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Revising Reform: China's New Leaders and the Challenge of Governance

As the Chinese Communist Party (CPC) undergoes its latest transition of top leaders, there is an opportunity to reflect on the challenges that this "fifth generation" of leaders face. Each generation of leaders has had to deal with problems left from the past. For the second generation of leaders, notably Deng Xiaoping, this meant undoing the damage of the Cultural Revolution. It entailed rebuilding the CPC, ending the class struggle and mass mobilisation policies of the Maoist era, beginning the reconciliation of state and society, all for the ultimate goal of pursuing economic modernisation. Jiang Zemin and the third generation of leaders had to undo the damage of the 1989 demonstrations and the partial economic reforms of the 1980s. The policies of the 1990s, including increased economic liberalisation and integration with the global economy, resulted in rapid economic growth but also growing inequality and reductions in the state's commitment to providing social welfare. These problems in turn shaped the policy agenda for the fourth generation of leaders, symbolised by Hu Jintao and Wen Jiabao. They began a shift away from the coastal development strategy of the 1990s so that other regions of the country could benefit from the policies of reform and development. Changes in investment and tax policies were intended to raise the prosperity of the central and western provinces and the countryside while still maintaining high economic growth. Despite this emphasis on balanced development, however, inequality continued to grow and popular protests against local growth-oriented policies continued to increase. Now that the fifth generation of leaders is taking office, they are inheriting a policy agenda that is shaped by past decisions. They must address a society and economy that is now in transition. The shift in priorities can already be seen, in some ways subtle, in some ways pronounced. There will be more emphasis on domestic consumption as an engine of growth and less reliance on expanding exports and building infrastructure. There will be more resources devoted to providing more public goods, such as healthcare, education and social welfare, and less shedding of state commitments in these areas. There will be more concern for governance and public participation in the policymaking process. The fifth generation of leaders will not fully abandon the policies of the past. Instead, they will change the policy priorities and how they pursue them. Put together, these new priorities entail a significant change in China's model of development. Just as China is updating its development model, scholars and policy-makers will have to update their assumptions about China's future trajectory as well. A successful updating of the China model would create a new scenario for China's future: the prospect of a modern, evolving, but still non-democratic power. This is a worrisome scenario for those who fear China's rise; for those who look at China's domestic affairs, a stable regime committed to governing better and enjoying a significant degree of popular support is a more appealing scenario than the more common predictions of collapse, stagnation or muddling through. In this article, I look at three key areas of policy change: the reliance on the state sector of the economy, the promotion of a consumer-oriented middle class and the incorporation of new societal actors in the policy process. Although these changes are in part interrelated, they are best viewed individually because they have different motivations, policies and implications. THE DRIVE FOR NATIONAL CHAMNONS The "China model" is a broad and ill-defined concept. In fact, many in China deny there is a model at all, other than pragmatic adaptations to changing conditions. China's leaders have repeatedly claimed they do not have a blueprint for economic reform, but are simply "crossing the river by feeling for stones". However, this is slightly disingenuous. …