After Long Wind-Up, Xi Delivers Anticlimax; For months, anticipation has been building about a plan to illuminate the way ahead for President Xi’s Chinese rejuvenation. Yet, what emerged was piecemeal and selective

After Long Wind-Up, Xi Delivers Anticlimax

ANDREW BROWNE

Nov. 12, 2013 1:32 p.m. ET

BEIJING—For months now, anticipation has been building in China about a Communist Party meeting that would, it was officially promised, offer up a “comprehensive” plan to illuminate the way ahead for President Xi Jinping‘s goal of national rejuvenation.Just days ago, the clear message that went out to a group of foreign visitors who met President Xi, Premier Li Keqiang and an array of government and military leaders was that they should expect a “comprehensive blueprint of reform” from the party’s meeting, known as the Third Plenum. Inspired leaks in party-run newspapers had dangled the prospect of unspecified political overhaul, which have been on ice for several decades.

But the reforms that finally emerged in a communiqué from the Communist Party on Tuesday turned out to be highly selective.

What’s more, the details were almost completely missing, even though the document ticked off many of the items that appear on standard lists of reform objectives for China, both inside and outside the country. These include pledges to overhaul the fiscal system, health care and education.

The party has historically signaled policy changes in words and phrases that appear as riddles to outsiders, In that vein, the language of the communiqué does offer a few tantalizing, if murky, clues to deeper reform that may lie ahead.

Some analysts, for instance, have divined significance in the use of the word “decisive” in the communique’s call for the market to play a “decisive role in allocating resources” rather than the state. Previously, the operative adjective in that standard formulation was “basic.” But what, precisely, the shuffling of the party’s lexicon means is left unanswered. Many liberal economists had been hoping for a clear message that the party would roll back the power of state-owned enterprises and promote private enterprise. Instead, the document reaffirmed the leading role of state enterprise.

China watchers have cautioned all along that it’s unrealistic to expect the communiqué to produce concrete action points for leaders’ main priorities: how to move the economy onto a more sustainable track, reverse environmental devastation, narrow social disparities, rein in runaway credit and build stronger institutions to improve economic governance and clean up corruption.

Yet, even by the more modest expectations of many observers for a high-level commitment to key elements of reform, the communiqué that emerged from the four-day meeting in a military hotel was piecemeal.

For instance, there was no mention of overhauls to the hukou registration system that prevents farmers from migrating to cities, a reform that many economists believe could underpin China’s transition to a more productive and consumer-led model of growth.

Changes that would give farmers more secure title to their land, including the right to sell it—seen as a prerequisite for their move to cities—are skimmed over.

Nor are there any specifics on financial reform, including interest-rate liberalization or capital-account opening, an essential component of any plan to shift the drivers of growth toward innovative private enterprise and away from more-inefficient state-owned companies.

Most glaringly, the communiqué carries only a fleeting reference to political reform, which liberal Chinese economists like Wu Jinglian believe must be the starting point for economic overhauls. That is because genuine economic reform implies an assault on vested interests in the party itself who have benefited from the economy’s singular focus on investment—which has created vast opportunities for personal enrichment.

There is a nod—no more than that—to the need for greater judicial independence, which goes hand-in-hand with political reform.

The question now is whether what appears at first glance as a limited approach to change is the best that the reform wing of the party could manage in the face of opposition from their conservative opponents. Or, whether lurking in the text are clues to a more fundamental change in direction that may not become apparent until the details are chewed over within the vast decision-making machinery of the Chinese party-state.

Also, it’s not clear whether the communiqué is the final word out of the meeting, or just an outline sketch to be shaded in later.

After the big wind-up to the plenum, it is perhaps inevitable that the outcome would be a letdown. Yet the Third Plenum was heralded as the climax to Mr. Xi’s first year in office during which he spoke in grand terms about a “China Dream.”

The reality is that Mr. Xi’s first months in office have been most notable for an attack on corruption and a revival of Maoist slogans that foreshadowed a harsh crackdown on free speech on the Internet.

One interpretation of what has been widely called Mr. Xi’s “lurch to the left” is that he is seeking cover for an aggressive economic reform program that would be unveiled after the Third Plenum. Until more details of reform emerge, that scenario must now be questioned.

Mr. Xi presents himself in historic terms as a leader who will revive China’s ancient position of pre-eminence in the world. China, in fact, reached its apogee around the turn of the 19th century under the Qing Dynasty, but then crumbled rapidly, partly due to foreign depredations but also because of homegrown problems, many of which bedevil the country today. These include unfavorable demographics, an exhausted ecology, pervasive corruption and internal dissent.

Many of today’s elite—Internet entrepreneurs, real-estate tycoons, academics and industrialists—have been making private calculations about whether, in the absence of drastic change, the current regime will face a crisis of its own. For many of them, the Third Plenum represented a chance to revive their faith in the future.

“My friends are all living in fear or exile,” said one of China’s leading technology investors, speaking before the Third Plenum opened. The question is whether the communiqué, and what follows, will inspire them to return.