China's master plan - Xi Jinping's 'profound revolution' seems geared towards the welfare of the people

Those familiar with the practices of Communist parties would know well that their plenary sessions called Plenums flow from the theoretical conjectures made in the main party congress.
The Third Plenum of the Communist Party of China’s 18th Central Committee that concluded on November 12 outlined policy changes that are being introduced in several sectors of the Chinese economy and polity.

Looking beyond the old homilies like China is building ‘socialism with Chinese characteristics’, General Secretary Xi Jinping announced the ‘Master Plan’ in this Plenum which he likened to yet another ‘profound revolution’. The core of the reform is to straighten the relation between the government and the market. This means that reforms need to go far beyond encouraging capitalism gradually as the Chinese have been doing and move to reform vested interests, increase rights, justice, accountability and transparency. Two new institutions — one for deepening reforms and the second a state security committee — have been set up. But what will be the impact and implementation of this master plan will only be known after the semantics are over and the results evident.

As was expected, this Plenum announced that financial regulations are being redesigned to facilitate investments and integrate further into global finance. Private capital has been given the go-ahead to set up small and medium-sized private banks. But at the same time the Chinese government will also enhance regulation through taxation. Economic decentralisation has been furthered by transferring over 200 items that earlier required central approval to local governments.

Small businesses are being encouraged since these can now be started with a minimum investment of about $4000. The intention of setting up free-trade zones was also announced.

However, the experience of many countries like India have shown that such zones encourage oppressive labour practices since they are exempt from labour laws. The Plenum of course does not mention this, as the focus is mainly on growth as opposed to growth with fair polices towards labour.

The most awaited reforms are projected in the rural or farm sector. As of now, half of the Chinese population lives in rural areas. But they only have limited property rights over their own houses and cannot sell these in the open general market. The same law does not prevail in urban areas. This means rural property values could neither be preserved nor rise, whereas urban property costs are not only very high, but attract rural folk who continuously are forcefully stopped from migrating and wanting to buy only urban homes. This phenomenon has been creating social crises based on rural-urban inequalities in terms of asset values and other amenities.

The unnaturally high value of urban land, the Chinese master planners felt can also lead to the creation of economic risks like when housing prices collapsed in the US. The Third Plenum is addressing this by stating that land in cities and the countryside which can be used for construction will be pooled into one market. This they believe will make the farm sector more attractive as an investment destination for the people. However experience has shown that agricultural land gets value with increased productivity, better management and other facilities.

Interestingly, the Plenum talks about democracy and declares that the Chinese judicial system will be strengthened to ensure rights for citizens. Justice is the heart of democracies. The justice system in socialist countries in the past and in present China is known to be in the grip of the Communist Party. The trial of former popular mayor Bo Xilai in the recent past, pointed to this. Real justice would mean autonomous, open, transparent, fair and quick/time bound (not delayed to the extent of being denied).

So if Xi is a real reformer, he should not just be reforming the economy, but also changing the structure of the political system to make it more accountable. It is in this context that this Third Plenum announced a stronger social policy, guaranteeing people’s livelihood, increased social security, improved housing guarantee schemes. Further, China’s enforcement of the decades-long one-child policy is to be loosened to allow two children. As part of human rights, the policy of ‘re-education through labour’ system, which has long been critiqued as forced labour, was also abolished. Capital punishment is to be reduced, gradually.

An editorial comment in the Chinese Peoples Daily-Global Times argued that history has shown that a country can be struck down if it does not have physical power, but without soft power it can collapse on its own. It is clear that Xi Jinping is looking inwards just as much as outwards for consolidating the power and stability of his Party as well as of the Chinese State.  

Third Plenums of the CPC have been famous in their history for making dramatic changes. For example in 1978, when it was the 11th Central Committee’s Third   Plenum, Deng Xiaoping initiated China’s modernization drive and in 1993, the Third Plenum of the 14th Central Committee declared the “socialist market economy”.

The Chinese are, however, in no hurry to make radical reforms at one go. So the state sector was declared as one of the pillars of the economy. There is no doubt that the reforms of this Third Plenum are significant and of historic importance. The economic reforms announced are part of the continuity of the past. The social and political reforms have the potential for yet again changing the course of Chinese history and creating more socio-economic space for the Chinese people.

But at the same time, just like in other social and political systems, there are always vested interests that can stop such changes. Will China be able to take its people along the way of these new paths? As the saying goes, time alone will tell if this Third Plenum and its new master plan become as historic as the earlier ones.

The author is professor with the school of International Studies, Jawaharlal Nehru University