Political announcements signal a greater role for the market in China

President Xi Jinping's comments at the conclusion of the third plenum of the party’s 18th Central Committee signalled greater interest in protecting the private sector - but many risks still remain.

A "deepening" role for the market was proclaimed by China’s ruling elite as it concluded the third plenum of the party’s 18th Central Committee. While the final statement predictably lacked specificity, it reinforced the reformist agenda of President Xi Jinping and signalled a gradual diminution of state control of all aspects of the economy in favour market influenced prices.

The importance of the plenum was always about the message it would send about momentum in the reform agenda and the ability of the new leadership to overcome resistance to reform. Beginning with an anti-corruption campaign that effectively discredited political opponents, most notably Bo Xilai, and generated popular support, the government has progressed reforms in foreign direct investment policy and interest rate deregulation. It has also had the confidence to permit an economic slowdown. The board pronouncements from the plenum indicate that this momentum will be sustained.

The report signals the development of a more balanced policy towards the public and private sectors; the maintenance of government to commitment to state owned enterprises combined with the development of "fair, open and transparent" market rules for the economy.

Exceeding expectations, the texts from the plenum show the government understands that systemic reform is a pre-requisite for making China’s economic system more sustainable. Judicial structural reform is called for along with changes to the Party’s internal oversight processes, thereby enhancing the role of central Party authorities. Enhancing the power of the judiciary’s at local levels could provide the government with a more effective mechanism to address corruption and force local implementation of policy directives, which would be positive for reform in the medium to long term.

Impediments posed by the two-tier land ownership system and the concept of equal land rights were also raised. At present, farmers moving to urban areas are unable to sell their land, in contrast to urban dwellers who are able to buy and sell property. It is anticipated that the distinction between urban and rural land will be abolished, a significant reform, that will take China a step further towards an economy driven by market forces.

While businesses can take many positives from pledges, albeit ambiguous, to protect the private economy, the crucial issues of interest rates, the floating of the renminbi or banking sector reform, were not publicly mentioned. This shouldn’t be interpreted as a sign that no action will be taken; rather that the government is leaving itself significant room for manoeuvre to implement policy reform in accordance with political and economic necessity.

While the pledge of greater protection for the private sector is a positive announcement from the leaders of the world’s second largest economy, many risks remain inherent in transacting business in country that lacks an independent judiciary and vibrant civil society.

Chinese President Xi Jinping in Beijing. Photograph: Getty Images.

JLT Head of Credit & Political Risk Advisory

Photo: Getty
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The rise of the green mayor – Sadiq Khan and the politics of clean energy

At an event at Tate Modern, Sadiq Khan pledged to clean up London's act.

On Thursday night, deep in the bowls of Tate Modern’s turbine hall, London Mayor Sadiq Khan renewed his promise to make the capital a world leader in clean energy and air. Yet his focus was as much on people as power plants – in particular, the need for local authorities to lead where central governments will not.

Khan was there to introduce the screening of a new documentary, From the Ashes, about the demise of the American coal industry. As he noted, Britain continues to battle against the legacy of fossil fuels: “In London today we burn very little coal but we are facing new air pollution challenges brought about for different reasons." 

At a time when the world's leaders are struggling to keep international agreements on climate change afloat, what can mayors do? Khan has pledged to buy only hybrid and zero-emissions buses from next year, and is working towards London becoming a zero carbon city.

Khan has, of course, also gained heroic status for being a bête noire of climate-change-denier-in-chief Donald Trump. On the US president's withdrawal from the Paris Agreement, Khan quipped: “If only he had withdrawn from Twitter.” He had more favourable things to say about the former mayor of New York and climate change activist Michael Bloomberg, who Khan said hailed from “the second greatest city in the world.”

Yet behind his humour was a serious point. Local authorities are having to pick up where both countries' central governments are leaving a void – in improving our air and supporting renewable technology and jobs. Most concerning of all, perhaps, is the way that interest groups representing business are slashing away at the regulations which protect public health, and claiming it as a virtue.

In the UK, documents leaked to Greenpeace’s energy desk show that a government-backed initiative considered proposals for reducing EU rules on fire-safety on the very day of the Grenfell Tower fire. The director of this Red Tape Initiative, Nick Tyrone, told the Guardian that these proposals were rejected. Yet government attempts to water down other EU regulations, such as the energy efficiency directive, still stand.

In America, this blame-game is even more highly charged. Republicans have sworn to replace what they describe as Obama’s “war on coal” with a war on regulation. “I am taking historic steps to lift the restrictions on American energy, to reverse government intrusion, and to cancel job-killing regulations,” Trump announced in March. While he has vowed “to promote clean air and clear water,” he has almost simultaneously signed an order to unravel the Clean Water Rule.

This rhetoric is hurting the very people it claims to protect: miners. From the Ashes shows the many ways that the industry harms wider public health, from water contamination, to air pollution. It also makes a strong case that the American coal industry is in terminal decline, regardless of possibile interventions from government or carbon capture.

Charities like Bloomberg can only do so much to pick up the pieces. The foundation, which helped fund the film, now not only helps support job training programs in coal communities after the Trump administration pulled their funding, but in recent weeks it also promised $15m to UN efforts to tackle climate change – again to help cover Trump's withdrawal from Paris Agreement. “I'm a bit worried about how many cards we're going to have to keep adding to the end of the film”, joked Antha Williams, a Bloomberg representative at the screening, with gallows humour.

Hope also lies with local governments and mayors. The publication of the mayor’s own environment strategy is coming “soon”. Speaking in panel discussion after the film, his deputy mayor for environment and energy, Shirley Rodrigues, described the move to a cleaner future as "an inevitable transition".

Confronting the troubled legacies of our fossil fuel past will not be easy. "We have our own experiences here of our coal mining communities being devastated by the closure of their mines," said Khan. But clean air begins with clean politics; maintaining old ways at the price of health is not one any government must pay. 

'From The Ashes' will premiere on National Geograhpic in the United Kingdom at 9pm on Tuesday, June 27th.

India Bourke is an environment writer and editorial assistant at the New Statesman.

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