Xi Jinping’s Failed Promises Dim Hopes for Economic Change in 2nd Term
“I’m highly skeptical, since I don’t think it’s a lack of authority or the opposition of special interests that have kept him from moving in that direction so far,” said Scott Kennedy, the director of the Project on Chinese Business and Political Economy at the Center for Strategic and International Studies in Washington. “Rather, he’s operated according to his instincts in the face of economic challenges. And I don’t expect his instincts or those challenges to change much.”
.. “The boat sails best when the winds and waves are steady,” Liu Shiyu, the chairman of the China Securities Regulatory Commission, said at a news conference last Sunday. “Without stable market conditions, no reform can make progress, and there may even be reversal of the strides that we’ve made.”
.. And while many economists, including some of Mr. Xi’s top advisers, continue to lobby openly for more market-oriented policies, the government has also become less tolerant of those who directly and publicly criticize it for not doing enough, including by censoring them on social media.
.. It is Mr. Xi’s own policies, though, that raise the biggest questions about his commitment to change. As more and more capital has left China, the government has restored restrictions on moving money abroad.
While taxes have been increased on service industries, promises to introduce a property tax and other fiscal changes have made little headway. That logjam has left the finances of local governments in many manufacturing-dependent cities dangerously dependent on land sales for revenue.
.. Some of the initial hopes that Mr. Xi would turn out to be a market liberalizer were probably never realistic. The Chinese government’s idea of reform has never been the free-market bonanza that some economists advocate.
Even Deng Xiaoping, who first injected elements of capitalism into the Chinese economy in the 1980s, stressed that the government must retain control.
.. Most experts expect Mr. Xi will stay much the same leader he has been for five years, unless slowing growth and rising debt produce a shock. Yet the cost of inaction could be an increasingly debt-ridden, inefficient economy.
“If the government keeps meddling in the markets to ensure growth, then this road will become impassable,” said Mr. Li, the professor in Shanghai. “The problems won’t be solved and will only get worse.”