The sentiment of Rahm Emanuel, ‘let no crisis go to waste’, resonates with anxious Chinese reformers. A sliding GDP and an overheated stock market, they argue, are measures of the headwinds battering reform and the need to renew forward thrust; failing which the vision of a new model lies out of reach.
State Council approves the ‘Yangtze River Midstream urban cluster plan’. Incorporating three existing clusters, it promotes integrated development to support the Rise of Central China initiative and Yangtze River Economic Belt. Ambitious plans however overlook basic geographical facts.
The CCP is buckling down. Amid public security crackdowns and continued reports of weakening economic growth, the mood at the March 2015 Two Meetings was sombre. Yet the weeks that followed saw diplomatic victory and delivery on a handful of reforms: steps toward granting local governments fiscal autonomy; marketising electricity prices; and liberalising deposit interest rates.
Environment policy continues to generate tension domestically, with the Ministry of Environmental Protection MEP caught in a never-ending game of snakes and ladders. It slid down a snake midweek with the massive explosion of a paraxylene plant in Zhangzhou, Fujian, before zipping up a ladder at week’s end by successfully blocking a major dam project on the Yangtze near Chongqing.
Electricity reform plan aims to deregulate electricity prices for industry by setting up an alternative market outside the NDRC price-controlled system where producers can sell outside their given quotas. Grid companies will not be able to influence price-setting in this market.
International enthusiasm for the AIIB is challenging US, EU and Japanese domination of the international financial order. At home, accusations that reform has stalled are soothed, without ceasing to simmer. A multi-front battle to centralise control over incorrigible localities and SOEs remained the unifying theme of March’s Two Meetings.
A spectacular success for Xi, for his AIIB investment bank, and for his westward development policies, the Boao Forum for Asia paraded buy-ins by the UK and up to 40 others. It rubbed salt into the wounds of the Obama administration’s ‘strategic error’ and is another indication of the challenge to the international financial order posed by China. But few noticed how far China bent over backwards on multilateral lending norms to appeal to AIIB’s OECD candidates.
MoF outlines plan to swap C¥1 tn off-budget high-interest maturing debt with longer-term lower-yield municipal bonds. A convincing move forward in addressing local debt, the restructure reduces local fiscal pressures in the short-term, frees up spending in other areas, and promotes financial transparency and accountability.
The career of Qiu He 仇和 sums up the China model and the tournament system in its heyday, the fat years of the Hu-Wen administration. Cutting him down, Xi and his attack dogs seek to cut themselves loose from a series of stains on the Party’s purity that culminated in the rampant brutality of Zhou Yongkang 周永康, Bo Xilai and their ilk. Qiu embodied a set of interlinked political and developmental models no longer in favour.