China, a new spirit is emerging

(Les Echos, 15, march 2004)

The style is indisputably rounder, the words less brutal, the speech less technical. Assuredly Wen Jiabao, the Chinese prime minister, who took his charge exactly one year ago, does not have to force his character to appear different from his predecessor, Zhu Rongji. His own way, he managed to imprint his stamp and that of the president, Hu Jintao, on the annual parliamentary session, that ended yesterday. The first real parliamentary meeting on the agenda of the new team is quite instructive, in several ways. Of course, as always, the parliament session was the occasion for a vast communication campaign. In that sense 2004 was up to tradition. Orientations that had been discussed during the year were all confirmed, and dissected at length. Whoever was still doubting the government will to re-equilibrate growth toward the rural sector is now reassured. “It is this year main challenge”, Wen Jiabao declared yesterday. Similarly the constitution amendment was achieved and now private property is officially recognised and guaranteed by Chinese authorities. Many might say that this is no more than official approval of a de facto situation. Rightly so, since last year the private sector contributed to 2/3 of the GNP production. But it is mostly a political rehabilitation of the private sector, private businesses having long been considered evil economic agents by the regime. And yet, next to a public sector that is obsolete and under permanent assistance, it is indeed private initiative that spurred growth.

Beyond Wen Jiabao style it is a whole new spirit that emerged during 10 days of debate : something hard to pinpoint, that resembles, in its principle, a will for greater transparency, the Chinese way of course, which has little to do with the western definition. In many respects China remains extremely opaque, particular as regards its political life, and it is not going to change before long. Socialism, the Chinese version, remains, among the great schools of thought, like Marxism, Leninism, Mao Zedong thought, Deng Xiaoping theory, and now the “three representativities”, the absolute reference. Yet here and there breaks in the structure are showing, strivings to have a speech “in better connexion with reality”, as an expert points out.

State authorities left aside the usual grandiloquent descriptions of orientations sector by sector, to officially admit the existence of problems. It was clearly stated that uncontrolled credit lending created overheating in several sectors, like concrete cement, aluminium, or steel. The disorders that these sectors suffer from were this time publicly denounced. Investments must be better targeted, and spent with more parsimony. The times when money was poured with little control into the economic machine, so long as it created growth, are over. Everyone must be more responsible, and in due time must let the “macrocontrol” operate. What is happening in the real estate construction sector, a sector that represents ¼ of total investment, in that respect is representative of many other sectors. To compel regional and local power levels to supply quantitative data back to the national level, national authorities, at the beginning of march, decided to freeze construction permits in 26 large cities until they provided their own statistical data. Anticipating overinvestment, and a subsequent real estate bubble, especially in top of the range residential housing, authorities want to take action before it is too late ; correctly indeed, since available data show that investment into construction, according to the Construction ministry, increased by 32,5% over the first eleven months of 2003, with a peak in November. Inflation in housing also shows a surprising pattern : the nation average is 4,9%, while that of the 40 most important cities is 9%, in some large cities it is 20%, and various observers estimate it to be even much higher in Shanghai for instance. To avoid the formation of a bubble is to prevent a subsequent collapse of the sector as well, and therefore to prevent disastrous consequences on the balance sheet of banks, considering how heavily they financed construction.

All these declarations are, first of all, intended to strike the minds, even though China, during these great political celebrations, knows too well how to use the complete palette of symbolic signs that so pleases foreigners. It will be its forthcoming task to transform these declarations of intention into durable changes. For the first time in years debates around the death penalty were reprinted in newspapers. From now on, to thwart excesses, any court decision will have to be approved at the Supreme court, at the national level, and therefore go above the regional one. Similarly, for the system of re-education by work, sentences will have to be decided by judges, and no longer only by policemen, as is still too often the case. Consistency in the scale of sentences will be stressed, the goals are publicly set.

However nobody knows where Wen Jiabao style will lead, nor whether it will bear fruit in terms of transparency. So far one may observe that the new leaders at least were able to set new long term orientations and to take firmly in hand the reins of power. Every event in the life of the party is the occasion to invite some dignitaries and to push aside some others. This time the absence of Zhu Rongji, the former prime minister, and of Li Peng and Qiao Shi, who each are former Assembly president, were noted as signs that a page in the history of China was turned, with no upheaval, while gently bringing about deep changes, and at this stage still promising.