Dirk van der Kley is a Research Associate in the Lowy Institute's East Asia Program.
This weekend the Communist Party of China (CPC) will begin the third plenary session of its Central Committee, the 200 or so highest-ranked party members in China. This includes the Politburo (25 top-ranking party officials) and the Politburo’s Standing Committee (PSC), the seven most powerful people in the CPC.
Because the first two plenums of new leadership groups traditionally focus on personnel appointments, the third plenum is the first major opportunity for a new leadership team to set out its political and economic reform plans, so this meeting is expected by many to play a key role in defining the reform objectives and directions of the first five-year term of the Xi Jinping and Li Keqiang leadership. It comes at a time in the country’s development when there is widespread agreement that social and economic reforms are necessary.
In 1993 Zhu Rongji announced the 'socialist market economy' at the third plenum of the 14th Central Committee. It was at the third plenum of 11th Central Committee in 1978 that Deng Xiaoping declared the opening-up of China's economy. These were both vital points in China's economic development.
This time, reforms being touted are equally groundbreaking and wide-ranging. Rumoured changes include greater government transparency, reining in state-owned enterprises (SOEs), financial sector reforms, encouraging private investment in the energy and power sector as well as land and household registration reforms, to name a few.
How many of these will actually come to fruition? Cheng Li of the Brookings Institution argues that there is reason for optimism about broad and deep reforms, despite the cacophony of vested interests that mark China’s political landscape: [fold]
Comprised of leaders like Xi Jinping and Wang Qishan – Princelings who come from prominent Communist veteran families – the leadership (PSC) now has more political capital to rein in SOEs and coordinate governmental agencies than it did under predecessors Hu Jintao and Wen Jiabao.
Li adds that because most of the current PSC will retire in 2017, this is Xi’s best chance to deliver reform:
In four years, China will undergo another round of leadership turnover when five out of seven PSC members will retire. With this turnover in mind, Xi and his coalition understand the importance of carrying out their market reform agenda now.
Li argues that failing to deliver will undermine Xi’s leadership credibility, particularly given the high expectations generated by senior Party figures and analysts.
Meanwhile, Douglas H Paal of the Carnegie Endowment for International Peace argues that precisely because some of China’s conservative PSC members will step down in 2017, now is not the best time for reform:
One or two (of the PSC) lean toward greater reform; others do not. So, in a sense, Xi and Li must pick and choose their policy agenda in the context of a mixed bag of administrators who range along a spectrum of preferences and vested interests from status quo to rapid reform.
Regardless of how deep or shallow the reforms in the final plenum document, history shows that the language will likely be vague and opaque, so we won't know immediately the exact outcomes of the gathering.
Moreover, the biggest question is whether reforms can actually be implemented in practice. The so-called 'vested interests' – local governments, SOEs, competing government agencies etc – will have representation at the plenum. But consulting vested interests in the formulation of a vaguely-worded document at a four-day plenum is vastly removed from overcoming opposing interests on a daily basis across a bureaucracy as fractured and vast as China’s.