This Quarter's Summary - Winter 2021
The idea of a “dashboard” to gauge Beijing’s progress in implementing its economic reform plans was born from the hopeful Sixty Decisions of the Chinese Communist Party (CCP) issued in November 2013. The Party Decisions, accompanied by a personal essay by President Xi Jinping explaining them, committed to make markets the “decisive” factor in the country’s long-term economic direction. As optimists cheered and pessimists snickered, we set out to track implementation to see if China actually did it. We began in late 2015 with design work and then published quarterly evaluations from the fall of 2017. This winter 2020–2021 edition is the last in a five-year program. We offer final observations on the march from 2013 pledges to 2020 deadlines, a look at new policy announcements at the margin today, and our perspective on the future.
Yesterday: Avoid the Blind Alley
Observers were unsure what to expect of Xi Jinping when he came to power in 2012. The global financial crisis had disrupted growth, triggering a wave of stimulative debt that was undermining productivity. Internal politics were a challenge, with powerful vested interests able to block needed reforms just as the middle-income trap arrived. Some intellectuals advocated liberal solutions for the economy administered by a regulatory state. Other so-called ”new left” voices counseled a more doctrinaire course emphasizing China’s brand of Marxist-Leninist authority. President Xi’s inaugural economic plan issued in November 2013, discussed at length in our report Avoiding the Blind Alley, had something for both sides. There were hundreds of pro-market objectives, but a commanding role for the state was retained as well. On the whole, the plan’s liberal elements were a surprise on the upside. We surmised this was intentional: expectations like these are not set by accident or as a feint.
Seven years have passed since then. Efforts to make good on the Decisions have come and gone, and in some cases come again. Reforms have generally been halted when they led to instability, which is most of the time. Industrial policies such as Made in China 2025 grew ever more heavily weighted in explaining China’s directions as the counterbalancing role of reform diminished. And over these seven years, with China breaking the $10 trillion GDP mark in 2014 (approaching $15 trillion today) and now taking off as a global direct investor, the less-liberal forces shaping outcomes inside China have begun spilling ever more quickly abroad.