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China leader gets more sway


HONG KONG » Chinese President Xi Jinping emerged from a Communist Party leadership conference on Tuesday with a mandate to give the market a "decisive role" in the world’s second-largest economy and to consolidate new decision-making authority in his own hands.

After a closed-door meeting of party leaders, officials announced that Xi would establish a new national security committee — which experts said took inspiration from the National Security Council that serves U.S. presidents — as well as leadership group that would push through a raft of economic reforms. The two new agencies suggest that Xi aims to circumvent the ruling party’s cumbersome bureaucracies and overcome resistance that deeper economic changes are likely to bring.

Xi has signaled that he intends to overhaul a wide range of long-entrenched policies, including restrictions on land ownership in rural areas and state control of interest rates charged by banks. He and Premier Li Keqiang have also vowed to wean China’s economy from its dependence on highly polluting industries and extravagant government spending.

A full list of reforms discussed at the party meeting is expected to be made public in the coming days, though many are expected to be phased in only gradually.

A year since assuming party leadership, Xi is also showing that he intends to govern in a more assertive, authoritarian style than his predecessor, Hu Jintao, who presided over a decade of rapid growth but failed to push through changes that many economists argue are needed to modernize the economy.

"He’s demonstrating that he’s really in charge," said Christopher K. Johnson, an expert on China at the Center for Strategic and International Studies in Washington, in a telephone interview from Beijing. "It’s the clearest statement we’ve seen so far of his power inside the system."

The new party leadership group on economic policy will oversee the introduction of market-oriented changes, and officials said there would be "decisive outcomes" in major policy areas by 2020. Yet they also stressed that party control must remain paramount even as China embraces more market forces in the economic sphere.

"Most important is maintaining the party’s leadership," said a communiqui. "We must be bold and our steps steady."

Xi, 60, has defied expectations that a new Chinese leader must tiptoe politically in his first years. Instead, he has moved quickly to reshape many policies and consolidate his control of the party’s levers of power: the military forces, ideology and propaganda, the domestic security apparatus and anti-corruption agency — and now economic policymaking.

Many analysts say Xi’s background, as the son of a Communist revolutionary who served under Mao Zedong and Deng Xiaoping, has made him more confident than recent party leaders in wielding power.

By establishing the leadership group, Xi has wagered his credibility on his ability to push through changes that are likely to face resistance from government ministries, local governments and big state firms, said Chen Ziming, a commentator in Beijing who closely follows party affairs.

Xi is almost certain to lead the group, which economists have long called for to help accelerate economic restructuring, Chen said.

"This is placing responsibility on his own shoulders," he said. "It’s concentrating power in one person, so the responsibility will also be his."

At the meeting, Xi and the other leaders vowed a more determined and concerted effort to act on promises of a bigger role for markets after a decade in which state power has swollen. The 204 central and provincial officials who attended as voting members of the Central Committee endorsed broad proposals for reforming taxation, better integrating urban and rural society, and improving government services.

China’s main evening news broadcast showed delegates to the conference seated in long rows of desks, listening attentively and taking notes as Xi and other officials spoke from a dais.

"We must establish fair, open and transparent market rules," said the communiqui from the meeting, which was issued by the official Xinhua news agency. "The core issue is properly handling the relationship between the government and markets, giving markets a decisive role in the allocation of resources while better applying the role of government."

The party leaders stressed, however, that the party-state, as well as state-run firms, would continue to play an important role in economic life. The communiqui said that both the public and private sectors were "important foundations" for economic growth.

"The key point for me is that the market has a clearly defined role — resource allocation — where it is to be promoted, but the role of the party and government in managing everything else in society is primary," said Arthur Kroeber, the managing director at GaveKal Dragonomics, an economic research firm.

Those resources could include land, minerals and fossil fuels. "It represents a pretty ambitious agenda, although of course the details won’t come for a while," he said.

Xi’s immediate predecessor, Hu, also started his 10 years in office with a Central Committee Third Plenum that promised to dramatically alter China’s economy. But for all the changes under Hu, many analysts said he failed to defuse growing problems with pollution, local government debt and a recipe for growth too dependent on state-mandated lending and land confiscations.

Some analysts said that the momentum for change could falter again, as it did under Hu, with even more risky consequences.

"Xi’s main concern will be that there have been promises of major reform before, but promises without action," said Deng Yuwen, a Chinese current affairs commentator who formerly worked for a newspaper published by the Central Party School. "I think the communiqui makes clear that China will probably lean to liberalization and relaxation in the economy, but will remain quite conservative politically — not unchanging, but conservative."

Xi has accompanied his vows of economic rejuvenation with a drive to stifle political opposition to one-party rule at home and a tougher position on foreign policy issues, particularly in maritime territorial disputes with Japan, Vietnam and the Philippines. In what appeared to be an effort to impose greater control over those areas, the conference approved establishing a new state security committee.

The formal English name of the new body was unclear, but state media used the same Chinese name for it as it uses for the National Security Council in the U.S. For many years Chinese officials have studied the workings of that body and other foreign security councils.

The new committee would be a "Chinese version" of the NSC in Washington that serves as the coordinating body on foreign policy for U.S. presidents, said Jin Canrong, a professor of international relations at Renmin University in Beijing. "The situation needs that – the external strategy is becoming more complicated," he said.

The creation of the new committee is likely to magnify Xi’s influence in foreign policy, Jin said. The committee is also likely to have a major say in domestic security issues, and Xi’s ability to win approval for it — after his predecessors had explored the idea and set it aside — showed Xi’s influence, said Johnson, the expert on China.

The initial reports about the new security body did not explain how it would either coordinate with, or possibly replace, other party committees that steer policy on foreign affairs and domestic security.

Xi and Li have said they want to encourage more confident consumer spending, and break down barriers excluding millions of rural migrants from access to schools, welfare and housing in urban society. Many experts have said that those changes will not be feasible unless the Chinese government gives farmers a firmer and more lucrative stake in their land, so they can sublease the land more easily, use it to raise loans and perhaps sell their leasehold rights if they decide to move permanently to towns and cities.

The party leaders hinted that they are exploring how to give rural residents more control over and income from their land, which mostly remains under "collective" — effectively, state — ownership. "Grant farmers more property rights," said the communiqui.

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