Improved rule of law a boon for China’s economy

Source:Global Times Published: 2017/10/19 23:08:39

Illustration: Peter C. Espina/GT

Domestic and global markets are watching the ongoing 19th National Congress of the Communist Party of China (CPC) closely for clues about these questions: How will China develop after the Congress? How will deepening reform be carried out? What adjustments will be made to the country's economic development strategy?

There is every reason to believe that many corporate executives are waiting for more direction from the 19th CPC National Congress before making investment decisions and drawing up development strategies.

It is generally believed that the 19th CPC National Congress is different from the 18th CPC Congress in the sense it focuses on the continuation of the national governance strategy.

The top priority since the 18th CPC Congress has been fighting corruption. The main task after the 19th CPC Congress will be building a moderately prosperous society. The foundation of social development must depend on the economy, which should therefore be the focus of development over the next five years.

Maintaining healthy GDP growth to permit a smooth economic restructuring will be the major challenge facing China after the 19th CPC Congress.

From the perspective of national governance, the top-level strategy for economic development has already been determined, so the challenges will mainly come from restructuring and developing the economy itself. In China at this current stage of history, many economic and social problems are related to the institutions: family planning, land system, household registration system property rights protection, State-owned enterprises' efficiency and income distribution gaps.

To address these problems, it is not enough to just focus on specific issues. China needs to regulate its economic development from a higher level by building the "legal economy" and "credit economy."

These "economies" are not a new concept in China. During the process of developing a market economy, these concepts have been discussed and tested.

Regarding the legal economy, Premier Li Keqiang told reporters at a news conference on March 16, 2016 that "the market economy is an economy on the basis of the rule of law with moral principles."

As for the credit economy, Li stressed at a State Council executive meeting on June 15, 2016 that the essence of a market economy is credit, but credit does not simply depend on "earnest payment." Earnest payment in transactions among enterprises is in line with market practices. But it is against market economy principles that governments set regulations and receive such money.

The "legal economy" is based on the rule of law. Of the 60 tasks that the Third Plenary Session of the 18th CPC Central Committee put forward for comprehensively deepening reforms, 32 were related to the rule of law.

For instance, it said, the property rights of the public sector are inviolable, as are those of the non-public sector; abolish all forms of irrational regulations for the non-public economy; implement a unified market access system and on the basis of making a negative list, all kinds of market players may enter areas not on the negative list on an equal basis and according to law.

In light of this situation, the development of the "legal economy" and "credit economy" should become a key goal for China.

China has grown much more sophisticated in developing its economy and has the capacity to make the rule of law the bedrock of sustainable development. With the 19th CPC National Congress showcasing the Party's determination to promote the rule of law, it is anticipated that the Chinese economy surely has a sustainable future.

This article was compiled based on a report by Beijing-based private strategic think tank Anbound.

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