Xi Jinping’s Reform Leading Group: Two Years in Operation

In November 2013, the third plenum of the 18th Congress of the Chinese Communist Party (CCP) unveiled an extraordinary package of reforms covering six areas: economic, political, cultural, social, environmental protection and party building. In November 2014 the fourth plenum passed a resolution on comprehensively implementing the rule of law. In November 2016, the Politburo adopted the Thirteenth Five-Year Plan outline. These three plenums laid out the core reform programs of the Xi Jinping regime. The depth and breadth of this round of reforms are summarized by President Xi Jinping as “four comprehensives”: comprehensively build a moderately prosperous society, comprehensively deepen reform, comprehensively implement the rule of law and comprehensively strengthen Party discipline. The stated objective is to lay the institutional foundation for the next stage of China’s development.

On December 30, 2013, the Central Leading Group for Comprehensively Deepening Reforms (CLGCDR) was established as the headquarters for coordinating the implementation of the various reforms. With President Xi Jinping at the helm, the CLGCDR represents the largest re-centralization of power in recent history, altering the power distribution at the top and changing way the Politburo Standing Committee (PSC) operates. High expectations have been placed on the CLGCDR to end the 10 years of reform drought under the Hu-Wen regime. Three years have since lapsed and it is time to take a closer look at this powerful body.

Routine Operation

Table 1 outlines the personnel, organization structure and the job description of the CLGCDR. The first thing to note is that Xi Jinping not only personally heads the body but also that 4 out of the 7 members of the Politburo Standing Committee and 14 out of the 25 Politburo members have joined the CLGCDR. Li Keqiang, premier of the State Council, Liu Yunshan, who is in charge of running the daily affairs of the Party, and Zhang Gaoli, executive vice premier, are deputy heads of the CLGCDR. By the last count there are altogether 43 members from all major power centers of the Chinese political establishment. Table 2 describes the high caliber members of the group; through them Xi Jinping can reach and extend his authority over all parts of the party-state establishment.

On average, the leading group meets every month. The meetings are chaired by Xi Jinping, attended by the deputy heads and group members. Depending on the reform bills being deliberated at each meeting, officials from relevant departments or localities are invited to join. It is unclear as to how many of 43 members actually participate in each meeting on average, but so far Xi Jinping has duly chaired all 20 meetings and delivered a speech at each, highlighting the key reforms and giving instructions with regard to the implementation of the reform bills passed.

Reform Bills Passed

As outlined in Table 3, the 20 meetings in the past two years have deliberated a total of 108 reform bills. Most of them were adopted; some were retained for further revision, and a very few very important ones were delivered to the Politburo for final passage. Table 3 indicates that the reforms dealt with in these bills are extremely diverse; some are very important but some seem trivial. Most of the bills address nationwide reform issues but some deal with only local reforms. The timing and order of the bills introduced seem random and without clear linkage among them. The authors of these bills are not announced, nor are the specific roles played by the six subgroups. It appears though that they are drafted by the usual bureaucratic agencies or local governments, while the role of the CLGCDR is one of screening and balancing, and endowing the bureaucracies with the highest authority to overcome possible resistance down the line.

108 bills in two years, and each may contain dozens of reform measures; the Xi regime has so far witnessed the most reform-intensive era since Deng Xiaoping. Compared with the pace of legislation in Western democracies and considering the nature of some of the reforms outlined in these bills, the speed and scope of the Xi round of reforms are simply breathtaking. Such tempo is impossible without a body like the CLGCDR.

But of course there is the question of how well these reforms are implemented down the line. At the last CLGCDR meeting of 2014 on December 30, it was announced that all the 80 reforms proposed in February that year had been completed. In addition, the central bureaucracies of both the CCP and the State Council have completed another 108 reforms in their own areas of responsibility. Altogether 370 reform measures have been rolled out and are under way, which marks one of the most intensive periods in reform history.¹ There is no way to check the reliability of these claims, especially to what extent the reforms have been consolidated and how well they have integrated with one another. Empirical research is needed to sort this out. Here we take a look at the reform bills only.

The six areas of reform specified by the third plenum, namely, economic, political, social, environmental, cultural and party building, are not given equal weight. By far the political and legal reforms received the most attention, with 37 bills passed; a close second is economic reform, with 32 bills. 16 bills are related to social reforms, seven with cultural/educational reforms, six bills are concerned with the environment and five with party building. Eight bills are about the overall reforms or the approach to reforms.

In the area of political reform, building up the institutional framework for the rule of law has received the greatest attention, down to such details as the pay grade of legal assistants and rank order of police officers. The National People’s Congress terminated the re-education-through-labor law and passed the Legislative Law that provides the basis for legislative activities of local governments. Intellectual property rights courts are established in Beijing, Guangdong and Shanghai, while trial circuit courts of the People’s Supreme Court are set up in Shenzhen and Shenyang; pilot programs to decouple the jurisdictions of the people’s court and the people’s procuratorate from that of local governments is underway. The Letters and Visits system is being overhauled. Despite the great doubt thrown upon the Xi regime’s commitment to the rule of law by Western critics, these reform measures, even if only partially implemented, would constitute a major improvement of China’s legal system.

However, Xi Jinping has made it clear from the outset that China is to stick to the current political system and will not allow Western-style democracy; political reform is to better “integrate the Party leadership, the people’s sovereignty and the rule of law.” The sixth CLGCDR meeting deliberated on “the socialist consultative democracy.” A major program to build up think tanks was also on the agenda.

