Fighting graft

The closed-door meeting, known as the Fourth Plenum, has brought together the party's 205-strong Central Committee and around 170 reserve members. The four-day conclave, which began on Monday, October 20, is set to strengthen the country's legal system and focus on how to rule the country in accordance with the law, according to Chinese media. However, many analysts point out that the notion of "rule of law" in China is tricky, as the ruling Communist Party has shown no eagerness to bring about a separation of powers.

In a DW interview, Julian Evans-Pritchard, China economist at Capital Economics, points out that talk of the "rule of law" should not be understood as complying with the Western ideal of judicial independence. Instead, he argues, the Fourth Plenum can be seen as marking the start of a second phase of the anti-corruption campaign launched two years ago.

DW: In your view, what is the main goal of the Fourth Plenum?

Julian Evans-Pritchard: The Fourth Plenum can be viewed as marking the start of a second phase of the anti-corruption campaign that was launched two years ago. The campaign has been implemented vigorously so far, with tens of thousands of officials disciplined.

Yet the leadership has made it clear that it is not content to stop there, and plans to institutionalize stronger oversight over officials and reduce the number of opportunities for corruption. So the focus at the Fourth Plenum will be on institutionalizing the ongoing anti-corruption campaign and introducing changes that would reduce opportunities for graft. This should pay economic dividends over the medium term.

What changes could the Party introduce to reduce opportunities for graft?

In order to strengthen central oversight of the legal system and prevent local officials from influencing judicial decisions, local courts may be made to answer to higher judicial bodies rather than local authorities.

Meanwhile, we expect policymakers to continue to slash the number of items that require administrative approval, which Premier Li Keqiang has identified as the primary source of gray income for officials. Stronger oversight over local government borrowing and spending, in connection with efforts to implement the new budget law passed last month, may also be a change to be introduced.

What impact could the introduction of these measures have on the Chinese economy?

These moves should ultimately have a positive economic impact. Breaking the ties between the courts and local governments will help reduce local protectionism, which has mostly benefited state-owned firms at the expense of more efficient private firms. Cutting down on administrative approvals reduces costs for firms and helps limit bureaucratic waste.

Stronger oversight over local government budgets should make state investment more efficiently and slow the build-up of credit risks. Our view is that the positive impact of these measures is likely to far outweigh any negative impact of the corruption campaign on the economy, due to weaker demand for luxury goods, banquets and ill-gotten property.

But analysts have also pointed to the negative side effects of the corruption campaign – official inaction out of fear of possible repercussions, or as a form of passive resistance against the crackdown. What is your view in this?

Premier Li Keqiang has repeatedly voiced frustration that economic policy measures are not always implemented at the local level. We expect the central authorities to strengthen supervision and take a tougher stance on official inaction.

The party talks about boosting the rule of law. Do you expect any changes in terms of judicial reforms not related to the anti-corruption fight?

It is tempting to dismiss the Communist Party's talk of boosting the "rule of law" in China as simply hot air, but viewed from within the Chinese context, there is more to it than that. Talk of the "rule of law" in Party speak should not be understood as complying with the Western ideal of judicial independence. The Party will maintain a degree of control over the courts and retain extrajudicial powers.

Instead, the primary goal is to try and ensure that Party and government officials toe the line and do what the leaders want, and that officials do not abuse their power, which the leadership fears is undermining their own legitimacy.

Julian Evans-Pritchard is China Economist at Capital Economics, a UK-based economic research consultancy.