I had a bit of a neck wrench the other morning when reading my Wall Street Journal. On the op ed page, the Chinese ambassador to the United States, Cui Tiankai, wrote a piece arguing that China is undergoing “structural reform.” He wrote:
“To sustain growth, China is implementing structural reforms that place greater emphasis on developing an innovation-and-consumption driven economy. China’s 13th five-year plan lays out five clear development concepts: innovation, coordination, green development, opening-up and inclusiveness.
“Structural reforms are never easy and come with risks. Yet China’s leaders are determined to see them through.”
All well and good but then I turned the page and read an analysis piece by the Journal’s Andrew Browne, who is arguably the best journalistic commentator of China. He noted that the current wave of economic news coming out of China has been downbeat, with Chinese growth slowing and therefore its purchases from the rest of the world also slowing. He said that when new Chinese President Xi Jinping took power three years ago, he styled himself as a reformer who would roll back the role of the state in the economy and give markets a “decisive role.” All true.
But in my view, Xi has not followed through on any of those reforms. The evidence is mounting that he is truly a Communist who believes in the supreme power of the Communist Party over all aspects of Chinese life, including the economy.
Browne seems to agree:
“Evidence is building that reforms have stalled because Mr. Xi sees only a limited role for markets.”
He adds lower in the story:
“His (Xi’s) big moves to date suggest he thinks he can still effectively control (the economy’s) direction through administrative engineering and state planning.”
So why are the ambassador’s words and Browne’s analysis so far apart? The answer is that they are talking about different kinds of reform. When the Chinese talk about reform, they are talking about increasing consumption and improving their technology, but they are not talking about embracing any reform that we in the West recognize as true reform. I suspect Ambassador Cui is smart enough to know that if you want to charm the Americans, you talk about how “reform” is imminent–even if it isn’t remotely the kind of reform that Americans have been anticipating, wrongly in my view, ever since Xi took office.
When are we going to wake up to the nature of what is happening in the world’s second largest economy?