Tue, Mar 07, 2017 - Page 9 News List

Xi promised economic reform in China; the world is still waiting

By Chris Buckley and Keith Bradsher  /  NY Times News Service, BEIJING

For years, Chinese President Xi Jinping (習近平) 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.”

The annual meeting of China’s National People’s Congress, which started on Sunday, appears sure to echo that theme.

However, as Xi nears the end of his first five-year term as Chinese Communist Party (CCP) 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.

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, there was little margin for error and caution was warranted, they say.

The proof will be in the second term, when Xi finally has the power to push through difficult economic adjustments, they say.

Xi is already China’s most powerful leader in decades. He has repeatedly used his authority, though, to undercut reforms he says are necessary, for example ordering heavy-handed intervention in the stock market and restrictions on the movement of money abroad and property prices.

The problem is that Xi’s demands for centralized control, stability and political conformity have often drowned out hesitant steps toward economic liberalization, critics say.

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.” Kennedy said.

Many economists, executives and policy advisers in Beijing do not disguise their disappointment about what has happened to Xi’s promises of an audacious overhaul of the economy.

In 2013, he and Chinese Premier Li Keqiang (李克強) laid out big plans to give markets and entrepreneurs more room to grow.

The market would play a “decisive role” in allocating resources, Xi declared.

Wu Jinglian (吳敬璉), 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, it hasn’t been vigorous enough,” he said.

Economists abroad have been less tactful.

“Virtually across the board, China is falling short of its own self-declared objectives for reform,” said Daniel 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.

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