Wen Jiabao’s Reform Moment?

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The political brouhaha over Bo Xilai’s ouster as Chongqing Communist Party Secretary continues to reverberate throughout China’s political system. Most notable is an effort at the top by Premier Wen Jiabao to capitalize on the moment by trying to once again energize his reform agenda

First, at a press conference following the conclusion of the National People’s Congress in mid-March, Wen commented: “Now reforms in China have come to a critical stage…without a successful political reform, it’s impossible for China to fully institute economic reform and the gains we have made in these areas may be lost, and new problems that popped up in the Chinese society will not be fundamentally resolved…the reform can only go forward and must not stand still, less go backwards because that offers no way out.” He added that the desire for democracy in the Middle East had to be “respected and truly responded to.”

More recently, he has taken aim at the behemoth state-owned banks, claiming that the time had come to end their monopoly on China’s financial system in order to relieve the suffering of households, which enjoy only non-competitive and extremely low interest rates on their savings, as well as entrepreneurs who are effectively starved of capital because 90 percent of bank lending goes to state-owned enterprises. To back up his words, Wen announced a pilot program in the entrepreneurial center of China, Wenzhou, in which private lenders will be allowed to operate loan companies and households will be able to invest in overseas financial institutions.

Reform efforts are also appearing elsewhere in the country. Guangdong Province recently initiated a policy that supports the establishment of non-governmental organizations. Under the auspices of Politburo Standing Committee hopeful Wang Yang, non-governmental organizations in Guangdong are allowed to register directly with a civil affairs office, avoiding the cumbersome process of finding a government bureau to sponsor them. (Currently there are as many as three million NGOs that remain unregistered – and thereby operating illegally – in large part because of the cumbersome registration process involved.)

Reform-oriented media, unsurprisingly, are also taking up Wen’s cause. In the wake of Wen’s press conference, a Caixin editorial argued: “Our leaders waver because they are afraid political reform will cause instability. But reality has proved them wrong. The unrest that erupted last year in the Guangdong village of Wukan was eventually pacified when the party leadership worked with the villagers to reach a solution stressing people’s autonomy, and fair and open elections were held…Political reform is not frightening. Reform should be gradual but firm.”

Even the Global Times had some interesting things to say, advocating greater political freedoms, but within some as yet undefined boundaries. Responding to the recent shuttering of the “ultra-leftist” website Utopia, the Global Times editor Hu Xijin wrote, “I don’t like the website Utopia, but I hope they can continue to make their voice heard.” Appearing as an advocate of free speech, he continued, “I don’t like what Liu [Xiaobo] stands for, but I wish he did not have to sit in prison, and that he would have his place in Chinese society like other ‘dissidents’ do.” But he lands here: “Nevertheless, the tolerance level in Chinese politics is never as high as we wish it to be. Do what you must, but be mindful of the measure. Once you break past a certain threshold, the constructiveness of the diversity you’re trying to create will turn into destructiveness, and the backlash will happen. This is the real China”.

Whether you fall into the camp that believes Wen is a reform fraud or the one that believes he’s the real deal (and I confess to being squarely in the latter camp), there’s little doubt that the premier is trying to develop a reform-oriented narrative for his legacy. All he really needs is one big success, but time is running out. If he leaves in 2013 without one notable policy victory, he will be relegated forever in history books as the man who stood next to Zhao Ziyang at Tiananmen, and even when given a second chance to accomplish something significant, fell short.

Elizabeth C. Economy is C.V. Starr Senior Fellow and Director for Asia Studies at the Council on Foreign Relations. She is an expert on Chinese domestic and foreign policy and U.S.-China relations and author of the award-winning book, 'The River Runs Black: The Environmental Challenge to China's Future.'  She blogs at Asia Unbound, where this piece originally appeared.

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