C&B Notes

Mr. Xi’s China Dream

Soon after his rise to the top of the Chinese government, China’s newly appointed leader Xi Jinping has made a point to emphasize the need for economic and market reforms that include anti-corruption efforts and greater government transparency.  Mr. Xi’s political will is likely to be tested early and often as vested interests have a lot to lose if the status quo is upset.

Xi Jinping, China’s new leader, has issued a rousing call for fresh economic reforms, using his first official trip outside Beijing to visit the southern province at the forefront of the country’s economic transformation over the past two decades…  The five-day visit to Guangdong province and the cities of Shenzhen and Guangzhou which concluded on Tuesday is rich in symbolism.  Deng Xiaoping’s 1992 “southern tour” launched the reform program that triggered the acceleration of China’s economy.

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The World Bank and others have warned that China needs to embark on a fresh round of reforms in order to avoid falling into a middle-income trap and seeing its development stall.  Many investors are concerned that without reforms to ease the state’s grip on the economy growth could slow more sharply.

Mr. Xi is hardly the first Chinese leader to talk about the need for reform.  But the tone of the pronouncements emerging from his weekend trip has been more forceful than those employed by past leaders.   Among some China watchers that has stoked optimism that long-delayed needed updates to economic management, from freeing up the household registration system to making government budgets more transparent, could be in the pipeline.   Yet others point out that since taking his new role as Communist party head last month Mr. Xi has yet to introduce any substantive policy changes.  “Lots of Chinese are very positive about Mr. Xi and now have very high expectations,” said Dong Xian’an, president of Peking First Advisory, a consultancy.  “I’m a little more prudent.  There’s a big difference between talk and action.”