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More power for Xi Jinping but no reforms in sight

Xi must face an inevitable economic slowdown by the rapid aging of the population and the increasingly low return on investment

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More power for Xi Jinping but no reforms in sight

The Assembly of Central Committee of Communist Party which has just concluded has not been more relevant to creation of large amendments to Chinese Constitution in its bosom. The main, no doubt, is elimination of limits to presidential errands that Deng Xiaoping had introduced in his day to institutionalize power and avoid Mao's personalism.

In economic field, question to ask us is wher a greater concentration of power in hands of Xi Jinping — which will no longer leave office at end of its second presidency in 2023 — can enable it to carry out economic reforms that China needs to make Faced with an inevitable economic slowdown due to rapid ageing of population and increasingly low return on investment.

Just a few months ago, at World Economic Forum meeting in Davos, China's new economic brain, Liu he, offered an absolutely optimistic picture of extent of economic reforms that China will carry out in 2018. With renewed hope, China's observers have followed development of last week's Communist Party assembly with a great deal of interest. The reality is that constitutional amendments adopted at that meeting do not even allude to economic reforms, but it seems clear, given its draft, that y could have an indirect impact on m.

A review of four main amendments to Chinese Constitution leads us to conclude that consolidation of power is key to reading m, not only by eliminating limits to presidential mandates but also because y elevate rank Constitutional a much more ambitious view of China's role in world as well as a more centralized territorial model. As if this were not enough, anti-corruption agency, led by Xi Jinping's closest ally, Weng Qi Xian, is also elevated to constitutional rank, placing it above many or control bodies. Beyond concentration of power, it is difficult to see a clear direction in use of it to carry out reforms that Chinese economy needs. Perhaps closest allusion to coddling, at least at first glance, is related to role that China intends to play in world. More specifically, with constitutional amendment just introduced by Chinese Communist Party's leadership, it makes clear that it is not interested in an open confrontation with or powers in world but cooperation for mutual benefit. This mutual benefit clearly identifies amendment as China's greatest presence in world. For most optimistic, who have tried to see a glimpse of reforms announced by Liu he in Davos, it should be recalled that context in which greater opening of China in constitutional amendment is expected to be an outward view, that is to say of presence of China and n outside and not foreign presence in China.

Therefore, and for moment at least, rest of world should not expect major changes in China's economic model to be in staunch fight against foreign competition wher it is on role that State continues to play in production of goods and services. In fact, two-thirds of assets of publicly traded companies are still controlled by state. In short, re is no doubt that Chinese political model has been furr centralized after last assembly of Communist Party. Although, a priori, such a concentration of power could facilitate introduction of draft economic reforms and cushion inevitable slowdown in China's growth in coming years, for time being re is no glimpse that this is direction it wants Take Xi Jinping at least if we rely on amendments to Chinese Constitution that have just been agreed. In this context, allusion to a greater opening of China that Prime Minister Li Keqiang has included in his annual economic report to Communist Party congress this weekend sounds empty after silence in what is certainly more important to China's future : constitutional amendments. In short, Li's empty words in front of silence of Omnipotent Xi, whose mandate has been extended indefinitely.

Alicia García Herrero is chief economist for Asia with NATIXIS for Asia and researcher at BRUEGEL


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