Chinese Communist Party Plenum Barely Addressed Corruption Problem

In the past, Third Plenums have been noted for delivering surprises, like the one in 1978 of the 11<sup>th Congress. That was when Deng Xiaoping effectively forced the early retirement of Chairman of the Central Committee, Hua Guofeng. The surprise was not simply the widespread policy changes that would affect China's society and economy to the present day, but for Hua and future leaders ousted from power, despite any offices they might hold, the comfort of knowing that their demise would not necessarily entail their imprisonment and/or death!

Now with a relatively young Xi Jinping having assumed the Chairmanship on 15 November 2012 being a year in office, this "fourth generation" leader was expected to use the Third Plenary Session to stamp his authority and set out his stall for economic and political reforms. Expectations were bolstered by Mr Xi's solid apprenticeship in various roles at Provincial level (Shaanxi, Hebei, Fujian and Zhejiang) including a Governorship, a reputation for pragmatism and hard work and experience abroad, which included a work-exchange trip in Iowa, USA in 1985.

It must be said that initial reactions of the world's waiting media to the final CCP communiqués were expressed in terms of "disappointment", "underwhelmed". Gwynn Guilford in The Atlantic on 12 November headlined her take: "How Xi Jinping Failed at China's Big Political Meeting".

What issues were the political and economic journalists expecting to be addressed, that appear to have fallen below the expected mark? In an earlier Atlantic article the day before the Plenary Session started, Rebecca Liao commented that Chairman Xi wants to be seen as Deng Xiaoping's successor: "a leader who puts China solidly on the path to sustained prosperity."

Outlining the main goals needed to achieve this, Ms Liao suggested that China must shift its current emphasis on investment towards greater consumption, thereby enhancing the middle classes and whereas the left-wing of the CCP want to see this done through state controlled programmes and welfare planning, the right-leaning President should have sufficient political clout to ensure this is achieved instead by using the capital and wealth creation of market forces.

Other changes require the reform of the giant state-owned enterprises (which Ms Liao concedes will be most difficult due to their power and anticipated resistance); improving rural land tenure and control, which in turn will mean the overhaul of China's Hukou/ household registration system - abolition would be better; and reform of the tax system.

It being unlikely that any statement from the Third Plenum will, except in the broadest of terms, indicate the seismic shift required by Chinese industry to move from its current export-led mission to concentrating on its domestic market, policy changes could be made to work in a shorter time frame on a couple of social aspects that Ms Liao brings up.

The problem with the state-owned enterprises is that they tend to crowd out resources from the more efficient private sector, have the security of state funding giving them an unfair advantage to cheap loans and are open to "jobs for the boys" and other practices not to be encouraged.

As to land tenure, in China all urban land is owned by the state and all rural land by collectives, and is governed by a Land Use Right (LUR) tenure system. This current system came about in 1986 and basically means that the land user may own the buildings and any improvements made thereon, but never the land. Chinese familiar with the UK will tell you that their system is a variation of leasehold property under English Law. Mmm, I'm sceptical about that.

Land for residential use typically has a term of 70 years LUR, individual rural holdings generally do not have a time limit set and land contracted for peasants' collective ownership, to be used for crop farming, forestry, fishery production and the like, has a term of 30 years.

The system is logical enough but, especially since the rapid expansion of China's cities during the past couple of decades, abuses arising from issues such as compulsory land acquisitions, adequate compensation, appeals processing (or not) and resolving disputes in general, have all engendered serious discontent throughout China. Some of this has been broadcast in TV bulletins in the West through mobile and web footage.

China's Hukou/household registration system has been established in one form or another for over 3,000 years, so before the first imperial dynasty united the whole country, and was established by central governments for tax collection, conscription among other purposes and for the same reasons that governments today analyse statistics.

Registration also kept people born on the land to stay on the land so that adequate food supplies would be available in theory and any movement to the town or cities would be done only with the approval of the authorities. No change then!

Barring a few tweaks like being able to get a temporary residential pass to work and stay in a large city (not many city dwellers are keen to return to the country) little is different. The trouble is that possibly as many as 300 million have left the countryside over the past decade or so to live in larger towns and cities and they are not entitled to most of the welfare provision and state services in that community.

Their entitlement remains back at their home village. Often children are not allowed to join parents and stay with relatives - usually grandparents. If the economy slumps, as happened in 2008-2009, these migrant workers will be ordered to return to their home communes. Such was the fate of 30 million blue-collar workers during the recent world slump and credit crunch.

The social problems arising from this system include the stress of living in cramped living quarters, often in cities like Shenzen in dormitories, no family life, long hours of work and for single adults, inability to find a partner willing to commit to a person with the "wrong" registration papers.

Needless to say, the system is wide open to abuse but another aspect was highlighted in an article on juvenile crime in The Economist on 26 October. The article noted that there are now an estimated 60 million youngsters "left behind" and:

"...Two-thirds of juvenile offenders in the 2010 national survey came from rural areas, up from just over half a decade earlier; and many of China's bigger cities, where rural migrants account for a substantial portion of the young population, they can account for as much as 90 per cent of juvenile offenders."

Ms Liao was not naïve enough to suggest that there would be any political reform in the Western sense and noted that since coming to power, Xi Jinping has increased censorship and lately, re-introduced Mao-style sessions of self-criticism.

Mr Guilford was encouraged that the CCP's communiqué got off to a good start. It said:

"The core issue is properly handling the relationship between the Government and markets."

But any enthusiasm quickly dissipated and with good reason, when he quoted the continuation:

We must stalwartly consolidate and develop the public economy, insist on the core role of public ownership, allow the state-owned economy to play a leading role, and unstintingly strengthen the state-owned economy's vitality, dominance and influence."

Did Mr Guilford expect anything else from Hua Guofeng? Sorry, a slip, Xi Jinping?

Wait however! The official communiqué did not reveal all and two days after the formal closure of the Third Plenary Session, wrong-footing more than one journal, a further bulletin was issued with clearer proposals.

The biggest reform will tackle that inequitable household registration system and promises "fully equal treatment" for migrant workers, particularly important in terms of their access to health and education services.

There is however a sting in the tail, due partly at least to cost considerations. The programme will be rolled out at county, town and mid-sized city level first and there is no time set for when the programme will apply to China's bigger cities - and China has dozens of them.

Secondly, there will be a relaxation of the one-child policy which currently permits parents having two children only when both parents were themselves, only children.

No doubt this has come about because China's working population shrank for the first time in 2012 - a couple of years before expected - whilst its old-age population is now 13.5 per cent. This though is more a psychological victory where many, even in China think the state has no business and where, as people become more affluent, there is less desire to have more than one or two children anyway.

There was some tinkering with the state-owned enterprises, though nothing dramatic; on freeing up land and establishing firmer legal rights, reducing the number of crimes with a mandatory or customary death sentence and abolishing China's "gulag" prisons where many have been incarcerated for years without trial.

Why was this not announced in the official communiqué? The CCP knows best.