Page 156 - 2017 White Paper
P. 156
7 White Paper on the Business Environment in China
In coming up with a 6% forecast - if all reforms are Mr. Liu had been regarded by some foreign observers as
fully implemented — Mr. Rosen’s report focuses on “one of the people standing in the way of much-needed
nine “clusters” of economic and political reform aimed economic reforms”. The Chinese Communist Party’s latest
broadly at reducing centralized control over the Chinese move is to place permanent anti-graft investigators and
economy and opening it up to more market influence. In embed them inside key national government bodies like
all, Mr. Rosen’s analysis finds that “quiet progress is being the cabinet and legislature. Resident supervisors will,
made in some politically sensitive areas of reform”. Much for the first time, be stationed within the management
like Mr. Tao before him, Mr. Rosen said the starting point office of the State Council cabinet in the National People’s
for the reform agenda is“a more fundamental overhaul of Congress, in key central party offices, and “altogether
the fiscal relationship between the central government in all 140 party and government offices”, according to
and the provinces”. The current arrangement has allowed Xinhua (Lubman 2014).
“an imbalanced division of power and responsibility
between central and local authorities [which] has given It remains to be seen whether these political changes
rise to pressing misallocations of resources and provincial will help clear the way for the extensive and ambitious
resistance to central reforms”, Mr. Rosen wrote (Casey economic reforms to which President Xi’s government
2014). has committed.
On a more positive note, Mr. Rosen has added that his Li Chengyan, head of the Research Center for Clean
report has identified a pattern in most regulatory areas Governance at Peking University, sums it up best in the
that“evidence of follow-through was apparent in 2014”. In Wall Street Journal: “Comprehensively deepening reform
an interview with the Wall Street Journal, Mr. Rosen said cannot move forward without adequately cracking
he viewed the anti-corruption campaign orchestrated by down on corruption…. The two sides of the approach
President Xi Jinping as “a sign of a serious commitment complement and reinforce each other and cannot be
to shake up an inefficient and privileged bureaucracy”. separated.” (Lubman 2014)
That and the other political reforms “set the stage for a
more comprehensive overhaul that’s needed to shift the Keep on Keeping On
economy from its current, unsustainable dependence
on investment-led growth to a more consumer-focused Like fictional British spy James Bond’s martini, reforms
model”, Mr. Rosen said (Casey 2014). in China need to be shaken, not stirred.
So, the Chinese Communist Party leadership has This will require an effort by China’s leaders on three
committed to economic reform at the Third Plenum in significant fronts, according to The Economist: first,
2013 and to legal reform at the Fourth Plenum in 2014. speeding up financial liberalization so that credit goes
As Mr. Rosen stipulates, the anti-corruption campaign to the most dynamic firms, not the best-connected;
and other political reforms form the backdrop for the second, establishing and enforcing the rule of law so that
framework of overall reform and transformation of the all firms, state-owned or private, domestic or foreign,
economy. A critical question confronts the leadership at are treated equally; and third, trimming bloated SOEs
this stage: Can President Xi Jinping and his administration and encouraging competition and innovation across the
continue to press forward in aggressively tackling economy by encouraging the private sector.
