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Curtis S. Chin (China Opening)

Mar 28, 2018

Forty years into a reform and opening process that helped unleash the power and potential of the Chinese people and that is most associated with Deng Xiaoping, the recent actions of the National People's Congress to abolish presidential term limits and adopt a "revolutionary" (in the words of Liu He, Xi’s key economic advisor and Politburo member) government restructuring plan suggests that China under Xi Jinping will be more about "consolidation, centralization and closing down" than about reforms and opening up -- consolidation of Communist Party authority under the centralized rule of a strongman leader and the closing down of perceived threats to such rule, whether from home or abroad.

Premier Li Keqiang may well have pledged to continue reform and opening-up, and People's Bank of China Governor Zhou Xichuan might have said China can be bolder with opening up its economy, but the short-term headline "reform" story with long-term consequences was the NPC approval of constitutional changes that will allow Xi Jinping to rule indefinitely -- a significant step back from term limits that had been put in place in part to prevent a return to the excesses and chaos that followed the Cultural Revolution.

Other, overshadowed reforms 40 years into the reform and opening up process may well include, per Bloomberg, "merging several ministries and agencies including the regulators that oversee the country's $43 trillion banking and insurance sectors." Here again, consolidation and centralization of Communist Party authority is the focus.

Whatever the views of the international community, my view remains the same: the world and the Chinese people will benefit from a more open China, and a China that is more committed to what I call the ongoing battle of the 'bric' -- the battle against bureaucracy, regulation, interventionism and corruption.

In the short term, the recent constitutional changes may be welcomed in China and provide the added near-term stability that established businesses and leaders prefer. In the long term, the verdict may well be very different should rule-by-individual supplant rule-of-law and hinder transparency, accountability and peaceful leadership successions.

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