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Political Gridlock, Beijing Style 2013-10-31 11:11:59 Release　Author：cuyoo　Read Flow：3177次: To admirers outside the country, China's political system stands far above the dysfunctional democracies of the West in one regard: its ability to act decisively and deliver results that boost economic growth.

Think of the flood of investment that enabled China to sail through the recent 'Great Recession,' the dizzying roll out of high-speed rail, or even the spectacular 2008 Olympics.

Why, then, on the eve of a crucial Communist Party meeting, are there so few indications that major economic reforms are on the way? Even though it is widely recognized that the economy needs a thorough overhaul, the Third Plenum of the 18th Party Congress--which will set China's economic course for the next decade-is expected to deliver only narrow reforms when it convenes from Nov. 9 to Nov. 12.

The reason is that, just as often happens in the West, the art of the politically possible will likely trump what may be best for the country's long-term economic interests. In other words, the Third Plenum is expected to produce just the kind of muddle-through compromises more associated with messy democracies--and starkly on display recently in Washington--than top-down authoritarian regimes like China's.

For that, many in China blame the power of vested interests. These wealthy and connected groups within state-owned enterprises and the upper echelons of the party are producing, some claim, China's own version of political gridlock.

Vested interests nestle at the core of a system that, in the past, has proved so capable at delivering economic growth: predictable, double-digit expansion, year after year.

But growth is now slowing. Local governments are shoveling credit into fanciful infrastructure projects in an effort to keep the momentum going. That's producing massive waste, and a sudden build-up of debt that some worry may be sowing the seeds of a financial crisis down the road.

The challenge facing President Xi Jinping is how to retool the system itself before it hits real trouble. But, like his Western counterparts, that means patiently trying to build coalitions, reaching out to public constituencies, isolating his opponents, and accepting compromises.

As a result, economists have been dialing back expectations of far-reaching change from the Third Plenum.

'They're going to be looking for a gradual transformation,' says David Dollar, formerly the U.S. Treasury's top official in China and now a senior fellow with the Brookings Institution in Washington.

'It was never likely that we'd see radical progress,' he adds.

Louis Kuijs, the chief China economist at the Royal Bank of Scotland, believes that the most detailed reforms will be offered in the area of financial services-a stronghold of reformist officials. There, Mr. Kuijs says 'the debate is over.' He expects further movement to liberalize the exchange rate and open the tightly controlled capital account.

Not surprisingly, perhaps, the area of the economy where economists have the lowest expectations is precisely the one where party control runs deepest: state enterprises.

That's despite the fact that industrial monopolies, cosseted by the government, pose the greatest threat to the development of a new Chinese growth model powered by private sector enterprise and innovation.

At a local level, vested interests link city-hall governments with the construction and real-estate conglomerates that bring them wealth. As a result, say many economists, reforms at the local level from the party meeting are likely to be only modest.

Few expect a significant relaxation of residency rules that would allow China's estimated 250 million migrant workers from the countryside to settle in urban areas. The effect of such a population shift would be transformative for the overall economy. But it's unpopular with city governments who would be saddled with massive costs in the form of education, health and welfare benefits.

Likewise, there is local resistance to land reforms that would give farmers stronger legal title to their fields. The present system suits city governments who fund their growth by taking over suburban farms-often through land grabs-and selling them at exorbitant profits to real estate developers.

Few doubt that Mr. Xi desires a faster pace of economic transformation. And it's still possible that he could spring a surprise at the Third Plenum by delivering a 'big bang' package of reforms that many thought likely at the start of his tenure a year ago. An editorial this week in the People's Daily, the party's mouthpiece, quoted Mr. Xi as calling for 'courage to breach the defenses of vested interests.'

For now, though, there's a gathering consensus that the meeting will deliver mainly high level commitments but not much in the way of concrete action. Among those anticipated commitments: a promise to expand opportunities for the private sector; to redefine the role of government as a provider of public services rather than an operator of business; to cut back on the bureaucratic steps needed for business licenses and approvals. All valuable, perhaps, but they will be directions rather than actions.

Recent commentary in the official Chinese media has been scornful of the failures of American democracy, as evidenced by the recent U.S. government shutdown. Xinhua news agency, noting the inability of American politicians to strike deals [Company Registration], went so far as to call for a 'de-Americanization' of the world to protect the international community from the spillover effects of political turmoil in Washington.

But increasingly it appears that when it comes to political gridlock getting in way of leadership, Beijing and Washington have something in common.

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Political Gridlock, Beijing Style