China's blueprint for the next decade

When the Central Committee of the Chinese Communist Party announced that the 3rd Plenary Session of the 18th Party Central Committee will take place from 9-12 November, it was announcing that the time for settling-in has officially ended for China’s new leadership.

As the Central Committee, comprising more than 300 top Party leaders, meets this week under tight security in Beijing, they will move on from the policies of the men who ruled before them, and will for the first time be setting forth their own policy vision in a framework for economic and social development that will guide the country for the coming decade.

The pattern has been well established; beginning with the famous 3rd session of the 11th Congress in 1978 where Deng Xiaoping announced the “Reform and Opening Up” policy, unleashing the market forces that propelled China into the global economic system and lifted hundreds of millions out of poverty. The 3rd session of the 14th Central Committee in 1993 subsequently established the “Socialist Market Economy” and bequeathed China’s development strategy as we know it today.

These historic sessions are still relevant to China’s growth model today, and signals being sent by the top Party leadership indicate that this year’s session will be among the most significant global events of the year.

The first plenum, or meeting of the incumbent Central Committee, occurred in November 2012 and resulted in the selection of the current Party leadership under General Secretary Xi Jinping. The second plenum convened in February 2013 to prepare for the transition of government at the National People’s Congress in March. As the third plenum arrives, the Party leadership has been actively studying national issues and aligning political stakeholders as they begin to lay forth their plan and goals.

After one year in power, the Central Committee is approaching consensus and will approve a national strategy that will belong wholly to the new leadership, defining their legacy for the future.  At the conference, General Secretary Xi Jinping is expected to deliver a work report reviewing progress since the group’s last meeting and laying out his blueprint for the next decade.

Of the groups anticipating the event, economic and social reformers have been the most active and the most vocal, as they call for policies that will right the imbalances of the past decade and put the economy onto more sustainable footing. With a growing gap between China’s haves and have-nots, seemingly unsustainable environmental damage, and worrying growth in local government debt, the current leadership will need to set out a strong vision and put in place effective policies to help them achieve their goals.

While reform advocates are optimistic, the scope of changes to be proposed remains uncertain. Among the members of the Politburo Standing Committee, many have been public in their commitment to economic reform. Promoting innovation, spurring consumption, addressing environmental issues, streamlining government, and increasing the market’s role in the economy have all become common themes since the leadership took office.

However, in order to implement meaningful economic reform the Party will need to find a degree of consensus that has been lacking to date. Many analysts remain skeptical that Xi has amassed enough political power to tackle some of the more intractable structural issues, particularly in State-Owned Enterprise (SOE) monopolies where political (and personal) interests are deeply entrenched.

The delay of this year’s meeting into November has prompted some analysts to speculate that reaching internal alignment around a reform agenda has been especially difficult. Even as Xinhua News Agency calls the meeting a potentially “landmark event”, drastic announcements are not likely. Policy changes will be conservative in nature as they lay the groundwork for gradual future reform. As with the slow realization of the original 1978 reforms, the full effect of the meeting may not become clear for years to come.

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