Chinese dream and China's governance

• The "reach" of the contemporary Chinese state is massive, and the ways it operates have a huge impact on developments in the economy, society, and most other spheres.

• The Third Plenum "resolution" lays out a substantive conception of directions of change in Chinese policy between now and 2020 that are exceptionally wide-ranging and complicated. On balance, these changes seek to enhance the importance of:

* market forces in determining the allocation and utilization of resources,

* the legal system in assuring basic rights and fair outcomes, o property rights in improving the assignment of responsibilities (e.g., in stewardship of natural resources),

* bureaucratic reforms (e.g., in leadership in the DIC system) to reduce corruption,

* and monetary and fiscal policy changes to shift incentives throughout the economy in order to create a more efficient, productive, fair, and sustainable set of economic and social outcomes.

The implications for governance of these changes are very complicated and in many cases potentially contradictory. I hope this is a topic that will receive substantial attention in the course of this conference.

• Nobody at this point can fully foresee either the changes necessary in the political system itself in order for these reforms to be implemented effectively or the impact on the political system of the outcomes of the reforms as they take hold and produce new economic and social realities.

One clear, consistent theme in this long and complicated "resolution" is that the Communist Part of China will strengthen its leadership in all spheres, the Party will enhance its policy of cadre management, and within the Party the Center will strengthen its role and its insistence on internal discipline.

• In short, the success of a more modern, well-educated, wealthy, internally and internationally connected Chinese population will depend on the wisdom, capabilities, and incorruptibility of Party cadres at all levels.

• This is a major challenge. It will require huge changes to the current realities within the Party, the current distribution of power within the political system, and the current incentives and practices throughout the polity.

• A great deal will depend on how Xi Jinping will actually implement the core features of the program he has laid out and how he will seek to create incentives and constituencies to support his programmatic goals. In sum, President Xi has now made very clear where he stands and where he wants the country to go under his leadership, and he has achieved wide-ranging endorsement of this overall program.

• But the polity is already massive, with complex internal structures, norms, incentives, principles, and existing policies and regulations.

• Navigating this terrain to produce the massive changes he has identified will require tremendous political skill and will inevitably generate many crises that will need to be managed and resolved.

• And the market itself will produce unpredictable and at times very unwelcome outcomes that will also require skillful political adjustments to keep things moving in the desired directions. Overall, the Third Plenum has given us in broad outline a fairly good idea of Xi's understanding of the Chinese Dream.

• This is a Dream that foresees massive adjustments in China's governance, even while maintaining the absolute supremacy of rule by the Party.

• It will require extraordinary skill to manage the politics of turning this broad Dream into operational programs that can successfully be implemented.

• And the implications for future governance – which cannot be predicted with any degree of confidence – will be determined not only by the strategy for implementing the Dream but also by the forces that develop as China's economy and society are themselves transformed.

 

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