Stability Trumps Reform at China’s Parliamentary Session

China analyst Willy Lam writes on China Brief:

The Chinese leadership at the ongoing National People’s Congress (NPC) has announced tough measures to rein in inflation and to promote government efficiency. In their talk to deputies in the two-week-long parliamentary session, however, Premier Wen Jiabao and his senior colleagues appeared to have made significant compromises to myriad vested interests and power blocs. Relatively vague commitments to liberalization have been made in this “Year of the Olympics,” when the Chinese Communist Party (CCP) is due to celebrate the thirtieth anniversary of Deng Xiaoping’s reform and open-door policy. Yet the few economic—and particularly political—reforms that have been promised are overshadowed by the call to stifle dissent and to instill at all costs.

In his inaugural address to the First Session of the 11th National People’s Congress last week, Wen pledged to forge ahead with the “scientific theory of development” in his second five-year term as head of government. Taming inflation—and lessening the financial hardship of “under-classes” such as peasants and migrant workers—has become the top priority of the new cabinet. In February, the consumer price index (CPI) surged by 8.7 percent, the worst in more than a decade (Financial Times, March 11). Independent economists reckon that the actual inflation rate is considerably higher because essential services such as housing, energy and health care are not taken into account by the index. Yet Wen and his State Council colleagues seem to have buckled under pressure from powerful interest groups by promising to adopt an “appropriately flexible” tight-money policy.

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