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China's Premier Is Not a Reformer

Posted By Derek Scissors, Ph.D. On April 27, 2012 @ 1:10 pm In International | Comments Disabled

Both The Washington Post [1] and the Financial Times [2] have more front-page stories today on the seemingly endless saga of the fall of senior Chinese Communist Party official Bo Xilai.

These particular two stories claim that Bo’s ouster has boosted China’s economic reformers, led by Premier Wen Jiabao. This is a horribly misleading view of what to expect from China on economic policy.

It is true that Bo represented a camp that can be described as leftist populism—fighting income inequality and corruption (never mind Bo’s own corruption) through a kind of modernized soft Maoism. So the campaign to discredit him potentially creates more space for market-based reform. But it is manifestly not true that the Premier Wen is in any way an economic reformer—unless hypocrisy counts as reform.

Bo’s brand of populism did not emerge as a force in response to market reform. There hasn’t been much market reform, if any [3], for years. These years comprise the term of Party General Secretary Hu Jintao and Party number three and head of government Wen Jiabao. Wen’s predecessor as premier shrunk the state sector and made major concessions [4] in order to win World Trade Organization (WTO) membership. Wen’s reign has seen an expansion of state prerogatives [5] in every direction and constant effort to circumvent WTO requirements.

What has apparently fooled some people is Wen’s frequent calls for reform—economic and sometimes even political. This does not qualify Wen to be a reformer but merely a politician. When the government has been moving away from economic and political freedom for nine years and counting, how can the head of that government have any credibility in calling for more economic and political freedom?

A concrete example: state monopolies are arguably the core of China’s economic problems. Premier Wen seemed to have recognized this [6] in the past few months. He also recognized this in 2005, when the first announcement was made that state monopolies would be addressed. Since then, while he has been Premier, the problem has gotten much worse. No one should afford him credibility in these matters.

What are the implications of this? Bo’s fall means that it will be more difficult for populist pressure to make itself felt in policymaking. At the same time, the economic reform camp has become more active, anticipating the possibility of progress [7] with the new government—with no Wen Jiabao—that will take power starting in November 2012.

But the statist camp—the one that has governed China for the last nine years, the one that has Wen Jiabao as one of its leaders—is alive and well, having just crushed a rival in Bo. The statists have the huge state quasi-monopolies on their side. They have Party cadres and their children, who have made huge amounts of money over this period, on their side. (Not coincidentally, Wen Jiabao’s son is now head of China SatCom, a national telecommunications company.)

True reformers have lost every battle with this group while Wen has been premier. They may have more success with the new government. But the idea that Wen is now leading a reform charge is fantasy.


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2012/04/27/chinas-premier-is-not-a-reformer/

URLs in this post:

[1] The Washington Post: http://www.washingtonpost.com/world/with-bo-xilais-ouster-chinas-premier-pushes-reform/2012/04/26/gIQAvhoCkT_story.html

[2] Financial Times: http://www.ft.com/intl/cms/s/0/0b426bc4-8f97-11e1-98b1-00144feab49a.html#axzz1tG1K8VBE

[3] much market reform, if any: http://www.heritage.org/research/reports/2008/10/us-china-economic-dialogue-in-need-of-tough-love

[4] major concessions: http://www.brookings.edu/opinions/2002/1028china_lardy.aspx

[5] expansion of state prerogatives: http://www.economist.com/node/21541408

[6] recognized this: http://www.cpcchina.org/2012-02/13/content_14588499.htm

[7] possibility of progress: http://www.heritage.org/research/reports/2012/04/chinese-economic-and-market-reform-how-us-should-prepare

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