Third Time's the Charm

Will China's leaders go big and enact serious reforms at the upcoming Third Plenum?

Chinese leaders haven't exactly downplayed the importance of the Third Plenum, the big Communist Party confab to be held in Beijing from Nov. 9 to Nov. 12. China's president Xi Jinping has promised to unveil a "blueprint of comprehensive reform" at the meeting, while Yu Zhengsheng, ranked fourth in the Party hierarchy, called the reforms it plans to "explore" at the upcoming meeting "unprecedented."

Indeed, China's slowing economy and unprecedented pollution, among other pressing concerns, indicate that there is an overwhelming need for reform. And the Third Plenum is often the venue to roll out bold new plans. While Party Congresses generally announce new leadership -- the 18th such soiree in November saw Xi Jinping ascend to the presidency -- and the subsequent First and Second Plenums generally deal with personnel and organizational matters, Third Plenums have traditionally enacted the most meaningful changes.

There are two historic Third Plenums to which the upcoming meeting is being compared. The Third Plenum in 1978 opened China to the global economy and abandoned the policy, known as the "two whatevers," of obeying whatever Mao Zedong had decided or decreed. And in 1993, a year after Deng Xiaoping urged more economic openness on his influential Southern Tour by visiting areas like the boomtown of Shenzhen and publically praising reform, that Third Plenum approved the concept of building a "socialist market economy," giving Chinese leaders political cover for introducing more free market features.  

And on economic matters, there is much that needs to doing. The country has enjoyed double-digit growth for 30 years, an unprecedented feat which lifted hundreds of millions out of poverty. This monumental effort, however, relied on massive state spending, huge volumes of low-cost exports based on cheap labor, and more recently, a real estate bubble. But this strategy hasn't allowed the growth of a consumer-based economy necessary for China to transition to a sustainable model. As China's economic boom slows -- 2013 gross domestic product growth is expected at 7.5 percent or less, down from 10.4 percent in 2010 -- Chinese leaders are casting around for a new model.

China's top officials favor serious economic reforms, with Premier Li Keqiang playing the role of point man. But most other members of the seven-man Standing Committee of the Politburo -- the top of China's power pyramid -- seem risk-averse, hindering Li's efforts. In early July, for example, the State Council, helmed by Li, approved the opening of a new kind of special free trade zone in Shanghai. Free of many restrictions found elsewhere in the country, the zone was to reverse the usual Chinese practice of forbidding everything unless specifically authorized: Instead, it would allow practically any business venture not specifically prohibited.

At least, that was the idea. But when the zone opened on Sept. 29, neither Li nor any other senior official attended the opening ceremony, suggesting the leadership was having second thoughts about just how far they dared go. Moreover, the day after the opening, the Shanghai government released a list of nearly 200 restrictions on foreign investment in the zone, placing further restrictions on it potential.

Finance is another key area where China's leaders could push for change. SOEs (State-Owned Enterprises), which account for about 40 percent of total industrial assets, thrive on cheap loans from state banks, yet are only half as profitable as China's private companies. This cozy arrangement also favors not only SEO executives, who frequently have close ties to officials setting financial policies, but often their friends and relatives. This forces smaller private companies to scramble for capital, often by plunging into a "shadow banking" network of lenders whose rates can be extortionate.

The finance system would benefit from more competition and less party control, with bankers having more freedom to adjust saving and lending rates and practices. However, SOEs needn't worry about radical change. They pay dividends to government agencies and minority shareholders, and serve policy purposes, such as securing international oil and mineral rights. They also have allowed powerful and entrenched families to enrich themselves: for example, members of former Premier Li Peng's family have held a dominant role in the electricity sector. SOEs, as official documents state, are "an important foundation of Communist Party rule" -- that's unlikely to change anytime soon.  

What will likely change, however, is the system of local government finance. According to a Ministry of Finance report, local governments now get more than half of their total revenue from land sales, incentivizing them to seize farms and homes for resale to developers at high prices. Some proceeds then go into local treasuries, some to corrupt officials and lesser amounts to those who were displaced, often leading to angry -- even violent -- protests. Beijing knows this must change, and Chinese economists expect a new tax and grant regime. Likewise, the discriminatory hukou system -- residence permits that give access to local benefits such as places in public schools, and which excludes some 200 million migrant workers who fill important city jobs but can't live there legally -- will likely be modified to allow more benefits for migrant workers.

As for political reforms, the ruling elite have made it clear that widespread calls for greater openness and accountability will not be granted, at the plenum or elsewhere. Xi continues to crack down harshly on public dissent and on social media. Activists who have called on leaders to disclose their personal assets as anti-corruption measures, like legal scholar Xu Zhiyong, have been jailed. And while a campaign against corruption high and low will continue throughout and after the Third Plenum -- swatting both "tigers and flies" -- its goal is to purge political embarrassments at least as much as it halts the corrosive practices that benefit so many officials.

But the chances of Xi unveiling a "blueprint of reform" as striking as that of his predecessor Deng is unlikely. And five years from now, Chinese leaders may be striking the same notes about the importance of reform -- but with fewer people believing them.



The End of India's Sovereignty Hawks?

It’s time for the world’s largest democracy to start promoting human rights.

With the exception of China, Russia, and perhaps Brazil, few regional powers of any consequence are as protective of their sovereignty as India. Its policymakers have expressed reservations about the emergent norm of the "responsibility to protect"; it abstained from voting on the 1998 Rome Statute, which led to the creation of the International Criminal Court, arguing that such a body would infringe on national sovereignty; it has mostly shied away from attempts to promote democracy abroad. That needs to change -- at least at the regional level, to start -- if trust, peace, and meaningful cooperation are to be established in South Asia, all of which are in the interests of both India and its neighbors.

