Rule of Law as the Safeguard for China’s Reform
Author： Source： Date：2017-09-01
Respected leaders and guests, ladies and gentlemen,
Good morning. I am glad to be invited to join the first Dameisha China Innovation Forum. First, please allow me to express my warmest congratulations to the Forum on behalf of its supporter—China Society of Economic Reform. I would also like to pay tribute to those who have been following China’s reform, and are committed to reform and innovation, as well as promotion of China’s development.
This Forum is held at the right timing, as just two days later on November 9 is the first anniversary of the third plenary session of 18th CPC Central Committee, and also the end of the fourth plenary session. The Forum is considered as an event for thought emancipation, conversation for experts, and a chance for all of us to study the ideas of the third and the fourth plenary sessions.
The past year is a year to further carry out China’s reform plan. The third plenary session of 18th called on a reform for China at the new stage, and ignited the new round of actions. This round set clear goals with solid directions. The country will stick to the top-level design and highlight execution of reform measures. The whole process is run with distinct features of times.
First, the government has made the planning, and the national high-ranking officials took the lead. The reform leadership structure is built in at all levels from the central authorities to local with unparalleled reform intensity.
Second, the reform follows to the top-level design that covers many areas including economy, politics, culture, society, eco-environment etc. It also focuses on systemic consistency, synergy, with unprecedented width and range.
Third, the reform is set to be culture-oriented to solve significant system issues in economic development. It focuses on livelihood, which is supported by the whole society. Key reform measures have been agreed and advocated by the public.
Fourth, reform in key areas is accelerating and solid progress has been made already.
The new round of reform is by no means easy, and is facing a number of tests and challenges. The central government has provided firm directions and requirements on “moving towards a market-oriented mechanism”. However, there is still some “noises” that question and disturb reform with rigid mindset. The government’s theory of “key reforms” is full of innovation and follows the idea of “keeping pace with the times”, but there are some departments or local entities either afraid of potential turmoil or trying to safeguard their vested interests. They changed or executed less of the reform policies in their own way. The planning and deployment by the central government is made comprehensively with strict requirements, yet some problems including waiting without actions, obstructing, or being unwilling to carry out reform do exist.
The central government has reiterated its resolution in deepening the reform. President Xi Jinping highlighted that this year is the first year of deepen reform and the government should push forward the plans in a solid and effective way as it is the foundation of future reforms. Therefore, I would like to highlight my opinions as below:
First, stick to mind emancipation and endless development and reform: it is the mind that determines how far the reform could go. The third plenary has opened the new round of emancipation and released the signal to break restrictions on conventional ideas in terms of both theory and policy. Practices encourage innovation based on mind emancipation. Integration of theory and practice must be promoted first. Mr. Deng Xiaoping used to mention that mistakes were tolerable in the process of reform, and taking no reform actions is not allowed. Reformers have to explore bravely and the central government and local governments at all levels shall protect reformers and innovators.
The mind emancipation must show respect to originality of people and to creation and innovation. Our reform must be fully combine with practices, and past experiences need to be well kept for reference. Being practical and realistic is the right way to emancipation. The key of the mind emancipation is the reverse pressure mechanism and, after all, the determination to reform comes to our mind only when there is something bumpy in development. People will not have profound insight, nor will their mind be fully emancipated unless they are confronted with crisis and challenges and have to make breakthrough. Only at that moment reform will be the consensus of the society.
Second, stick to the market-oriented reform: the third plenary session stated that the market should play the key role in resource allocation. It is a historic breakthrough and an example of mind emancipation. China has been following a government-dominated market economy mechanism for years. The current government decides to engage in reform in administrative system. The resolution is well recognized and the result proved to be effective. The reform is known as “streamlining administration and delegating power to the lower levels”, and in fact the core is to transfer the government functions and well handle the relationship between market and government. The tendency of departmentalization and fragmentation during the reform emerges, and it is highly difficult for government to reform themselves. The next step is to handle the relationship between the government and market. One is to change our mind from “streamlining administration and delegating power to the lower levels” to “identifying the range of power”, and to do legality review on administrative permission by governments. The range of government power shall be made in accordance with law, and others outside the range shall be open to the market. Those that are not specified by law shall be deemed as not allowed.
