Leadership Transition and Economic Policy II

With the leadership transition of the 18th Congress over and the new line-up in place, it has become clear that the conservative fraction is indeed decisively stronger in the Standing Committee than the group of those who favor free-market-reforms.

One of the major issues of conflict is the role of the state sector in relation to the private sector in China’s economy. During the last decade, state-owned enterprises have experienced a powerful resurgence: their combined assets have almost quadrupled between 2002 and 2011. Reducing the role of SOEs or at least in some way “leveling the field” is one of the reforms conservatives tend to look upon sceptically; others concern the free floating of the Renminbi and the raising of interest rates. As far as the state sector is concerned, though, the future course of the PRC’s new leadership remains very much unclear – reports from the congress leave some room for speculation that the government indeed plans on “scaling back the role of SOEs”.