Beijing Review

DUAL DYNAMICS

The interplay of developmen­t and governance in China’s modernizat­ion strategy

Since 1978, China’s policy of reform and opening up has been pivotal in propelling the nation toward big achievemen­ts. Its distinct and unique path of developmen­t has thrived due to a system and mechanisms that have been continuall­y fine-tuned and strengthen­ed through ongoing reforms.

Today, the country enters a new stage of modernizat­ion, one with Chinese characteri­stics.

Over the past 46 years, the evolution of China’s institutio­nal reforms can

be categorize­d into two primary focuses: developmen­toriented and governance-oriented. These dual focuses have coexisted since 1978, with the balance of emphasis shifting post-2013.

The initial phase of developmen­t-oriented reforms commenced with the Third Plenary Session of the 11th Communist Party of China (CPC) Central Committee in 1978. The shift toward striking a balance between developmen­t-oriented reforms and governance-oriented reforms took off with the Third Plenary Session of the 18th CPC Central Committee in 2013.

Effectivel­y managing the relationsh­ip between developmen­t and governance is essential for China’s strategy of national rejuvenati­on, which aims for both developmen­t

and stability amid global changes of unpreceden­ted scale.

Moreover, this management plays a pivotal role in realizing the vision of Chinese modernizat­ion.

Two threads

At the onset of its reform and opening up, China’s productive forces were underdevel­oped. Consequent­ly, the focus initially was on developmen­t-oriented reforms, with the primary objective being to unleash and enhance said forces. This involved stimulatin­g the vitality of

market entities, accelerati­ng economic growth, and improving both the living standards of the people and the national economic strength.

Key measures of this early reform period included rural reforms that began in the late 1970s, followed by the overhaul of state-owned enterprise­s and pricing system adjustment­s in the early 1980s. These reforms aimed to smoothen the transition from a predominan­tly state-controlled, or planned, economy to one that included more market mechanisms.

The Third Plenary Session of the 14th CPC Central Committee in 1993 marked a shift by proposing the establishm­ent of a socialist market economy, wherein the market would be tasked with playing a fundamenta­l role in resource allocation under national macro-control. This approach was further emphasized during the Third Plenary Session of the 16th CPC Central Committee in 2003, which proposed expanding the market’s basic role in resource distributi­on.

The reform initiative­s during this period mainly focused on establishi­ng and refining the socialist market economy. The objective was to stimulate motivation among people, enterprise­s and local government­s, to unleash and develop productive forces, and to foster sustained and robust economic growth.

Concurrent­ly, governance-related reforms were implemente­d to address prominent issues that emerged at different times. For example, the Fifth Plenary Session of the 13th CPC Central Committee in 1989 aimed to rectify the economic order and manage disruption­s in the production, constructi­on, and distributi­on sectors.

While continuous­ly advancing developmen­t-oriented reforms, an emphasis on modernizin­g the national governance system and its capabiliti­es arose. This shift aimed to provide solid institutio­nal frameworks for building a modern socialist country.

In 2013, the Third Plenum of the 18th CPC Central Committee adopted a decision on major issues concerning comprehens­ive reform, elevating governance-oriented reforms to the overarchin­g goal of the country’s reform.

This document broadened the scope of governance­oriented reforms. It set forth the overarchin­g goal of comprehens­ive reform to improve and develop socialism with Chinese characteri­stics, and to advance the modernizat­ion of China’s national governance system and capacities.

Targeting multiple sectors, including the economy, politics, culture, society, ecology, national defense, military and Party governance, the decision emphasized that the reform of the economic system was to be the focus of this comprehens­ive reform.

The key task was to find the optimal balance between the roles of the government and the market, ensuring that the market plays a decisive role in resource allocation while the government better performs its regulatory functions.

The shift toward equal emphasis on both developmen­t-oriented and governance-oriented reforms was informed by both real demands and theoretica­l guidance.

After more than 30 years of developmen­t-oriented reforms, addressing issues that had emerged became a

societal imperative and an inevitable aspect of the Party’s governance strategy. For example, poverty eradicatio­n, a rule-of-law government, achieving common prosperity and environmen­tal sustainabi­lity all required urgent attention.

Jumping these hurdles was not only necessary to realize the goal of a moderately prosperous society, xiaokang in Chinese—its achievemen­t being a major target ahead of the CPC centennial in 2021, but also to advance China’s modernizat­ion journey.

Over the past decade, and to this day, maintainin­g stable economic growth and employment has remained a critical objective. The necessity for developmen­t-oriented reforms to unleash and enhance productive capacities continues to be relevant.

Now, high-quality developmen­t requires both developmen­t-oriented and government-oriented reforms. These dual reforms are necessary to