The reform focus shall turn from the government function to market system, workplace order, and market mechanism improvement to set up consistent, open, competitive and ordered market system to drive reforms in other areas. Relevant measures shall include carrying out the consistent market access system, promoting the formulation of negative list in Pudong, Shanghai, and allowing corporate entities to enter the areas not specified in the list (businesses are deemed as permitted unless they are included in the negative list); further breaking down administrative monopoly; partially opening some public security businesses that currently are in monopoly to competitiveness; providing currently monopolistic franchising to entities under all kinds of ownership; removing local protectionism and favorable fiscal policies; carrying out price reform on electric power, oil, gas and medicine industries, and opening up businesses that shall follow competition mechanism; modifying the Anti-unfair Competition Law as soon as possible and removing all the subsidies provided to competitive industries from government budget; removing industry policies that over-intervene specific businesses and activities and replacing them with policies that courage competitiveness, entrepreneurship, free and fair flow of production factors, and IPR protection.
Third, regarding how to understand and handle the relationship between reform and the rule of law, our basic experience is to safeguard reforms with the rule of law, which, as the foundation, is the guarantee of further reform at a new stage. It seems to be contradictory between reform and rule of law as the former features change and breakthrough while the latter tends to be stable. The past practice shows that China’s reform is to explore, set standards and norms and introduce legislation. It is in fact a mode of exploring first and introducing legislation later.
The fourth plenary session of the CPC Central Committee requires that “all reforms shall be guided and instructed under the rule of law and be carried out in accordance with law”. It is the key requirement. The requirement seems to put more restriction on reform and innovation, and in fact it helps explore the new forms and space of reform, indicating the mode of reform is going to change, from “legislation later” to “legislation first”. Laws are not only the result of reform, but also the safeguard of reform execution, and may serve as the major measures. The rule of law is the fundamental mode of state governance and that of further reform. It shall include consistency in reform and legislation decision, stickiness to “introducing legislation first”, and following this pattern for the reforms are already set in plan, and making full use of its functions in guiding, promoting, normalizing and protecting.
Review on establishment, change, abolishment and trial of legislations shall be carried out timely based on the requirement on socialistic market-oriented economy, and those that need to be modified shall be timely amended and that need to be abolished shall be firmly removed.
Key reforms shall be made in accordance with law, and trial reforms can be conducted by “authorization by legislation entity to pilot” to provide legal foundation. China’s reform is still on the way after the Decision was released in the third plenary session one year ago. The China Innovation Forum today is also an excellent chance. Since China is simultaneously at the three stages, and its economy is in the “new normal’ status, reform theory also calls for breakthrough and development. We are expecting your insights in today and tomorrow’s forum and hope the Forum a great success. Thank you!
Good morning. I am glad to be invited to join the first Dameisha China Innovation Forum. First, please allow me to express my warmest congratulations to the Forum on behalf of its supporter—China Society of Economic Reform. I would also like to pay tribute to those who have been following China’s reform, and are committed to reform and innovation, as well as promotion of China’s development.
This Forum is held at the right timing, as just two days later on November 9 is the first anniversary of the third plenary session of 18th CPC Central Committee, and also the end of the fourth plenary session. The Forum is considered as an event for thought emancipation, conversation for experts, and a chance for all of us to study the ideas of the third and the fourth plenary sessions.
The past year is a year to further carry out China’s reform plan. The third plenary session of 18th called on a reform for China at the new stage, and ignited the new round of actions. This round set clear goals with solid directions. The country will stick to the top-level design and highlight execution of reform measures. The whole process is run with distinct features of times.
First, the government has made the planning, and the national high-ranking officials took the lead. The reform leadership structure is built in at all levels from the central authorities to local with unparalleled reform intensity.
Second, the reform follows to the top-level design that covers many areas including economy, politics, culture, society, eco-environment etc. It also focuses on systemic consistency, synergy, with unprecedented width and range.
Third, the reform is set to be culture-oriented to solve significant system issues in economic development. It focuses on livelihood, which is supported by the whole society. Key reform measures have been agreed and advocated by the public.
Fourth, reform in key areas is accelerating and solid progress has been made already.
The new round of reform is by no means easy, and is facing a number of tests and challenges. The central government has provided firm directions and requirements on “moving towards a market-oriented mechanism”. However, there is still some “noises” that question and disturb reform with rigid mindset. The government’s theory of “key reforms” is full of innovation and follows the idea of “keeping pace with the times”, but there are some departments or local entities either afraid of potential turmoil or trying to safeguard their vested interests. They changed or executed less of the reform policies in their own way. The planning and deployment by the central government is made comprehensively with strict requirements, yet some problems including waiting without actions, obstructing, or being unwilling to carry out reform do exist.
