The most widely reported item put forth at the Third Plenum was the principle that the market should be allowed to exercise a decisive force in the allocation of economic resources. Some have said that the rebalancing of political power to the center runs counter to that stated goal. But this assessment is contrary to realities on the ground. After more than thirty years of rapid economic development under a relatively decentralized framework, local protectionism and the lack of standardized rules that govern commercial activities are now hampering the further development of China’s market economy. Many companies use their alliances with local governments to block entry by competitors from other regions by political means. Disparate rules and regulations across provinces make it difficult for companies to operate outside their home territories. The centralization policies launched by the Third Plenum, not dissimilar to the waves of federalization during America’s industrialization process that propelled inter-state commerce, will drive the further scaling up of China’s vibrant market economy. In addition, positive externalities may also result from this trend. Environmental protection and food safety, for examples, will greatly benefit from the national standardization and enforcement of rules and regulations.
DISCIPLINE AND THE LAW
Widespread official corruption is a major challenge facing contemporary China’s political governance. Many have named corruption as the Achilles’ heel of a political system that has otherwise achieved undeniable successes. One of the main reasons for the party’s inability to contain corruption has been the existence of fundamental flaws in the intra-party discipline inspection regime and the state’s legal system.
How to check internal abuse of power has been a central issue for the CCP at the earliest stage of its development. The first internal inspection agency, then called the Central Inspection Commission, was established in 1927 when the party was barely six years old and 22 years before it actually gained political power. The system has gone through periods of irrelevance and effectiveness. It fell to virtual disuse during the Cultural Revolution. Deng Xiaoping re-established the current incarnation of the regime, called Central Discipline Inspection Commission (CDIC), at the all-important third plenum of the eleventh party congress in 1978.
From its origin in 1927 to the present, the party used the matrix structure borrowed from the Soviet Communist Party’s internal inspection organization. In name, the Discipline Inspection Commission (DIC) at each level of government is under the DIC of the next highest level of government, and ultimately all under the CDIC. But in practice, they are appointed by and work under the party committee of the same level. For instance, the highest official of a county is the county party committee secretary. The head of the Discipline Inspection Commission of the county serves on that party committee under the authority of the party secretary and is almost always of a lower rank to him in the party’s hierarchy. Further more, almost all personnel, financial management, compensation and welfare of each DIC are controlled by the parallel party committee. This leads to the situation in which the person in charge of checking official corruption in a particular jurisdiction is under the influence and authority of, and sometimes owes his career to, the head of the officialdom he is tasked to discipline. This shortcoming might not have been so obvious when the governance system was relatively simple. But with the dramatic increase in the complexities of the country’s political system and its society in general this structural flaw is proving to be crippling to the party’s ability to govern.
Bo Xilai, the disgraced party secretary of Chongqing, was a member of the Politburo, China’s highest ruling body. But the head of Chongqing’s Discipline Inspection Commission was not even a member of the Central Committee, which placed him at least two levels below in ranking to Bo. Needless to say, such a regime, while workable in punishing low-level offenses, is weak in checking abuse of power at higher levels.
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