The plenum in Beijing may be a landmark. Most early commentary has focused on its economic reforms. But it has been little noted that the political signal is a mix of Mao and markets.
The good news is that China’s leaders recognise that the country needs to make a structural shift in its growth model – from export and investment-led growth to increased consumption and a stronger service sector. No one should underestimate the plenum’s boldness. After 30 years of almost 10 per cent annual growth, it is no small matter to change plans. Most countries dither until crisis or slowdowns compel change. Of the 101 economies that the World Bank considered middle-income in 1960, only 13 were high-income by 2008.
The not so good news is that the previous leaders also said the country needed to change. Vested interests resisted. So President Xi Jinping seems to have concluded that he needs a political plan to reverse the dissipation of Communist party and central power.