In the area of economic reform, China is entering a “new normal” of slower growth, and faces the challenges of changing its growth model and upgrading its industrial structure. The CLGCDR reviewed a landmark fiscal and tax reform package that was later approved by the Politburo. The package intends to improve the budgeting system and reform the tax system, in particular re-adjusting the fiscal relationship between Beijing and local governments. It specifies the mechanisms for local governments to borrow money and improves the transfer payment system. The new tax code is designed to stimulate the development of the service and nascent industries; the pilot program to replace business tax with value-added tax has been expanded.

The State Council abolished or devolved to local governments more than 700 administrative review items in 2014. Business registration has been made easier by allowing registration before proof of capital. Price control of 26 goods and services is either relaxed or marketized, including telecommunication, public hospital services, farm products etc. Five private bank permits were issued in 2014 and substantial progress made in establishing deposit insurance. In the rural sector new policies were adopted on farmland leased to peasant households, as well as collective land for business and residential usage. The goal is to allow land use rights to be traded on the market. This hopefully will increase the return to the farmer and allow larger modern farm businesses to emerge.

The Xi-Style Branding

Successful execution of reform plans depends on not only power and authority but also the leadership style of the top leader. President Xi is widely regarded as the most powerful leader since Deng Xiaoping. In addition to Deng’s pragmatism, Xi is also detailed oriented and systematic. As the chairman, his style has shaped the operation of the CLGCDR.

Systematic and comprehensive

Xi’s systematic and comprehensive approach is borne out by the ambitious reform package unveiled at the third plenum and, more recently, by “the four comprehensives” he proposed at the end of 2014. Unlike previous leading small groups that operated mostly behind the scenes, the creation of the CLGCDR, its main members and broad structure were announced with great fanfare. The year 2014 is branded as “reform year one” and 2015 as a “critical year of reform” when some of the most difficult reforms will be undertaken. The second meeting on February 28, 2014 rolled out 80 reforms and at the fourth meeting a seven-year comprehensive reform plan of 336 major reforms was drawn (2014–2020). The operation of the CLGCDR is marked by planning at the beginning, progress review in the middle, a review at the end of the year and a heads-up on the reforms in the following year.

Meticulous

The official media reported that for each of the 336 reforms in 2014 a detailed implementation plan was worked out: the timing, sequencing, the methods and measurable outcomes at each stage. Xi pledged from the outset that “We will not fire empty shells in the first year of reform; we shall get real!”² He emphasized “five in-places,” that is, the implementation plan must be in place; the implementing actions must be in place; the supervision must be in place and the outcome must be in place.³ As mentioned earlier, an inspection bureau has been created under the CLGCDR Office. Xi requires that, for each reform the subgroups of the CLGCDR, its office, the lead agencies and the participating departments must first establish an effective coordination mechanism so as to create synergy. The duties and responsibilities are to be clearly specified. The coordination must occur “simultaneously at the strategic, campaign and battle ground levels, and between long-term and short-term objectives.” Action plans should be detailed and executable. The execution of the plan must have a timetable for each item, effective supervision and guidance. Tasks are to be subdivided and assigned to relevant units responsible for the implementation. Frequent and broadly based consultations are to be conducted to solicit feedback for timely adjustments.⁴

Pragmatic

The Xi-style or approach to reform is problem-driven. To garner popular support, Xi advocates that progress should be measured by “the level of satisfaction of the masses.” Priority is given to issues that people are most concerned with. The Xiist approach also acknowledges the new social reality, that Chinese society is increasingly pluralistic and that there are new classes, new stakeholders, more conflicts of interest and conflicting demands. It acknowledges that in this round of reforms many status quo interests within the party-state establishment will be on the losing side. Overcoming their resistance and preventing them from hijacking or distorting reform measures is a critical test of his resolve.

Concluding Remarks

The CLGCDR, compared to the Central Leading Group on Financial and Economic Affairs (also headed by Xi), provides a larger platform to take on issues from almost anywhere and coordinate reforms in all sectors. Table 3 however also reveals randomness in the agenda of each meeting; for example, one would be hard pressed to think of a reason why football reform and the ranking and pay grade of police officers and legal assistants should be on the agenda of such an important body.

In terms of personality, President Xi is a strong leader and competent administrator. The massive recentralization of power successfully engineered by Xi provides the institutional means for fulfilling his vision and ambition. The CLGCDR has been operating smoothly so far. There is however still a question whether what he possesses now is enough. Xi has yet to assemble a team of capable reformers who shares his vision, and who has the synergy and ethos to work together effectively. Xi’s popularity comes mostly from his massive anti-corruption campaign, which has a chilling effect on the cadre corps that he has to rely on for implementing the reforms. In addition, the cadre corps of the CCP is mostly on the losing side in this round of reforms. Recentralization has constrained their power and reduced their control of resources; anti-corruption has stripped them of the many benefits associated with their offices; Xi has yet to find a way to translate his popularity into concrete support from the masses for his reform programs. Hence the fate of the Xi round of reforms is far from clear, even with his strong leadership and determination.

Notes

1. The 80 pre-set reforms of 2014 basically completed. (2014, December 30). People’s Net. Retrieved from http://politics.people.com.cn/n/2014/1230/c70731-26302482.html

2. Absolutely not to fire empty shell in reforms in the starting year. (2015, March 7). People’s Daily.

3. Xi Jinping: Find ways for the reform and make effort for the reform together. (2014, August 18). Xinhuanet. Retrieved from http://news.xinhuanet.com/politics/2014-08/18/c_1112126269.htm

4. Xi Jinping: Reform to central government must be up and running as soon as possible. (2014, January 23). Sina. Retrieved from http://finance.sina.com.cn/china/20140123/013218050013.shtml