New national reporm body means policies of change will be more effective than before

The significance of rebuilding a national-level office to coordinate reform cannot be overestimated.

This week's top leadership conference in Beijing, the Third Plenary Session, decided to commission a Central Reform Leading Group to design and coordinate the country's next round of reforms.

This was 10 years after the previous ministry-level economic reform commission was merged into the present National Development and Reform Commission.

The NDRC will continue its function after the new, higher-level Central Reform Leading Group is established.

Ten years ago, when most state-owned enterprises had finished their restructuring - some on their way to becoming the world's largest corporations in their industries - and when the country had already been a member of the World Trade Organization, some people thought China was about to start a regular course of development in which there was nothing to reform.

Well, if reform had to take place, it would only be some minor tasks, such as finishing off the work of the more revolutionary 1980s and 1990s.

From seeing what the NDRC has become, one realizes how wrong it was to imagine, as some did 10 years ago, that China was to enter a challenge-free post-reform era. The organization has grown into a massive bureaucracy whose primary role, as seen by many outsiders, is to stamp red seals of approval on the local governments' project proposals for fixed assets investment.

Blurring the very concept of reform from the government's top structure might have aided the spread of a dangerous psychology. It turned out particularly wrong for local governments to regard their duty as being mainly to seek continual GDP growth and having little to do with reform - which, at the very least, would have been to study others' successful experiences, reconsider their own strategy, and reorient the local economy.

Exporting cities just went on increasing their exports. Resource-rich provinces just continued to produce and sell more of their minerals. Areas that used to serve as bases for big smoke-stack heavy industries just kept producing the same capacity.

There was some competition, but it was cordoned within a very narrow band. Protected monopolies, such as those in the oil and gas, telecommunications, power, railway and banking industries, have had no motivation to improve service or to work with smaller companies.

In daily life, there have been few successful cases of the "mixed economy" that officials like to promote, in which public sector and private companies work together to fuel the whole economy's growth.

Local governments developed a dependency on revenues from the auction of land rights, showing no care for their communities' genuine prosperity, and did little to improve education and import skills and skilled workers. Only a few cities in the vast interior and western frontier regions have truly developed their competitive niche.

If China's unprecedented urbanization drive is to continue along the old path, under the "keep building more" concept, many cities will fall into a micro-financial crisis. We have already seen a few do so. And nationwide, a huge amount of capital would be wasted - more than the amount that has already been wasted in the competition to maintain capacity over the past decade.

China is fortunate that since its new leaders assumed office last November, they have not acted so hastily as to roll out any major financial stimulus plan in building old industries or old-style cities. They must have realized how many problems face China that cannot be solved by simply spending more and building more.

It is high time the Chinese leaders stood up and raised the banner of reform, to tell the nation there is no end of it - to make it a modern version of Mao's "continuous revolution".

Indeed, in the Third Plenary Session's communique, issued on Nov 12 in Beijing, China's reform and opening up was called "a great revolution".

So, let the torch be passed on. Let the revolution continue.

The author is editor-at-large of China Daily. Contact the writer at edzhang@chinadaily.com.cn.

(China Daily European Weekly 11/15/2013 page11)