Ren Jiantao, "The Periodicity of Reform"

Articles from the Liberal and revisionist theoreticians of China
--------
Translation by David Ownby

Ren Jiantao (b. 1962) is a well-known political scientist in China and teaches at the prestigious Tsinghua University.  In terms of ideological orientation, Ren is a social scientist and “conservative liberal” like Gao Quanxi (b. 1962) (the constitutional scholar and Trump supporter) and Xu Zhangrun (the legal scholar, also formerly of Tsinghua, who has paid very heavily of late for daring to criticize Xi Jinping); the three are friends and have published together.

Understanding China’s Economic and Political Cycles
　　
Like all the national congresses held since the ruling party came to power, the 18th National Congress of the Chinese Communist Party [to be held in November of 2012] will have at least three important agendas: first, it will establish and fine-tune the party's political line and economic and social policies; second, it will revisit the party's personnel arrangements; and third, it will bring forth new ideas, formulations 提法, and initiatives, put forward by the Party in order to maintain its influence in Chinese society.
 
However, the 18th National Congress of the Communist Party of China has its own special characteristics. This national congress will be held in a rather unusual situation with regard both to the CCP and the domestic and international situations.

 
In terms of the ruling party’s own situation, it is facing serious challenges.  On the one hand, in terms of its self-understanding, the CCP has not yet completed its transformation from a revolutionary party to a ruling party, and its ideology as a revolutionary party is still stubbornly playing a role in governing the direction of the country's development. However, the realities of the situation in which the ruling party currently finds itself constitute a strong incentive for the CCP to abandon the mindset of a revolutionary party as soon as possible, to re-examine the mass movement style of governing, the style of administration that consists of concentrating power to do big things throughout the entire country, and to question the idea of clinging to power for political purposes at all costs. In addition, the political interactions within the CCP have given people a sense of the powerful tensions caused by intra-party democracy. In the past, leadership transitions within the ruling party were decided by authoritative leaders. Today, new generations of leaders with different styles consciously fashion their own leadership personalities, thus adding an element of fermentation and instability to intra-party democracy. Moreover, as the ruling party’s decision-making mechanisms and processes, administrative capacity, and policy performance are under increasing pressure from the contemporary situation, the decision-making model long employed by the Party is in need of reform.
 
In terms of the domestic situation, the Party will face a great economic test in 2012: the most direct will be that the policies introduced after the global financial crisis impacted China in 2008 are beginning to show both their their positive and negative effects.  On the positive side, these policies have maintained China's sustained economic growth for nearly four years, saving the country from the immediate impact of the financial crisis. On the negative side, the deadlines are drawing near for local governments to repay the 4 trillion yuan of funds invested by the state and the trillions of yuan lent by banks, and the central government no longer has many cards left in the hands of to play in terms of financial policies. It remains to be seen if there is an effective means to curb the rise in consumer prices produced by the monetary policy of quantitative easing.  The rise in public discontent that this could cause, as well as a number of social contradictions caused by the downward trend in economic growth, may also be problems this year.
 
In terms of the international situation, North America is still in the phase of post-financial crisis, and the possibility of a European debt crisis is rising rather than falling, meaning that China will lose what have been our most valuable international trading partners over the past 30 years. At a time of ups and downs in international economic development, inter-state relations have become tense: economic conflicts between the so-called "Western" bloc and "Eastern" China are bound to evolve into political conflicts. Western political concern about China will be stimulated either by fear of China's rise or worries about China's collapse. The 30 year-long economic honeymoon between China and the West seems to be coming to an end. Everyone’s strong impression is that China's unrelenting criticism and even repudiation of the West, as well as the discontent generated by the dashed expectations of the West concerning China’s course, seem to have opened a curtain on a completely different scene. Is this really the end of an international environment of détente that prevailed during the nearly 30 years of reform and opening up? For those concerned about the direction of the country and the international situation, a new age seems to be dawning, even if its nature remains unclear.
　　
Economic Cycles and the Economic Reform Posture in 2012
　　
 As 2012 draws near, it is clear that the Chinese are beginning to experience a sense of the end of an age in a way they have not clearly felt before. For nearly 30 years, China has been dominated by economic factors that have changed the country. As a result, this sense of periodicity is first evident at the economic level.
 
A consistently high Consumer Price Index contributed to this feeling in 2011. The CPI trend of 6% or more throughout the year was in fact clearly inflationary. The public felt it directly: the stock market plummeted, making stockholders cry out in pain; soaring real estate prices and the government's largely unsuccessful efforts to control them made the middle- and lower-income classes sigh in despair; the skyrocketing prices of daily necessities made ordinary citizens feel as if time was crawling by; the slow and rather slight increase in wages kept people from buying high-end consumer goods.  More importantly, the collusion between the market, powerful interest groups, and state power has made the people feel that their hopes of getting a fair share of the economic development are disappearing. There is a sense of disillusionment about economic life that Chinese people have not felt deeply over the past 30 years. The Chinese dream of an affluent life, once extended to the people at the beginning of the market reforms, seems to be coming to an abrupt end.
 
