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China’s Third Plenum Reform Agenda: Highs And Lows

By Zhenjie Im, Former Fellow

21st December 2013, Global Governance, Issue 4, No. 6

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On 15th November 2013, the communiqué, entitled “Decision of Major Issues Concerning Comprehensively Deepening Reforms”, for the recent plenum of the Communist Party of China was released to the public.[1] Unlike previous releases which were disseminated weeks after the conclusion of the closed-door plenum in Beijing of its Central Committee, this one was released to the public just three days after the end of the session. With the apparent build-up of expectations prior to the plenum, many foreign observers have expressed disappointment at its eventual product.[2]

Critics firstly claimed that the communiqué provided insufficient details in relation to the objectives set out within the document. Next, they also expressed regret at the level of economic reform given the backdrop of rising income inequality in particular between urban and rural centres, growth stagnation and the crowding out of credit to private enterprises by state-owned ones.[3] Furthermore, much criticism also came from the concern of over-centralisation and concentration of power within the hands of the General Secretary of the Party, Xi Jinping, through the new National Security Council and Central Deepening-Reform Leading Group, as well as the overall lack of liberal political reform.[4]

If one were to contrast these observations with those of the domestic media and academia, the contrast is significantly pronounced.[5] Domestic observers tend to view the communiqué in a more positive light. Such a perspective may perhaps be attributed to their recognition of the state of political and economic affairs in China and the long-term objectives of the Communist Party of China.

Premises in the analysis of Communist China

In order to better examine the proposals contained within the communiqué, it is necessary to lay out the premises that had led to such divergent views.

From the outset, it is worth noting that the communiqués of the Communist Party have historically not been concerned with specific policies and details, but rather serve the purpose of outlining key principles and directions upon the conclusion of a plenum.[6] Details and policies agreed at the plenum are on the other hand released in the more comprehensive plenum resolution that was supposedly due a week after the conclusion of the session. Hence critics who point at the lack of details may perhaps have held overly high expectations of the communiqué which were unlikely to ever be fulfilled.

That the resolution however has yet to be fully released may point to two things – that the policies agreed at the resolution have yet to be fully digested by all levels within the Communist Party or that as much as the resolution has been formally agreed upon, interest groups that are due to lose out are still tacitly resisting it. If the latter were true, it is the belief of some domestic observers that a premature release of the contents of the resolution may in fact harm the chances of reform.[7] While such a conclusion may seem counter-intuitive given that the leaders may possibly appeal to the public’s general appetite for reform, it is worth noting that politics in China is still largely an elite and factional bargaining system within a single-party state. What this means is that while public support is beneficial, it is neither necessary nor sufficient to achieve one group’s desired policy objectives and options. One only has to look to Bo Xilai’s dismissal from power despite his popularity in Chongqing as an example of the insufficiency of appealing to the public.  The act of a premature release of a resolution which has yet to be fully agreed upon by all groups may be perceived by potentially disadvantaged groups as an affront to the interests of those groups – in that the interests of those groups do not matter despite them being stakeholders within a factional and elite bargaining system. Set in this backdrop, a premature release of a resolution that has yet to be agreed by all groups on a substantive level may stiffen opposition to reform. This is the second context that ought to be featured in any analysis on Chinese politics – policymaking is an elite and factional bargaining system that is influenced and distorted by interest groups.

The foregoing conclusion then begs the following question – what are these interest groups and main factions within the Chinese Communist Party? The interest groups that influence policymaking and distort policy implementation are the state-owned enterprises (SOEs) and local governments. State-owned enterprises, by virtue of their size and contribution to the economy, influence decision-making in their favour. This includes the preferential rates on loans to SOEs over private enterprises by state banks.[8] It is also worth noting that there is a problem of the revolving door between SOEs and the Communist Party, even at its highest echelon of power. Zhou Yongkang, a former member of the Politburo Standing Committee, was previously an executive of the China National Petroleum Corporation.[9] When SOEs become powerbases for members of the Communist Party, the interests of those SOEs become even more influential and distortionary.

The other source of influence and distortion is the local governments. It has been noted that the ineffectiveness of reforms under the presidency of Hu can also be attributed to weak control over local governments by the centre. Local governments have been known to manipulate national policies in ways that favour local leaders.[10] While the concentration of legislative, executive and supervisory powers tend to be concentrated within the executive branch in the centre, this concentration is even greater in local governments.[11] This is worsened when judicial investigations filed at local courts are not currently conducted independently but by the local governments. Land grabs, often a source of ire among local communities, is an example of such a phenomena. 

With regards to the main factions within the Chinese Communist party, it is worth noting from the outset that it is difficult to establish specific and cohesive factional units. Factions are generally loosely bound and change according to the issue at hand. However, it is possible to be point at two broad and generally cohesive political factions within the party – the Shanghai clique and the Tsinghua clique. The patrons for the two cliques are former General Secretaries Jiang Zemin and Hu Jintao respectively. Reflecting that the Politburo Standing Committee was staffed by Shanghai clique loyalists during Hu’s term, recent analysis of Hu’s presidency have suggested that the lack of reforms was due to the strong opposition from the Shanghai clique, particularly when one considers the fact that the Standing Committee works on the basis of consensus decision-making.[12]

Some commentators also suggest that there is a third faction – the princelings – of which both Xi Jinping and Bo Xilai belong to.[13] It is in my view however that the princelings are not a faction. It is but a status that accords a person privilege and prestige due to the legacy of his family. If the princelings were a faction like that of the Shanghai or Tsinghua clique, given the prominence of both Xi Jinping and Bo Xilai as princelings, the public dismissal of latter would suggest to the other two cliques of the internal weakness and disunity of that “clique”. This would leave the “clique” with a feebler bargaining position vis-à-vis the other two. Such a conclusion is definitely not in the interest of the “clique” were it to exist. Therefore the public dismissal of the popular party leader in Chongqing suggests the improbability of a princeling faction.

Analysts have also further suggested a possible third faction with Bo Xilai as a key member of it. They suggest that this third faction was perceived to be a challenge to the existing duopoly within Chinese politics.[14]  Given the position and prestige of Bo in relation to his public and humiliating dismissal, it is likely that members of the Shanghai or Tsinghua clique who have enough dirt on their sleeves would be loath to be treated in the same manner. That the dismissal went ahead despite such considerations must therefore reflect at the very least tacit consent on the part of both cliques. A plausible reason posited by analysts is that both cliques viewed Bo and his potential third faction as a challenge to the existing arrangement.

This view is lent greater credence with the recent investigations of Zhou Yongkang, a former member of the Politburo Standing Committee under the previous presidency.[15] Zhou Yongkang is also seen as the patron of Bo Xilai and was previously involved in attempts to oppose Bo’s dismissal and subsequent trial. If true, this marks the first time that a member of the Standing Committee is subjected to formal investigations of corruption and abuse of power. That the family of former premier Wen Jiabao, who is seen as a member of the Tsinghua clique, has an equal amount of dirt that can lead to similar investigations must surely raise further questions as to why both cliques would have at the very least tacitly consented to the risky extension of investigations into the highest levels of power.[16] Once more, the view of a potential third faction within the Communist Party seems to be plausible. However, given recent events, it is perhaps also true to state that this third faction is not at the same level of the Shanghai or Tsinghua clique, and thus does not hold a similar degree of power or influence in policymaking.

About Zhenjie Im

Zhenjie Im is a former Junior Fellow.