China has announced relaxation of its one-child policy and abolition of its “re-education through labour camps” following last week’s meeting of a key decision-making body of the governing Communist Party. A 22,000-word document released three days after the Third Plenum meeting of the communist leadership in Beijing contains measures covering a wide span of the socioeconomic life in world’s second largest economy that unwrap its boldest set of economic and social reforms in nearly three decades. It seeks to dispel doubts about the new Chinese leadership’s zest to introduce long overdue reforms that will free the markets further and give the economy fresh momentum now that its three decades of breakneck expansion is faltering.
The documents goes a long way towards addressing public concerns that Chinese president Xi Jinping and his team seemed to dodge the reforms that were most pressing, either because they were unwilling to take on the special interests that would get hurt as a result, or they didn’t see the need or urgency. Now it is clear the Xi Jinping does appreciate the weaknesses of the Chinese economy — excess capacity, rising debt, a distorted financial sector, a lack of competition — and appears willing to confront them head on. However, what remains to be seen is how quickly these announced reforms will become reality, and how far they will really go.
Titled as the Decision on Major Issues Concerning Comprehensively Deepening Reforms, the document that has come in the public domain is likely to prompt a surge of experimentation in everything from trading rural land to the freeing of controls on interest rates. Normally, it takes a week or longer before the full contents of the plenum resolutions are published. This hiatus ensures that the party’s more than 80 million members have a chance to digest the document first. Also, speeches given by Chinese leaders at plenums have not been released. This time, however, the address of president Xi Jinping at the gathering was made public along with the document itself. This is supposed to be a signal that Xi Jinping is taking personal charge of the reform process. This gives the document added import.
Expectedly, his address was larded with reformist phraseology. He quoted Deng Xiaoping’s warning in 1992 of a “dead end” if the country failed to reform and improve living standards. He was blunt about the challenges China faced and admitted that the present mode of development was “unbalanced, uncoordinated and unsustainable”. He noted that public expectations of reform were “high” and the leadership couldn’t afford to waver.
Most China analysts agree that the latest reforms proposed by the new Chinese leadership are bolder and far more pervasive since the series of reforms initiated by Deng Xiaoping in the late 1970s and the early 1980s. The earlier reforms were limited to some areas. New reforms are all-round.
China had introduced its one-child policy at the end of the 1970s to curb rapid population growth. But the policy has become increasingly unpopular and China’s ageing population threatened to reduce the labour pool and exacerbate the elderly care issues and more than a quarter of the nation’s population would be over 65 by 2050.
The other reforms include the abolition of “re-education through labour” camps and moves to boost the role of the private sector in the economy. The new Chinese leadership has promised that the free market would play a bigger role, and farmers would have greater property rights over their land. The state-owned firms will be required to pay larger dividends to the government, while private firms will be given a greater role in the economy. There will be greater liberalisation in both interest rates and the free convertibility of the yuan. More overseas investment will be allowed. The number of smaller banks and financial institutions funded by private capital will also be increased.
Most of the announced reforms — such as financial deregulation and market opening — have been talked about and some have been experimented with in the past. But the pace of actual change has been glacial. In the case of reforms in State-owned Enterprises (SOEs) it is uncertain right now how much power the state is really willing to cede to the market and private enterprise.
The jury must, however, wait to see how the reforms in administration of criminal justice are implemented on the ground. On the face value the decision to do away with the “re-education through labour” camps should lead to improvement of human rights and judicial practices in China and Chinese leaders had talked about reforming the system in the past also. The network of camps created half a century ago holds tens of thousands of inmates in China’s labour camps and the police have the power to sentence offenders to years in camps without trial. A concerted attempt to overhaul the administration of criminal justice system is bound to be met with stiff resistance from China’s law enforcement agencies which exercise uncontrolled powers at present.
While answers to some questions raised by the Chinese leadership’s new-found zeal for reforms lie in the future, the speed with which it has come out with a radical reforms package makes one thing clear. A year into power, Xi Jinping and his team that now controls the Communist Party of China has come to understand the value of political symbolism. The Chinese leaders are aware of what is at stake as years of rapid growth comes to an end. Having been the factory to the world, they want to avoid the so-called middle-income trap, where wealth creation stagnates as market share is lost to lower-cost rivals.
The experience of the past decade may give reasons to many economists and international observers to view Beijing’s bold reform plans with guarded optimism. Still, Xi Jinping and his team have given themselves until 2020 to achieve “decisive” results. This is a tacit acknowledgement of the risks involved in Beijing’s balancing act between letting market forces eventually take over and preserving financial and social stability and the Communist Party’s political monopoly.
(The writer is a former professor of sociology, IIT-Kanpur. Email: email@example.com)