What the Chinese people are most proud of is that in the past 30 years of rapid economic growth, they have basically managed to avoid the bothersome cycle of economic prosperity, economic crisis, economic depression, and economic recovery. People who like to sum up the lessons of the "China model" always point to the unique Chinese pride in this respect. In fact, a brief review of the process of China's economic growth shows that China has always been plagued by economic cycles: after the de facto market economy was established in the mid-1980s, invincible market forces often proved to be playing tricks on Chinese wisdom. The inflation in 1988, the political reaction to the economic crisis in 1989, the economic overheating in 1993, the painful restructuring of enterprises in 1998, and the national resentment against the arrogance of monopolistic state-owned enterprises since the new millennium, are all frequent manifestations of economic cycles. It is just that the state has quietly reduced or forcibly suppressed the people's intuitive feelings about economic cycles through the exercise of its power.
 
Consequently, the Chinese people now lack the psychological preparation, capacity building, and preventive planning necessary to deal with economic cycles. In 2008, the 4 trillion yuan invested by the central government in the aftermath of the North American financial crisis, and the more expensive bank loans that grew out of this, were yet another missed opportunity for the people to recognize the reality of economic cycles. In fact, China has never been immune to the ills of economic cycles, it is rather that state power has been suffering through economic cycles on behalf of the people in a display of political skill.
 
In 2012, the cold reality of China's economic cycle is revealing itself. The prominence of this wave of economic problems has prompted people to think deeply about the incompleteness of the reform of China's economic system, and to question how much hope remains for a breakthrough. There is no doubt that China's market economy is still unhealthy. China's economic reforms have been stalled in all areas of economic reform that might touch on political taboos. China's market economy is an economy driven by state power. Therefore, China's market economy is necessarily a form of economy dominated by wealthy and powerful bigwigs. Without a clear definition of property rights and mechanisms to protect them, it is impossible to arrive at a sound market economy. Therefore, the ups and downs of politics are the drivers of economic cycles in a market economy dominated by state power.
 
The power-dominated market economy, which people have consistently denounced, is the result of incomplete reform. The hand of politics is the fundamental cause of the periodic power spasms in China's economy.
 
For this reason, property rights reform is imperative. Initiatives that go along with property rights reform, such as the restructuring of monopoly state-owned enterprises, and especially family-run monopoly state-owned enterprises, must be undertaken as soon as possible.  Structural adjustments must be put in place immediately in order to hasten the emergence of the modern enterprise system, a change in the employment system, the reshaping of incentive mechanisms, and the reshaping of the relationship between government and enterprises, among others.  Obviously, such a thorough-going market-oriented reform is not a problem that can be solved in the economic realm.
　　
 
Political Cycles and Political Reform Trends in 2012
　　
 
The political cycle in contemporary China is generally understood to be the policy adjustments, personnel appointments and specific initiatives enacted during the party congresses held every five years by the ruling party. The year 2012 coincides with the 18th Communist Party Congress, a normal recurrence of this habitual political cycle. There is a minor reshuffling of positions within the CCP every five years, and a major change every ten years.  People have become accustomed to such cycles and to the personnel inertia that has developed since the period of reform and opening.
 
However, this time, the 18th National Congress will reveal some special characteristics of the political cycle. The 18th National Congress will coincide with a major shift in personnel at the top of the central power structure of the CCP, changes that are unprecedented and which touch on the nature of political transition, all of which has attracted particular attention. In this kind of transition, people’s eyes are naturally drawn to changes in Party leadership, the leadership of the State, and the head of the government.  In the run-up to the 18th National Congress in 2012, political leaders who are moving up and those who are stepping down will both take an extremely cautious approach to politics. We naturally cannot expect earth-shattering political reform initiatives. Even political reforms that are thought to cause a slight upheaval are unlikely to be pushed to the forefront.
 
The 2012 political cycle in China is a moment when politicians are blocking one another out 卡位. Since the leadership of the CCP has already decided which “brains” and “seats” will change, leaders who are destined to move up and move down will not seek an advantage outside the established political rules. Even at a moment of great change in the political cycle, ambitious politicians who find themselves in a crisis of make-or-break cannot use major reforms as the engine of political change. This is the model for the transition of state power established in the past.
 
However, the situation may be somewhat different when we observe another political cycle occurring outside of that of political transition. The political route toward state power followed by the ruling party in its first 30 years is very different from that followed in the second 30 years; the first period was shaped by a "philosophy of struggle" and the second has sought to change the people’s mindset by pursuing their material interests. These two types of political mobilization have shaped the basic mode of power of the ruling party. However, any attempt to revitalize the former mode of mobilization would undoubtedly represent a clear danger of overturning the ruling party; and continuing with the latter mode of mobilization is running into strong resistance because of the rise in inequality, which has become a bottleneck blocking the party’s forward progress. As a result, the extremely tense relations between the cadres and the people in some areas and the current situation of political reform have pushed the ruling party into a situation of the cyclical law that Huang Yanpei 黄炎培 (1878-1965)[2] described to Mao Zedong.
 
