Is a new round of economic reform kicking off in China?

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“China under Xi Jinping,” a seminar series sponsored by the Stanford China Program and Center for East Asian Studies kicked off this month. The series will bring noted experts to Stanford who will analyze the new era initiated under Xi's leadership.
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Flickr/kevinthant

After the critical Third Plenum meeting in Beijing last November, China indicated impending changes to its economic and security policy in a 60-point resolution. Now the challenge is determining just how the Chinese government will attempt to implement its directives, leaving analysts to ask how significant and in what direction reform will go. As economic growth remains a priority, China will consider initiating realistic, long-standing policy changes to maintain its status as a global leader.

Barry J. Naughton, So Kuanlok professor of Chinese economy in the School of International Relations and Pacific Studies at the University of California, San Diego, considered this question and related topics during his visit to the Walter H. Shorenstein Asia-Pacific Research Center on January 9, 2014. His lecture was the first in a series on the meaning of the reforms coming out of the recent Third Plenum of the 18th Party Congress.

After introducing the context of the Third Plenum, Naughton evaluated what the resolution signals and offered his view on what it all adds up to.  He posed the questions: did the Third Plenum succeed? and should we understand the place of the Third Plenum in China’s future development?

Naughton put forth a guarded, but optimistic view of the November resolution by pointing out that while individual reforms might not seem major, putting all the reforms together, there is a lot of substance.  He stressed the breadth of the document, its inclusion of measurable policy targets, and its willingness to tackle the most complex and controversial subjects. However, Naughton also warned that the large agenda is one of the risks. 

Focusing on the need for further SOE reform, Naughton ended his talk with a proposal. He argued that, indeed, the reform agenda is plausibly achievable if new institutions are created to implement economic restructuring. This could include the abolition of existing supervisory organizations and the creation of competing wealth management agencies assigned with the task of turning the remaining unreformed SOEs into modern joint-stock corporations. Naughton proposed that a national wealth-restructuring task force be created to address these major problems facing China.

Having recently spent time at Tsinghua University in Beijing, Naughton draws from extensive hands-on experience with China’s political economy. Many of his publications, including his book The Chinese Economy: Transitions and Growth, remain standards in the canon of scholarship on China. Most recently, Naughton is the editor of Wu Jinglian: Voice of Reform in China released in 2013 by the MIT Press.

Co-sponsored with the Center for East Asian Studies, the Stanford China Program series, entitled “China under Xi Jinping,” will engage distinguished academics, policymakers, and thought leaders in discussion throughout the next few months. Noted experts will provide thoughtful conversation on the new era initiated under Xi’s leadership.

Jean C. Oi, director of the China Program, says of the series “The 3rd Plenum of the 18th Party Congress unveiled details of the reforms to come under Xi Jinping’s rule of China.  But how significant are they?  Are the proposed reforms sufficient to tackle the challenges that China faces?  Can they be achieved?  Are they contradictory?  These questions are all the more pressing given Xi Jinping’s seemingly divergent policy directions in the economic and political realms.  This series brings leading scholars to help untangle the 3rd Plenum reforms and shed light on where Xi Jinping is taking China.” 

The event series “China under Xi Jinping” will be reoccurring throughout spring, please refer to the Stanford China Program calendar of events to learn more and RSVP.