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The Only Answer is Political Reform
Summary:

October 18, Issue 490
Translated by Tang Xiangyang
Original article:
[Chinese]

The Fifth Plenary Session of the 17th Central Committee of the Communist Party of China (CPC) was held in Beijing from October 15 to 18. Part of the meeting was devoted to evaluating and approving the Communist Party's Suggestions for the proposed 12th Five-Year Guidelines for Economic and Social Development. Currently, the clouds of a possible currency war hang over China, while internally, the country is facing difficulties in meeting the energy-saving and carbon emission reduction targets included in the last Five-Year Plan and social tensions are on the rise, causing all kinds of complications. The question of how China will progress over the next five years has naturally become a focus of international attention.

We believe that economic restructuring will be the key phrase of the 12th Five-Year Plan. Over the past ten years or more, the goal of economic restructuring has never been out of the minds of central government policy makers, but at the same time, there hasn't been any fundamental progress in achieving the goal.

This indicates that economic restructuring is both difficult and urgent. In fact, some essential reforms are already under way, such as the reform of pricing mechanisms for natural resources with an obvious acceleration in the speed with which reforms to the way oil, natural gas, water and electricity are priced.

China has already made clear its resolve to quicken the pace of income distribution reform so as to let ordinary people share the benefits brought about by economic development in order to allow them to live a decent life. It's also predicted that social reforms targeted at achieving social justice will also be deepened during the 12th Five-Year Plan period.

These initiatives include reforming the country's health, education and social security systems, despite the many difficulties these reforms face, moves have already been made to start down these tracks. For example, China's Minister of Health Chen Zhu noted last week that China had already established a basic health care insurance system that covers 90 percent of the population - the biggest health insurance system in the world.

The success of social reform will depend on steady economic growth over the long term. The establishment of various programs aimed at ensuring social security, will require investment from all levels of governments, the resolution of various social conflicts and a balancing of the demands of various interest groups.

Often the government will be required to put real money into buying the acquiescence of certain interest groups so as to balance some of the competing powers in the hidden, complicated web of interest group politics that exists in China.

If one day, economic growth were to slow down and weaken, all of the various social reforms currently being pursued would fail.

However, we have noticed that although social reforms continue apace, the support for the deepening of the economic reform agenda appears to be weakening and is experiencing difficulties.

The basic principles of a market economy are forever having to give way to the pragmatism of administrators.

Over the past decade, policy makers have released three papers that have advocated the importance of breaking the control of state-owned monopolies, each report more enthusiastic than the former, but "the advance of the state and the retreat of private enterprise" (国进民退 guojin mintui) has still managed to emerge as an inevitable trend in the post-financial crisis era.

Even in the social sector, respect for the basic rights of individuals is often trampled upon when officials abuse their power to forcibly demolish people's property or to intercept petitioners. All of these actions are conducted in the name of "maintaining social stability," in order to maintain economic growth.

This indicates that the internal momentum for economic growth is weakening. Why?

In the past, the release of such internal momentum was realized by reducing the amount of regulation imposed on private capital.

This was done by recognizing the need for private capital, recognizing the need for economic freedom (with some constraints) and by furthermore creating the conditions necessary to realize such economic freedom.

The past thirty years of tremendous growth are all due to these measures, but, these measures might not be enough to ensure that future growth of China's economy and society can take place.

Economic restructuring means that certain interests will also have to be adjusted, especially in terms of private enterprises being provided with more freedom to pursue growth.

But this greater freedom may be impeded by a kind of ideological rigidity and recidivism and blocked by either bureaucratic self-centeredness or other powerful vested interests.

How to solve these problems outlined above?

The only answer is political reform.

Deng Xiaoping, the general designer of China's reform and opening up policy, was very clear about the need for political reform.

He once said, "Whether our reforms will succeed or not will depend on the reform of the political system. Without political reform, we won't be able to achieve economic reform, as it will impeded by people."

This was Deng Xiaoping's vision and also a task in his grand plan for reform that he didn't complete.

In recent months, Premier Wen Jiabao has raised the issue of political reform five times. This perhaps indicates that policy makers already have a clear and firm position on the issue.

Without reforming the political system, we cannot guarantee the benefits that economic reform brings, nor will we be able to continue to push ahead with reforms to the economic system and social reform will also fail.

We look forward to a 12th Five-Year Plan that will be able to serve as an opening to further political reform, to solve at a systemic level the problems associated with excessive concentration of power not subject to supervision, ensure that everyone will enjoy all the rights and freedoms granted to them under Chinese law according to the Chinese constitution and to create the conditions that make it possible for people to criticize and supervise the government.

In fact, whether it's breaking the deadlock on economic reform or making a breakthrough on social reform, both rely on pushing ahead with political reform.

A real harmonious society can only be achieved if we have economic, social and political reform.

This article was edited by Paul Pennay

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