The longer we have to reflect on it, the more last November’s Third Plenum of the Chinese Communist party emerges as a watershed. It seems increasingly clear that Xi Jinping, the new party chief, is managing to corral support behind a substantial leap forward from the reforms begun 30 years ago by Deng Xaoping. As state and market continue to jostle for pre-eminence in the leadership’s carefully balanced rhetoric, it would appear that when Mr Xi signals left, he means to turn right.
The plenum was characterised by an interesting metaphor. A senior official told China Daily that while three decades of rapid development had dramatically closed the “hardware” gap between China and the developed world – particularly in the coastal areas in the south – it still had a “software” deficit. While the west focuses on ideas like ‘opening up’ as describing what we want from China, the software metaphor tells us a lot about China’s weaknesses and what it needs from the rest of the world.
The “software” of China’s political economy will still be built around centralised control. But its rapid growth has overlaid – and undermined – this control with expansionist regional government and growing networks of private economic power. China’s software is also badly degraded by “bugs” such as endemic corruption and gross misallocation of resources. Set against Beijing’s inherent desire to control and direct, this growing functionality gap is a source of frustration. China feels like it is running Windows 95 in an Android world.