The central government has reiterated its resolution in deepening the reform. President Xi Jinping highlighted that this year is the first year of deepen reform and the government should push forward the plans in a solid and effective way as it is the foundation of future reforms. Therefore, I would like to highlight my opinions as below:
First, stick to mind emancipation and endless development and reform: it is the mind that determines how far the reform could go. The third plenary has opened the new round of emancipation and released the signal to break restrictions on conventional ideas in terms of both theory and policy. Practices encourage innovation based on mind emancipation. Integration of theory and practice must be promoted first. Mr. Deng Xiaoping used to mention that mistakes were tolerable in the process of reform, and taking no reform actions is not allowed. Reformers have to explore bravely and the central government and local governments at all levels shall protect reformers and innovators.
The mind emancipation must show respect to originality of people and to creation and innovation. Our reform must be fully combine with practices, and past experiences need to be well kept for reference. Being practical and realistic is the right way to emancipation. The key of the mind emancipation is the reverse pressure mechanism and, after all, the determination to reform comes to our mind only when there is something bumpy in development. People will not have profound insight, nor will their mind be fully emancipated unless they are confronted with crisis and challenges and have to make breakthrough. Only at that moment reform will be the consensus of the society.
Second, stick to the market-oriented reform: the third plenary session stated that the market should play the key role in resource allocation. It is a historic breakthrough and an example of mind emancipation. China has been following a government-dominated market economy mechanism for years. The current government decides to engage in reform in administrative system. The resolution is well recognized and the result proved to be effective. The reform is known as “streamlining administration and delegating power to the lower levels”, and in fact the core is to transfer the government functions and well handle the relationship between market and government. The tendency of departmentalization and fragmentation during the reform emerges, and it is highly difficult for government to reform themselves. The next step is to handle the relationship between the government and market. One is to change our mind from “streamlining administration and delegating power to the lower levels” to “identifying the range of power”, and to do legality review on administrative permission by governments. The range of government power shall be made in accordance with law, and others outside the range shall be open to the market. Those that are not specified by law shall be deemed as not allowed.
The reform focus shall turn from the government function to market system, workplace order, and market mechanism improvement to set up consistent, open, competitive and ordered market system to drive reforms in other areas. Relevant measures shall include carrying out the consistent market access system, promoting the formulation of negative list in Pudong, Shanghai, and allowing corporate entities to enter the areas not specified in the list (businesses are deemed as permitted unless they are included in the negative list); further breaking down administrative monopoly; partially opening some public security businesses that currently are in monopoly to competitiveness; providing currently monopolistic franchising to entities under all kinds of ownership; removing local protectionism and favorable fiscal policies; carrying out price reform on electric power, oil, gas and medicine industries, and opening up businesses that shall follow competition mechanism; modifying the Anti-unfair Competition Law as soon as possible and removing all the subsidies provided to competitive industries from government budget; removing industry policies that over-intervene specific businesses and activities and replacing them with policies that courage competitiveness, entrepreneurship, free and fair flow of production factors, and IPR protection.
Third, regarding how to understand and handle the relationship between reform and the rule of law, our basic experience is to safeguard reforms with the rule of law, which, as the foundation, is the guarantee of further reform at a new stage. It seems to be contradictory between reform and rule of law as the former features change and breakthrough while the latter tends to be stable. The past practice shows that China’s reform is to explore, set standards and norms and introduce legislation. It is in fact a mode of exploring first and introducing legislation later.
The fourth plenary session of the CPC Central Committee requires that “all reforms shall be guided and instructed under the rule of law and be carried out in accordance with law”. It is the key requirement. The requirement seems to put more restriction on reform and innovation, and in fact it helps explore the new forms and space of reform, indicating the mode of reform is going to change, from “legislation later” to “legislation first”. Laws are not only the result of reform, but also the safeguard of reform execution, and may serve as the major measures. The rule of law is the fundamental mode of state governance and that of further reform. It shall include consistency in reform and legislation decision, stickiness to “introducing legislation first”, and following this pattern for the reforms are already set in plan, and making full use of its functions in guiding, promoting, normalizing and protecting.
Review on establishment, change, abolishment and trial of legislations shall be carried out timely based on the requirement on socialistic market-oriented economy, and those that need to be modified shall be timely amended and that need to be abolished shall be firmly removed.
Key reforms shall be made in accordance with law, and trial reforms can be conducted by “authorization by legislation entity to pilot” to provide legal foundation. China’s reform is still on the way after the Decision was released in the third plenary session one year ago. The China Innovation Forum today is also an excellent chance. Since China is simultaneously at the three stages, and its economy is in the “new normal’ status, reform theory also calls for breakthrough and development. We are expecting your insights in today and tomorrow’s forum and hope the Forum a great success. Thank you!
