China's Changing Governance Model: Further Evidence of CPC Resilience

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China's Changing Governance Model: Further Evidence of CPC Resilience

By Denis Fred Simon (People's Daily Online) 10:32, November 19, 2013

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With the publication of the 60 Point Decision document on the Deepening of Reform at the Third Plenum of the 18th Party Congress, it has become clear that the Chinese leadership under the direction of Xi Jinping is committed to bringing about some fundamental changes in the governance of Chinese society and economy. Both the communique and the Decision document reveal a series of new initiatives that are designed to re-shape the administrative landscape for managing the economic system and handling social affairs. While these two documents do not introduce many still needed political reforms, they do provide ample evidence that regime leaders are willing to break way from the system of governance that, in many ways, has been in place since the founding of the People's Republic of China.

Perhaps the most significant is the change in the role of government in the overall management of the Chinese economy. The proposed changes will transform government in terms of its current overall dominance over the economy; markets will play the decisive role in governing the PRC economy, especially regarding the allocation of resources. The forces of supply and demand will become the drivers of economic activity at both the macro and micro level. Of course, the role of the state will not disappear and the government still will be present in many arenas. Nonetheless, we are likely to see markets replace government in driving labor markets, financial and capital markets, land use decisions, and the choices of products and services among both buyers and suppliers.

A second key area where governance will change has to do with the judicial system. Basically, in contrast to current practices, there will be a concerted effort put in place to create a separation between the legislative and executive functions of government and the judicial function. By introducing this type of meaningful separation, it is hoped that the impact of local government and politics will be reduced in terms of influencing judicial decisions. The goal here appears to be to ensure that all judicial decisions will depend on evidence and law rather than on the political desires and preferences of local officials. The opportunity for distortion of legal decisions will be greatly reduced.

A third area where governance will be affected will be in granting privately owned firms more opportunity to play a significant role in the economic system. By opening up the economy to more pro-active role of the by the private sector, the dominant position of state owned enterprises will be reduced. In essence, this means that market interests and dynamics will dominate over government prerogatives. While the Chinese government still wants to enhance the performance and productivity of state owned enterprises, it will be using market forces to put competitive pressures on SOEs rather than simply using government admonishment to secure better performance.

Finally, an additional area where governance practices will change involves the commitment to greater overall transparency in government activities and decision making. Greater transparency is designed to reduce corruption--one of the major threats to the long term viability of the current regime. Arresting corruption is not just desirable, but is vitally necessary for the government to win back the overall confidence of the people. The recent anti-corruption efforts against senior officials in SASAC and the Ministry of Railways are good examples of the ways in which the leadership seems prepared to tackle this urgent problem. 'Disciplinary inspection teams' now will report more directly to the central authorities and the old system of dual reporting will be changed. This is important to ensure that all cases, irrespective of who is involved, will be dealt with in a swift and appropriate manner.

Accomplishing all of these important changes in governance will not be easy, but the fact that they have been clearly articulated as part of the deepening of the reform effort indicates that the leadership understands the current challenges it faces as it seeks to promote continued economic growth and transformation of the economic structure. Reform in China involves attacking many vested interests; there are many stakeholders within the “old system” who stand to lose ground if these reforms move ahead. As suggested earlier, however, the current leadership has little choice but to move ahead in this direction. A number of years ago, the noted specialist on Latin America, Albert Hirschman, wrote a seminal article on 'reform mongering' to describe the failed attempts at reform in many Latin American countries. Reform mongering refers to the tendency to merely dabble with reforms rather than making a thorough commitment to comprehensive change. Xi Jinping and his colleagues seem to have recognized this potential when deciding to take a comprehensive approach to reform at this recent Third Plenum. While the initial communique seemed to have retreated from this commitment, the latter 60 Point Decision document suggests that the leadership in truly prepared to take on the various interests that might stand in the way of progress in changing China's governance system. There is clear intent to make China more of a country guided by the rule of law than the rule of special interests of specific individuals.

The 60 Point Decision document contains many of the core elements of the so-called '383 Reform Plan' that was announced earlier by the Development Research Center under the State Council. The 383 plan refers to the core elements of the reform effort: three actors--government, business and the market, the 8 key areas of reform--including governance, state assets, and public finance, and the three goals--easing the pressures for domestic reform, social inclusiveness, and reducing inefficiency, inequality and corruption. While there is no doubt that a number of these efforts will be slow to materialize, the future bodes well if, in fact, progress can be made in these areas. The Communist Party of China, no doubt, has faced many serious challenges to its authority over the last several years as corruption and inequality as well as government inefficiency have become undeniable problems. That said, it also is clear that the CPC represents a good case of organizational resilience. Like a select number of the Fortune 500 companies have been able to remain on the list of the world's most competitive and successful firms year after year, the CPC has found new ways to adapt itself to its changing circumstances and environment. In many respects, the newest reform effort carries as much weight as Deng's initial reforms at the Third Plenum of the 11th party Congress in terms of the potential changes being proposed. In the final analysis, therefore, the regime has outlined for itself a new path of development for the next 10-20 years, one where the statist nature of the regime will be relaxed and the market orientation of the entire system will be enhanced. Markets don't always work best, especially when they are not properly regulated. That understood, in contrast to the current situation where a massive, often inefficient bureaucracy still plays at dominant role at both the national and local levels, the new governance approach promises to increase social justice, open up the economy to greater competition, and ensure for the government a more solid foundation while building greater trust and confidence among the populace.

The author is Denis Fred Simon, Vice-Provost for International Strategic Initiatives of Arizona State University

（Editor：YaoChun、Zhang Qian）