Reform efforts target the government itself

0 Comment(s)Print E-mail Xinhua, November 7, 2013
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Government omnipotence, which has become an obstacle to efficiency after powering China’s staggering growth in past decades, is expected to be addressed in reforms outlined by the country’s new leadership for the next decade.

The market is widely anticipating plans on the transformation of government functions to be formulated at the upcoming Third Plenary Session of the 18th Communist Party of China Central Committee, known as a springboard for major national reforms.

“Letting the government manage everything had the merit of efficiency at a time when China’s economic aggregate and private production were both severely underdeveloped,” said Chi Fulin, head of the China Institute for Reform and Development.

But it has lost its advantage in today’s market economy, he added.

The Chinese government, local authorities in particular — with their roles as decisionmaker, investor, franchiser, regulator and supervisor all in one — has oriented the growth of the economy, which awed the world with two-digit expansion in the past 30 years.

This model, which once won praise because of its efficiency, has now become a target of public complaints, as it has interfered excessively with the market and society.

For example, in Zhengzhou City, Henan Province, an expectant mother surnamed Zhang had to make 20 visits to the local residential community this year to obtain a birth certificate for her soon-to-be-born baby.

For Kong Lingmin, a project manager at a real estate development company in south China’s Hainan Province, the biggest headache was the need to deal with many different government departments to get approval for the project, although the time taken for this has recently been reduced from six months to 10 working days.

Pollution, over-capacity, debt crisis

What’s worse, such practices have led to serious problems such as over-capacity, pollution, the local government debt crisis, and market malfunctions, raising the stakes for a weakening economy that has already faltered at a time of global economic distress.

Against the backdrop of today’s economy with its diversified players, the government-led growth model has increasingly hindered China’s ongoing economic restructuring efforts, according to Chi.

The old growth model has leftthe Chinese government with little choice but to carry out reforms that start with itself, added Wang Xiaoguang, a researcher at the Chinese Academy of Governance.

Growth of the world’s second-largest economy eased to 7.7 percent in the first three quarters of the year.

But there are signs that efforts to foster a more rational relationship between government and the market will be accelerated under the new leadership.

At a press conference in March after the new leadership took power, Premier Li Keqiang compared reducing government power to “cutting one’s own wrist,” to demonstrate his resolve to transform government roles.

The expression evoked a Chinese legend in which a courageous warrior severed his snake-bitten wrist to keep the poison from spreading all over his body.

Let the market play its role

At a September economic forum, Li stressed that the key to economic reform is to balance government, market and society, and let the market play its role to induce more vitality.

Past years have seen consistent efforts in China to adjust the role of the government.

Though noticeable progress has been made during this process, analysts say there is a long way to go for the Chinese government to become a de facto limited government.

“Today’s reform is more difficult compared to 10 years ago,” said Ding Yuanzhu, a researcher from the China National School of Administration, citing more entrenched interest groups.

The central government has scrapped more than 200 administrative approval items this year, but it still holds another 1,500. Approval items in the hands of local governments number as many as 17,000.

To target any of these powers means that the interests of some groups will inevitably be hurt, which puts the reformers’ determination and courage to the test, according to Ding.

“Reform at the present stage is essentially carrying out reforms on the reformers themselves,” said Chi. “By setting the brave warrior as an example, Chinese reformers have to emulate his courage and decisiveness, without which reforms are not likely to make headway.”

“The key lies in reforming the mindset of the cadre team,” says Ding. The spirit of reforms will percolate down and gain traction when cadres really understand and implement the reforms demanded by the central government, he added.

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