In general, China is a huge country that is beset with multi-faceted disparities in its domestic economic development. But with the trade war at sight, the external environment to which China belonged and excelled in the past, is no longer the same as before.
At the same time, these internal and external challenges have become more inter-twined with each other and thus, adding the difficulty of reform for Beijing.
As pointed out by the recent Central Reform Conference in January, the reconstruction of the organizational structure and the change of institutional functions only solved superficial problems impeding reforms.
Fundamental reforms affecting Party functionalities and the Chinese governmental institutions are unresolved by the Chinese central leadership.
From the perspective of public policy research, China’s next round of reforms will face five challenges.
The first challenge is how China would push for further reforms beyond the organizational restructuring of the CPC and the central government.
This entailed transforming China’s export-oriented economy into a consumption-driven one that could help the country weathered through its own economic slowdown as well as the impacts from the trade war with the US.
As of now, the current progress of reform is inadequate in helping China to secure its advantage in the global competition for foreign capitals. The advantage could only be secured if Beijing takes a step forward in its institutionalization of the rule of law and ensure that it really safeguards the interests of foreign investors in the country.
This will be pivotal for China to continue attracting foreign capitals in this challenging global economic order. In all, China’s new round of reforms should focus on liberalizing its domestic market, promoting market-oriented reforms in the economy and exacerbating the construction of the rule of law within the party and the central government.
The second challenge then will be on how to stimulate interests and enthusiasms of the Chinese society and the local governments in the top-down reform agenda and gaining value-added experiences from their participations. One of the success factors of China’s reform and opening-up over the past four decades is the participation of the whole Chinese society and local governments in this historic cause.
To date, prevailing China’s reform has deviated from such a cause with the Party and the central government taking charge while the society and local governments remained to be passive implementers (especially without incentive mechanism in place).
In other words, the participations of local governments at all levels are relatively limited whereas the Chinese society is not even involved within such a reform agenda.
Given these shortcomings, a slew of measures has to be carried out to stimulate the interests and enthusiasms of both the Chinese society and local governments in involving themselves in the reform agenda.
Also, a greater degree of tolerance should be allowed for these sub-state and non-state actors to experiment reforms in their respective domains which could be replicated nationwide.
The third challenge will be the question of how fast China could enact its market-oriented reforms that would respond to the external-internal challenges it is facing now.