The Beijing shuffle

Expectations of China's new leadership have been relatively subdued since its formal installation in November last year. It would be hard to blame the marketing campaign launched by the new mandarins in Beijing. In fact, they have been working very hard to project a fresh image, vowing to restart China's economic reforms. Apparently, the Chinese public prefers action to rhetoric.

Based on the news coming out of the annual session of China's National People's Congress (the country's rubber-stamp parliament), it seems that popular cynicism is fully justified. This event provided the first opportunity for the new leadership to demonstrate its commitment to reform. Unfortunately, the measures announced during the proceedings of the congress fell short even of the lowered expectations of the new leadership's ability to galvanise China's stalled march towards a market economy.

Before we discuss the bad news, let us report some promising developments first. The most important and heartening step Beijing is about to take is merging the national family-planning commission and the ministry of health. The family-planning commission has been responsible for the enforcement of China's disastrous one-child policy for the past three decades, and is viewed as the last staunch defender of this draconian and inhumane policy. Its disappearance signals the end of the one-child policy (although no officials in Beijing are ready to acknowledge this inevitability). Another possible encouraging change is the elevation of the bureaucratic status of China's food and drug administration, apparently to show the government's resolve to improve food safety, which has become, along with environmental degradation, a source of public discontent.

The abolition of the railway ministry, a government agency that builds, owns and operates China's vast rail system, may qualify as another piece of good news. The ministry is the last bastion of the country's planned economy. It is known chiefly for corruption, inefficiency and financial indebtedness. Beijing's plan is to spin off the debt-laden assets of the ministry into a standalone corporation, which will operate the railway system. The regulatory functions of the ministry will be assumed by the ministry of transportation. It is hard to determine the long-term effects of this measure at the moment. On the surface, it might appear to be a positive step. However, past experience of replacing a government ministry with a national monopoly has not been very good. In the 1990s, China abolished its ministry of petroleum and split its assets among three giant national oil companies (China National Petroleum Corporation, Sinopec, and China National Offshore Oil Corporation), each protected by regional or sectoral monopoly. The result was not progress in economic reform, but its hidden subversion.

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