Many were disappointed that the new Chinese leader, Xi Jinping, did little more than lay out some broad principles regarding economic reform at this week’s Chinese Communist Party plenum. These included the promise to use the market to play a ‘decisive’ role in allocating resources, implicit talk of introducing a level-playing field for foreign and domestic players, promoting rural land reforms as well as new policy-making bodies that would be in charge of economic reforms and national security. There is a sense of a consensus in Beijing for pressing ahead on a new generation of reforms. Reforms that would seek to move the country away from its dependence on government-financed and investment-driven growth and provide more space to its stunted private corporate sector.
If Mr Xi is able to manoeuvre his country on a new growth trajectory, even a sustained 8-9% growth rate, he would ensure China would become the world’s wealthiest nation in two decades. This would be both a challenge and an opportunity for India. China’s economy is now a major pillar of the world economy. If Beijing stumbles, New Delhi will suffer as well. Yet there is also no reason to believe a powerful China will be hostile to India. The worst case scenario is most likely if India remains in its present economic doldrums.
It is not writ in stone that what the plenum has announced will come to be. The true measure of Mr Xi will be whether he can implement what the plenum has outlined and under what timeframe. An early test will be the membership of the proposed economic and security committees. Mr Xi’s biggest challenge will be to overcome the resistance of the State-owned enterprises, the provincial party units and the military — all of whom have entrenched interests in maintaining the present economic system. That will be the biggest story over the next five years. It will also be the biggest story in the world. If Mr Xi’s plenum promises become reality, the 21st century will surely be China’s.