China's Third Party Plenum has ended, and each word of the communique issued by President Xi Jinping's new administration is being meticulously assessed to try to determine the true direction Chinese policymakers will take for the next decade or longer. Ahead of the plenum, which new Chinese administrations use to define themselves and their vision for the country's future, Chinese media emphasized the depth of reform coming, and the communique itself focuses on how market forces will shape China's economic future. But exactly how Chinese leaders define market forces remains somewhat obscure. It may take weeks to fully sort through the statement's carefully crafted phrases to interpret their underlying meaning -- and years to see if they are truly applicable or effective.
Are China's leaders really prepared to allow the swings of success and failure, of boom and bust, to weed out inefficiencies and redundancies in the Chinese economy? Or is the potential for social disruption just too much to accept? How do market forces, which may disproportionately reward certain geographic areas and penalize others, square with the desire to strengthen the country's interior provinces and narrow the widening wealth gap within Chinese society? And how does the market, with its acceptance of short-term instability as the cost of long-term equilibrium, match with the Communist Party's penchant for applying short-term stabilizing adjustments at the cost of long-term adaptation?
These questions only address the issue of market forces. They do not even begin to touch upon numerous other issues embedded in the communique, such as central government responsibility for social services (especially changes to China's household registration system and social welfare), the establishment of the new Chinese National Security Council, adjustments to the military's strategic goals and structure, and changes in the one-child policy. In short, the statement is a broad guiding document meant to highlight China's general policy direction while providing few concrete details about application or possible contradictions between the various initiatives.
This is not unexpected. The document is intended to be a guideline -- a rough framework for the more difficult details to come. But given the not-so-subtle reminders ahead of this meeting of the significance of the 1978 plenum shaped by former Chinese leader Deng Xiaoping, the strong attention to market forces, however ill-defined, may provide at least some sense of direction. In theory, the "decisive role" of market reform is to introduce greater market forces and efficiencies into the country's economic process while the Party maintains its role in guiding, monitoring and supervising the transformation. But market forces are Darwinian in their extreme manifestation, so the Party seeks to keep the weak and dying alive for as long as possible while still demonstrating its commitment to reform.
This raises a significant challenge for the Party, which must balance its desire for even stronger central control with its contradictory desire to inculcate market forces into the economy -- forces that are unlikely to preserve the weak and inefficient just to maintain employment and the elusive concept of social stability. Gone are the days when the Party stood as the vanguard of the proletariat or even as a bulwark against the insidious influence of Western imperialist exploiters. The Party now serves as a structural bureaucracy parallel to the government, ostensibly ensuring continuity through a calculated and lengthy process whereby cadres move slowly through various positions in order to gain experience for top leadership. The Party's reason for existence now is to endure. It is, in some respects, like the ruling Golkar "functional group" in Indonesia under former President Suharto -- a structure underlying the government that seeks to preserve its own control so that it can control.
The Party has sacrificed creativity for consensus and adaptability for continuity. This sort of Party will have a very difficult time guiding but not interfering with market forces. So market forces will either mean something highly unique in the Chinese context, or political elites will be at odds with the very Party that has sought to harness such forces to shape China's next evolution. Perhaps the most important question of the plenum, then, involves the relationship between the political system and the economic and social spheres. The Chinese saw the results of political change at the end of the Soviet Union and the impact of political adjustments in Suharto's Indonesia. Now, as the economic system continues to evolve and the world around it changes, they are seeing the erosion of a perhaps more benign central authority in places like Malaysia and Singapore.
There is little doubt that China's leaders see a need for a change in the way things are done. And they are saying all the right things. The test will be in implementation. Can the Party adapt fast enough to stay ahead of the changes that their policy pronouncements and the shifting global position will engender? When Deng launched his economic reform and opening some 35 years ago, he also turned the ideology of the Communist Party on its head and fundamentally altered the relationships within it. Rapid economic growth allowed him to manage the political implications, and political change allowed him to push economic growth forward. The changes went hand-in-hand. It is now time to watch for the next iteration of the Communist Party.
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