China Leadership Monitor

Leadership Transition and the “Top-Level Design” of Economic Reform

Monday, April 30, 2012

For several years, economic reforms in China have essentially been dead in the water. The impending leadership transition creates uncertainty about China’s future, but it also opens up new possibilities. Already, the discussion of economic policies in China reflects the greater range of options made possible by the impending leadership change. Recently, the need for a more forceful push on economic reform has been acknowledged publicly in ways that would scarcely have been possible a few years earlier. In addition, the fall of Bo Xilai inevitably involves the repudiation of at least some elements of the package of economic policies—often called “leftist”—he had staked his future on. These policies were inimical to healthy economic reforms, and Bo’s fall creates an opportunity for rethinking and rejuvenation of the reformist agenda. This piece traces some of the key personalities and events involved in this opening policy space. It examines some of the signals Xi Jinping, the presumptive next top leader, has sent in the policy realm. New leaders inevitably seek to stamp their mark on a new package of policies, differentiating themselves from their predecessors (even as they proclaim continuity). We can already see Xi Jinping initiating a process of this sort, though it is far too early to make any judgments about how it will work out. Finally, there will be massive turnover at all levels of the political system. This piece examines a few of the interactions already beginning to take shape between new policy agendas, on the one hand, and the coming widespread turnover of policy-makers and technocrats, on the other.