest of many of his former lieutenants.

However, prosecuting even a retired member of the Politburo Standing Committee would break a long-standing taboo.

Beginning with former CCP leader Deng Xiaoping (鄧小平), the post-Mao regime has worked hard to ensure the physical security of its top officials, thereby avoiding Mao’s mistake of turning internal power struggles into life-and-death contests in which nobody is safe.

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