How to change the dynastic cycle, in which an incorruptible figure takes power, only to be succeeded by corrupt descendants and ultimately replaced by a new dynasty, has become a real problem that the CCP must deal with. The market economy with Chinese characteristics has not only achieved the miracle of a rapid growth in wealth, but has also created a collusion between power and money, and corruption has flourished. How the ruling party deals with this situation has become a key factor in a special political cycle existing outside the normal political cycle, and coincides with the big changes that will occur at the 18th National Congress. Whether they can, in a timely manner, promote a basic system capable of defeating corruption, producing effective policies and honest officials, will determine whether or not the 18th National Congress can find a solution to the politics of the dynastic cycle.
　　
 
Small Cycles and Big Cycles:  Pauses and Breakthroughs in the Reform Process
　　
 
It is easy to see that in 2012, China's economic and political situation is reaching a critical point in the economic-political cycle. In real economic and political terms, China is facing an urgent situation in which it must avoid the occurrence of a crisis at this moment in the cycle. 
 
But at this very moment, one has to admit that the reform situation in China is in a weak state. There is a lack of elite-level planning to support in-depth reform, and no major reforms are being implemented in the economic and political realms, which means that reforms are hanging by a thread. More critically, after the reforms were hijacked by interest groups, the people’s sense of identification with the reforms has declined to the point of indifference, and reform seems to have become simply a means for interest groups to further their interests. The reforms of the 1980s, which the state pursued as an effective means to shore up its legitimacy, are a thing of the past.  Moreover, the formerly positive situation in which the people applauded state leaders’ calls to carry out reforms has now, in the eyes of many citizens, morphed into an embarrassing situation in which reform is synonymous with the state's plundering of citizens' interests.
 
The situation of reform in China has frustrated everyone, regardless of their political positions on the left or the right.  People are losing confidence in what they believe reforms might bring. State leaders, facing the cycle of political transition and economic stagnation, are naturally well aware of this situation. However, in the fragmented state of state power, and in the difficult reform situation, the possibility of making timely reform moves to break through the economic-political impasse has not increased, but rather decreased. If China's reforms since the 1990s have been confined to minor tinkering and adjustments, today's reforms have an even narrower scope for action. The possibility that the cycle that governs state power will slide into a crisis situation has increased dramatically.
 
Looking at things from the structural perspective of the initial stages of China’s reforms, our reforms have in fact been stalled for 20 years:  in political terms, our efforts to solve the problem of the source of power have been limited, in economic terms we have dragged our feet on solving the problem of property rights, in cultural terms, we have had difficultly defining our core values, and in terms of reform breakthroughs, we have hesitated.  All of this highlights the dilemma of reform. 
 
China's reforms urgently need a breakthrough. This breakthrough is a prerequisite for China to bring the people together, to maintain a national identity, and to support national development. At this moment in the 2012 economic and political cycle, the country's leadership as well as ordinary citizens both need a truly effective reform breakthrough to provide themselves with the spiritual momentum to build confidence and support for reform.
 
At this particular moment, looking beyond the perspective of political and economic cycles, and examining the modern political and economic cyclical patterns encountered by mankind in general, the Chinese have all the more reason to demand that reforms move ever deeper in order to achieve the country's sustainable development and its true rise.
 
The successive financial crises after 2008 have created a situation of crisis and reconstruction within a Western capitalism that has long been flourishing. The crisis in Western capitalism does not, and should not, give the Chinese any reason to maintain China’s existing system, because China is going through a major cyclical test of its own system as well. The difference between the two is that the cycle in the developed West is being experienced intensely, while in China we only dimly perceive the importance of the economic-political cycle.
 
For this reason, while the developed countries of the West have already begun the task of seeking a solution to their system's problems, China may lose still more time as it congratulates itself for the success of its existing system. The danger of the latter is obviously greater than that of the former. As Mencius said, “life springs from sorrow and calamity, and death from ease and pleasure."  The great test of this historical cycle is a test that will impact the future of a nation-state, and there is no reason for people to allow themselves to remain in the ridiculous state of enjoying the plight of others and ignoring their own hardships.
 
Notes

[1] 任剑涛, “以周期论改革,” originally published in the journal China Reform 中国改革, also in January, 2012, and posted to Aisixiang on January 7, 2012.

[2] Translator’s note:  Huang Yanpei was an important intellectual and activist during China’s Republican period, devoting most of his efforts to education.  In 1945, he went to Yan’an to meet with Mao Zedong in an effort to mediate between the Nationalists and the Communists—Yan belonged to neither party—and in their conversation told Mao that all political regime’s were subject to cyclical laws and thus destined to decline.  Mao replied that since the people now possessed the power, the CCP had finally broken the cycle. 

This materials on this website are open-access and are published under a Creative Commons 3.0 Unported licence.  We encourage the widespread circulation of these materials.  All content may be used and copied, provided that you credit the Reading and Writing the China Dream Project and provide a link to readingthechinadream.com.