The just-concluded Central Committee 4th Plenum sends a strong message. The Party fully understands how to rule China: Xi Jinping’s 习近平 political program now delivers ‘modern governance’. China need no longer consider external models. Economic, environmental and social issues are flagged in the small print, but do not attempt to break new ground.
Outside commentators made much of the fact that the meeting was delayed, but given the last plenum was convened ahead of time in February 2018, it was technically on schedule. Xi Jinping displayed his measured self-confidence. Any rumours of power struggle, in view of events in HK or the US-China relationship, are put to rest.
These gatherings typically promise policy responses to major challenges. A plenum in 1978 began China’s economic transformation. Another in 2013 saw Beijing dispense with many social shibboleths (including the one-child policy), slowing major economic reforms to secure state control. In February 2018, presidential term limits were lifted. The Fourth Plenum was not in this mould: its mission was to re-centre the Party, with the state responsive to its program.
policy trends
The program as delivered through the communiqué does, however, register some policy movement. We await the final plenum statement that will give us more details of the alignment of the Party’s moving parts.
In social policy new initiatives were declared in job promotion (seeking to mitigate large-scale layoffs produced by economic slowdown); life-long learning (replacing compulsory education); universal social security (to tackle the urban-rural divide and other inequalities); health system governance; and a focus on relative poverty. Absolute poverty, measured as annual income less than C¥2,300, is to be eliminated by 2020.
Environmental policy reiterated ‘ecological civilisation’, in line with Xi Jinping’s focus on the ecology of the Yellow and Yangtze rivers, essentially a policy of prioritising resource conservation and ecological protection in China’s polluted heartland, while underlining the interdependence of environmental protection and high-quality growth. This reaffirmation means that growing macroeconomic pressure will not distract the central leadership from its ‘ecological civilisation’ program, it will continue with aggressive inspections, regionally-integrated pollution control, and greater accountability. Environmental protection will also continue to be reconfigured as a testing ground for other institutional reforms.
Phrases in the communiqué, 'letting the market play a decisive role' (reframing a core theme of the 2013 3rd Plenum) and 'building a modern economic system', are further signs that recently intensified efforts to reform highly monopolised sectors (not least power and energy) will continue, albeit balanced with other concerns. State-owned enterprises will need to become more competitive and innovative, but will be entitled to significant support. ‘Indigenous innovation’ and ‘self-reliance’ continue to be themes, but mentions of opening-up and activity in global forums hints that the centre accepts that these are relative terms.
Promoting the ‘socialist economic order’ remained a key theme. A noticeable shift highlighted at the plenum press conference was the elevation of the so-called ‘three notions’ as China’s ‘fundamental economic institutions: distribution according to work, the coexistence of multiple modes of distribution, and the socialist market system’. All signs point to the government continuing to use measured fiscal stimulus, tightly supervising the real estate sector, and opening while simultaneously deleveraging the financial sector.
New technologies will play a large role in modernising governance: for the first time ’technology support’ was mentioned in a plenum communiqué. Undefined goals, such as sharing data, optimising e-government services and building a ‘social governance system…with legal backing and technology support’ signal that some ongoing pilots such as the social credit system, the grid-style social management system, and surveillance techniques, are likely to be rolled out nationwide. The communiqué also announced that ‘improving sci-tech innovation mechanisms’ is part of economic policy, and that reform of funding procedures in this sector will continue.
While no major pronouncements appear on the rural economy, structural reforms to raise productivity and quality are indicated. Closing the urban and rural welfare gap was mentioned; a flourishing economy in the countryside is needed if targets (such as building means and mechanisms to prevent a resurgence of poverty) are to be attained. Developing rural industries, creating non-farm jobs and improving village infrastructure were noted, but any new directions in agricultural and rural policy will be debated at the Central Rural Work Conference in December.
On trade, the Plenum’s focus on upgrading governance underlines the imperative to create a better domestic business climate. More efficient administration and cutting red tape, Li Keqiang’s mantra over recent years, were again to the fore. Free trade zones were noted as crucial, especially in terms of training more skilled youth and ensuring that prosperity generated there would spill over into areas that have benefited least from globalisation.
China-governance for the world
No geopolitical surprises were expected from a Plenum devoted to domestic governance, though a few were delivered. The term ‘China-governance’ (Zhongguo zhi zhi 中国之治), taking the China 'solution' to a new realm, and decisively superior to Western alternatives, hinted that this approach might tacitly shade into global governance. But the Plenum’s proposals to uphold and improving its independent foreign policy of advocating ‘peace’, development, cooperation, win-win, and so forth, travelled little beyond boilerplate terms in daily use since 2017. Still, the fact that the communiqué called for improving the Party's systems and mechanisms for leadership over foreign affairs hinted that the Plenum might well have discussed reforms in this sector.
The focus on modernising governance and enhancing capacity included the standard mention of risks. Party media continues to ratify Xi’s reforms and institutional restructuring in particular. According to the communiqué, ‘work has been completed’ to cope with current challenges. A ‘community of social governance’, where the state, social organisations, market entities and citizens are mobilised by the Party to negotiate and cooperate, was highlighted as providing safety, stability, and harmony. Public consultation may play a larger role, as the communiqué, having invoked Party leadership, follows with calls for the people to be ‘master in their own house’.