The recently concluded third plenary session of the 17th Central Committee of the Chinese Communist Party (CCP) (October 9-12) ended on a sober note. There was much to be celebrated – the successful holding of the summer Olympics where China topped the medal list, followed by the hosting of the Paraolympics and most important, the successful space walk by a Chinese astronaut, known as taikonaut, aboard the Shenzou VII space craft. These were mentioned, but other issues clouded the plenum.
The communiqué issued at the end of the plenum acknowledged a serious challenge facing the country that has been generally painted over till so far. It is the rural sector where the country’s 800 million of its 1.3 billion population live. Significantly, on the second day of the plenum i.e. October 10, the Shanghai Daily reproduced a section from the World Economic Forum’s (WEF) Global Competitive Report 2008-2009 which said western and north-eastern regions of China were lagging in development with wide spread absolute poverty, approximately 128 million people living on less than US $1 per day, without access to clean water or sufficient education and health care. In terms of efficiency enhancement, the report noted some serious shortcomings, with the financial sector ranked at 109 among the 131 countries surveyed.
The WEF report also noted positives for China. For example, it moved up four places to the 30th position in Global Competitiveness Index. But it was also noted that China’s remarkable showing in GDP ($3.3 trillion), foreign exchange reserves ($1.8 trillion), and high domestic savings “should not deemphasize the enormous challenges that face China is maintaining its competitiveness”.
It is known that such reports by international organizations are usually careful not to upset large countries, and China is about to step into the G8 + along with India. At the same time, an official newspaper under the control of the Shanghai government and party committee carrying such a report at a crucial time is certainly not routine.
In another development of note, the CCP mouthpiece, the People’s Daily, commented (September 28) that young professionals joining the system at high levels with proper ideological education and commitment had created a situation where young cadres were being corrupted, who would be used in th future in power politics and making money. The newspaper was quoting a party Central Committee report.
Another analytical report in the run up to the plenum suggested that erstwhile party General Secretary Jiang Zemin had brought in senior experts into the party fold to improve economic efficiency, but after he retired things began to go wrong.
These, and other reports could only suggest that problems within China are rising, and these developments appear to have opened up the otherwise dormant power struggle between Jiang Zeman’s Shanghai faction emphasizing on the coastal region, and Hu Jintao’s Communist Youth League (CYL) faction emphasizing on rural development. In March this year, Jiang Zemin had openly criticized the energy policy of Hu Jintao leadership, an issue extremely important for the industrialized coastal region of China. The differences seem to have become sharp enough to adversely affect the development and stability paradigm of the country.
The neo-liberal nexus of party officials – bureaucrats – business interests have worked only on profit motive, with corruption playing the role of the engine. This is exactly what the People’s Daily observed.
It is not surprising that the plenum basically concentrated on rural reform. Only small and selected news about the deliberations during the plenary meetings was released. The published plenum document, delivered by Hu Jintao, frankly admitted that “The country was facing challenges in its rural development and reform”, and promised to tackle the problems firmly. At the same time the document may have failed to inspire confidence among the people when it said “new concepts and ideas” would be worked out and the government would “try to make a breakthrough” in reforming the rural system. Efforts to uplift the situation include education, health care, employment, housing and pension sectors.
The only definite decision that came out of the session was doubling the per capita “disposable” income of rural residents by 2020 from the 2008 level. A big task, but China has delivered on even bigger promises in the past.
China’s vast rural regions suffered from years of neglect to build the country’s power show-room in the coastal region. Late paramount leader Deng Xiaoping had hoped that the development of the coastal areas would flow to the interior. This, unfortunately, did not happen. In fact, the urban real estate mafia in collusion with party officials, bureaucrats and the police almost literally robbed farmers and rural residents of their land. The government is moving to enact a compensation law to ensure that owners are paid fair compensation when the state takes over their land.
This year celebrates the 30th anniversary of late leader Deng Xiaoping’s declaration of the “reform and opening up” policy. Deng focussed on liberating the rural forces by breaking the commune policy finally and introducing the system where a farmer could lease land from the state and cultivate it. The farmers were given a partial free market for their produce. The rural sector started on a fast paced growth.
Unfortunately, further reform has come to a stop in China. This despite the promise of greater transparency and political and economic liberalization by Hu Jintao. Development has stagnated because without further political reform, economic reform would not be possible.
In the run up to the plenum there were discussions about allowing farmers to lease out their land to others for cultivation. The farmer may continue to work on the land or seek some other employment. It would depend on the agreement between the two parties. This, however, did not find a mention in the plenum report suggesting serious disagreements, and signalling opposition from hardliners in the Central Committee. This decision was apparently adopted by the Politburo after the plenum was over.
The review of the economic situation was not effusive, but guarded. The effect of the global financial meltdown on China’s economy was taken note of, but carefully in order not to raise panic. But immediately after the plenum, a Hong Kong owned toy factory which supplied to top international brands like Mattel, closed down, putting more than seven thousand workers out of jobs. China’s is basically an export driven economy, and it cannot escape global depressions.
Recently, China has suffered some battering over their quality control of its products. Three major incidents were discovery of toys that had harmful chemicals, harmful preservatives in exported preserved food stuff, and baby milk food contaminated with melamine. A lesser country’s export market could have been ruined, but it is in the interest of many to keep China afloat.
The dislocation between the Central government in Beijing, and the local governments has become acute. For the best part, laws and rules remain in the books. While social unrest has been growing, the CCP and the Central government have returned to the old ways of brushing problems under the carpet. Factional sniping has added to the problems.
China’s fortunes do affect the world in some way or the other. Serious political problems in the country is also reflected in its foreign policy. These are issues that countries involved with China economically, politically, and with territorial issues need to look out for.
( Courtesy: South asia Analysis Group.The writer, Mr Bhaskar Roy, is an eminent China analyst, based in New Delhi).