corruption while also fiercely undertaking economic
reforms? An outline of a market-based financial sector is
now emerging and much more needs to be done. Last
Our conclusion is, they must – they have to – and they year, China’s leadership agreed on the importance of
should. “comprehensively advancing the rule of law”but progress
on the rule of law has been sluggish (Keck 2014). Caixin
President Xi’s anti-corruption drive has removed high- ran a compelling editorial back in June 2015, arguing
ranking figures such as Bo Xilai and Zhou Yongkang, the that, despite official promises, the private sector still
former security chief, along with Liu Tienan, deputy head suffers legal discrimination in market access, finance and
of the National Development and Reform Commission, investment. China needs “a transformation” to become
the principal agency for setting and carrying out more innovative and efficient, it said, which “requires
economic policy. According to the Wall Street Journal,
156
In coming up with a 6% forecast - if all reforms are Mr. Liu had been regarded by some foreign observers as
fully implemented — Mr. Rosen’s report focuses on “one of the people standing in the way of much-needed
nine “clusters” of economic and political reform aimed economic reforms”. The Chinese Communist Party’s latest
broadly at reducing centralized control over the Chinese move is to place permanent anti-graft investigators and
economy and opening it up to more market influence. In embed them inside key national government bodies like
all, Mr. Rosen’s analysis finds that “quiet progress is being the cabinet and legislature. Resident supervisors will,
made in some politically sensitive areas of reform”. Much for the first time, be stationed within the management
like Mr. Tao before him, Mr. Rosen said the starting point office of the State Council cabinet in the National People’s
for the reform agenda is“a more fundamental overhaul of Congress, in key central party offices, and “altogether
the fiscal relationship between the central government in all 140 party and government offices”, according to
and the provinces”. The current arrangement has allowed Xinhua (Lubman 2014).
“an imbalanced division of power and responsibility
between central and local authorities [which] has given It remains to be seen whether these political changes
rise to pressing misallocations of resources and provincial will help clear the way for the extensive and ambitious
resistance to central reforms”, Mr. Rosen wrote (Casey economic reforms to which President Xi’s government
2014). has committed.
On a more positive note, Mr. Rosen has added that his Li Chengyan, head of the Research Center for Clean
report has identified a pattern in most regulatory areas Governance at Peking University, sums it up best in the
that“evidence of follow-through was apparent in 2014”. In Wall Street Journal: “Comprehensively deepening reform
an interview with the Wall Street Journal, Mr. Rosen said cannot move forward without adequately cracking
he viewed the anti-corruption campaign orchestrated by down on corruption…. The two sides of the approach
President Xi Jinping as “a sign of a serious commitment complement and reinforce each other and cannot be
to shake up an inefficient and privileged bureaucracy”. separated.” (Lubman 2014)
That and the other political reforms “set the stage for a
more comprehensive overhaul that’s needed to shift the Keep on Keeping On
economy from its current, unsustainable dependence
on investment-led growth to a more consumer-focused Like fictional British spy James Bond’s martini, reforms
model”, Mr. Rosen said (Casey 2014). in China need to be shaken, not stirred.
So, the Chinese Communist Party leadership has This will require an effort by China’s leaders on three
committed to economic reform at the Third Plenum in significant fronts, according to The Economist: first,
2013 and to legal reform at the Fourth Plenum in 2014. speeding up financial liberalization so that credit goes
As Mr. Rosen stipulates, the anti-corruption campaign to the most dynamic firms, not the best-connected;
and other political reforms form the backdrop for the second, establishing and enforcing the rule of law so that
framework of overall reform and transformation of the all firms, state-owned or private, domestic or foreign,
economy. A critical question confronts the leadership at are treated equally; and third, trimming bloated SOEs
this stage: Can President Xi Jinping and his administration and encouraging competition and innovation across the
continue to press forward in aggressively tackling economy by encouraging the private sector.
corruption while also fiercely undertaking economic
reforms? An outline of a market-based financial sector is
now emerging and much more needs to be done. Last
Our conclusion is, they must – they have to – and they year, China’s leadership agreed on the importance of
should. “comprehensively advancing the rule of law”but progress
on the rule of law has been sluggish (Keck 2014). Caixin
President Xi’s anti-corruption drive has removed high- ran a compelling editorial back in June 2015, arguing
ranking figures such as Bo Xilai and Zhou Yongkang, the that, despite official promises, the private sector still
former security chief, along with Liu Tienan, deputy head suffers legal discrimination in market access, finance and
of the National Development and Reform Commission, investment. China needs “a transformation” to become
the principal agency for setting and carrying out more innovative and efficient, it said, which “requires
economic policy. According to the Wall Street Journal,
156