All of India's neighbors are struggling with the challenges of liberalism and the tasks of forging representative and inclusive governance in diverse societies. Sri Lanka, for example, is rapidly turning into an illiberal democracy in which the Tamil minority is systematically marginalized, and it still refuses to acknowledge the anti-Tamil pogrom that swept through Colombo in 1983. Pakistan has, at best, made a tenuous transition to democracy, and its military still bears the taint of the East Pakistan genocide of 1971. In Bangladesh, Hindus and Buddhists face routine discrimination. And Nepal has only the trappings of an electoral democracy after the overthrow of its anachronistic monarchy and confrontation with a Maoist insurgency.

Admittedly, as a sprawling, post-colonial society riven with ethnic and class cleavages, India has seen more than its fair share of human rights violations, and despite the existence of an independent judiciary, its ability to mete out justice has been wanting. It failed to prosecute those who directed the pogrom in New Delhi against the Sikh population that followed the assassination of Prime Minister Indira Gandhi in 1984. And only last year did it succeed in incarcerating one of the key perpetrators of the Gujarat pogrom of February 2002 -- Mayaben Kodnani, a Bharatiya Janata Party politician -- for her role in instigating anti-Muslim mobs.

India's uneven performance on human rights, however, should not prevent it from advocating for their protection and for inclusive democracy in its neighborhood and beyond. Few countries that promote human rights abroad enjoy an unblemished record at home, whether historical or contemporary. And India's limitations, while real, are not so outlandish as to prevent it from embracing a vigorous human rights and democracy agenda.

India has addressed its shortcomings through institutional measures, albeit fitfully. When faced with much international as well as domestic criticism while dealing with an ethno-religious insurgency in the disputed state of Jammu and Kashmir, it created the National Human Rights Commission in 1993. Some critics were quick to dismiss this new entity as a toothless body at best and a sop to Cerberus at worst. However, to their surprise and to the delight of others, the commission quickly acquired a degree of organizational autonomy and sought to extend its writ.

Not content with simply addressing complaints of human rights violations on the part of security forces, the commission soon started to probe prison conditions, child labor abuses, and the like. It has no enforcement powers, so its capacity to effect change is limited. However, it does possess the ability to "name and shame," thereby deterring would-be abusers of human rights. Although a culture of rights and their consistent enforcement has yet to take hold across every sector of Indian society, an effort to create such a climate is clearly under way. The process will be long, arduous, and fraught with setbacks, but that tortured course seems to be a well-worn pathway for states as they seek to enshrine such "irreducible minimums" -- to borrow an evocative phrase from Canadian human rights activist and political theorist Michael Ignatieff.

Strong Indian support for human rights and democracy in South Asia would reduce regional tensions and build cooperation. Comparatively speaking, India has followed a nation-building strategy at home that is inclusive and accommodative in religious, linguistic, ethnic, and cultural terms. In contrast to others in its neighborhood -- in which there are four formally Islamic states (Pakistan, Bangladesh, the Maldives, and Afghanistan), until recently a Hindu state (Nepal), a Buddhist state (Bhutan), and an ethno-linguistic-religious majoritarian and unitary state (Sinhalese-Buddhist Sri Lanka) -- India is a secular, federal, multilingual, and multicultural state that institutionalizes power sharing among its various groups. Its constitutional and political experience, warts and all, can offer invaluable lessons in managing a diverse society.

Given South Asia's history of partition and secession (the 1947 Partition into India and Pakistan, the 1971 secession of Bangladesh, the 30-year civil war in Sri Lanka), all rooted in real or feared majoritarianism, inclusive and accommodative democracy and commitments to human rights are vital to cultivate the trust necessary to resolve regional conflicts and integrate minorities. This is because, in South Asia, perceptions of the intentions of neighboring states toward one's own country are shaped by the way that minorities that might be viewed as one's kinfolk are treated in that country. Such "kin" minorities -- religious, linguistic, and ethnic -- abound in a region of ethnic overlaps. Hence, it is in the region's interest, and in India's interest as the region's hub, to promote inclusive democracy and human rights as a way of calming suspicions, turning around hostile attitudes, and moving toward regional integration.

There are a few signs that India's traditional antipathy toward democracy promotion is shifting. For example, in 2012 and 2013, India voted against Sri Lanka at the U.N. Human Rights Council, censuring Colombo for its failure to address charges of rampant human rights violations in the sanguinary end to its civil war in 2009. Furthermore, at a global level, it voted at the U.N. Security Council to impose the initial sanctions on Libya. But a broader push is needed.

Perhaps it is time to rethink the exclusion of domestic issues from the South Asian Association for Regional Cooperation, the only regional forum designed to promote integration in South Asia, and move toward a normative regime that entrenches inclusive democracy, human and minority rights, and regional autonomy or federalism for minority regions. Even if these are not made membership criteria, as democracy is for the European Union, and even if there is no surrender of sovereignty over human rights to a supranational regional court, as in the Council of Europe, it is time to start thinking of a regional normative regime on democracy that builds trust about the intentions of each state toward kin minorities and hence toward neighboring states.

Given its institutional choices and social movements, India's political leadership should no longer seek to take refuge in tired shibboleths about sovereignty and instead willingly embrace the emerging consensus that states indeed have duties beyond borders. As a state that rarely tires of stressing its democratic credentials at home, it should now demonstrate that it can act on the courage of its convictions. To that end, it needs to take forceful stands when it witnesses the flagrant violation of human rights both in its own neighborhood and beyond, and promote a normative regime of inclusive democracy for the region.