China’s Reform Stalemate

BEIJING – China’s reform program has reached an impasse, with fundamental conflicts of interest and subtle resistance mechanisms blocking progress. Until these barriers are removed, there is little hope that China’s slowing economy – which grew by 7.4% in 2014, its lowest rate in nearly a quarter-century – can rely on reform to give it the push it needs.

Chinese leaders are well acquainted with how difficult it can be to implement drastic reforms. When Deng Xiaoping launched his radical program of “reform and opening up” in 1978, he faced fierce opposition – mostly from fervent ideologues and revolutionary diehards. Just as Deng’s status and forcefulness enabled him to face down his opponents and keep China’s economic modernization on course, President Xi Jinping’s determined leadership can overcome vested interests and implement the needed reforms.

Of course, reconciling the fundamental misalignment of interests in China will not be easy – not least because interest groups will not discuss, much less oppose, reforms in an open and transparent manner. Instead, they argue that the reforms are too risky or purge their substantive provisions. Only small concessions have been made to scaling back government intervention, affecting powers that are either irrelevant or never actually existed.

There are two types of conflicts of interest among the government bodies. First, China’s powerful bureaucracy is disinclined to cede its powers in the name of liberalization and a shift toward a more market-oriented economy.