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The Third Plenum: Initial Disappointment

Nov 14, 2013
  • David Shambaugh

    Gaston Sigur Professor of Asian Studies and Director of the China Policy Program, George Washington University

China watchers the world over are underwhelmed by the immediate outcomes of just-concluded Third Plenary Session of the 18th Central Committee. After months of heightened expectations—which the Chinese government did nothing to damp down—the four-day plenum attended by 373 Communist Party delegates concluded in Beijing on November 12 by issuing a bland, boilerplate communique.

David Shambaugh

The document was filled with familiar propaganda slogans and vapid prose such as “…emancipate the mind, release and develop productive forces, release and strengthen social dynamism, resolutely get rid of all aspects of institutional shortcomings, and make diligent efforts to develop even broader prospects of the cause of socialism with Chinese characteristics.” Sentence after sentence, paragraph after paragraph obscured rather than illuminated the deliberations and outcomes of the leadership conclave.  Even to veteran China watchers attuned to such Party-speak, this communique was more opaque and boring than most.  It is largely a compilation of regurgitated catch-phrases and slogans that have emerged since the 16th Party Congress in 2002. The CCP Propaganda Department certainly earned its salary with this communique.

Such staid and stale prose is unfortunately symptomatic of the sclerosis in the Chinese political and economic system in recent years—both of which began to freeze up in 2009. The Fourth Plenary Session of the 17th Central Committee, held in September 2009, was the last reformist Party meeting held.  That plenum issued a progressive communique on political reform, which was immediately shelved as the CCP entered a four-year freeze that has lasted to this day. One can argue that in certain policy areas, the relative immobilism began even earlier in 2006-2007. Since Xi Jinping, Li Keqiang, and other new leaders came to power a year ago, there have been few substantive new departures. Yes, the anti-corruption rhetoric has ratcheted up, the Bo Xilai scandal has been disposed of, and Xi has been quite active in his foreign diplomatic forays. But, truth be told, very little of substance has changed during their first year in office—thus continuing the policy sclerosis dating to at least 2009. Indeed, in some areas such as suppression of dissent and the internet (weibo), there has been retrogression from the already dismal situation at the end of Hu Jintao’s term. Acute social inequalities and ethnic unrest have deepened.

Meanwhile, a plethora of chronic structural economic problems have festered for years: financial sector distortions; underfunded local governments straining to provide public goods to needy populace; a biased tax collection and redistribution system skewed in favor of the central government; overleveraged banks with spiraling debt; all-powerful state-owned enterprises (SOEs) that monopolize many key sectors of the economy; an urban housing bubble about to burst; restrictive rural land holding tenancy and property market; an outdated hukou residency system contributing to  a swelling migrant population without a real labor market; rising unemployment among university graduates; a not fully convertible renminbi; uncompetitive multinational corporations doing poorly abroad; pervasive corruption through society and the state; an environmental catastrophe plaguing air, water, and soil; and many other pressing socio-economic problems.

These are the issues the plenum was supposed to wrestle with and address head-on.  The communique, however, offers only a few vague hints of policy initiatives in these areas. There was some discussion of improving rural land rights, reforming the tax and budget systems, allowing the market to play a “decisive role in allocating resources,” improving the “judicial structure,” and enhance the “non-public sector” of the economy.  Perhaps—and quite likely—we will get some more specifics when the “Decision by the CPC Central Committee on Several Major Issues Concerning the Comprehensive Deepening of Reform” is subsequently released. This potentially important document, which is still to come, was noted in the communique.   It will no doubt spell out many of the details lacking in the communique and sought after by foreign China watchers and Chinese alike. But the “devil will be in the detail.”

It will also be in the implementation of proposed new initiatives. China is no democracy, but it has strong vested institutional interests—which are likely to block and undermine attempts to reform certain sectors (notably SOEs and state banks).  No matter how serious the Xi-Li leadership may be about tackling China’s many chronic problems (and it remains uncertain that they are serious), they face enormous inertia and entrenched vested interests, inside and outside the Communist Party, that will blunt most attempted changes. They also sit atop an authoritarian political system that many observers consider to be very fragile. The Soviet collapse still hangs like a heavy thundercloud over the CCP.

Finally, the plenum communique did mention the creation of two new high-level leadership bodies: a “Commission on National Security” (which will focus primarily on internal security matters) and a “Leading Group for Comprehensively Deepening Reforms” (with an unclear mandate).  How both of these bodies will function and relate to already existing leading groups and commissions remains to be determined.

While there are more important details still to emerge from the just-concluded Party plenum, and we should not rush to judgment, nonetheless the initial consensus of most China watchers is that the Third Plenum fell far short of its hyped expectations.

David Shambaugh is Professor and Director of the China Policy Program at George Washington University and nonresident Senior Fellow in the Foreign Policy Studies Program at the Brookings Institution in Washington, D.C. 

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