Next year will be the most important year for Chinese President Xi Jinping in his drive to claim "a decisive victory" against corruption and vested interest groups in order to shake up China's economy, said a China expert with the Lee Kuan Yew School of Public Policy.
The shake-up is imperative in order to sustain the growth of the world's second-largest economy, which has slowed down in recent years as it has become more market-oriented and consumption-driven, said Professor Huang Jing at The Straits Times Global Outlook Forum last Friday.
Mr Xi is racing against time, said Prof Huang, because the Communist Party is due to hold its once-in-five-years congress in 2017, where five of its seven apex decision makers led by Mr Xi are due to step down.
And the Chinese leader has a monumental task: To dismantle privileged interest groups that have come to monopolise every sector of the economy over three decades of breakneck economic growth without the rule of law, said Prof Huang.
"China has developed for 30 years without the rule of law. It has come to a point where China has to restructure, redistribute resources, cut right into the privileged interest groups which established themselves during the rule of (former presidents) Jiang Zemin and Hu Jintao," he told the audience of about 400 during a panel discussion.
Mr Xi has made the fight against corruption his signature policy since coming to power in 2012.
Top officials and senior executives of powerful state-owned enterprises (SOEs) have been charged with graft, along with provincial governors and county-level mandarins.
Mr Xi has cleaned up most local governments and made headway in the SOEs, said Prof Huang.
"Now they've got to get into the most important area, (liberalisation of) the financial industries. That's why you see all this instability, the stock market crash," he said, referring to the drop of more than 40 per cent in China's bourses between mid-June and August.
The crash has been blamed on an investment climate overheated partly due to liberalising laws that made it easier for funds to invest and for companies to offer shares to the public for the first time.
"2016 will be the most important year for Xi Jinping and his comrades because they will have to achieve 'a decisive victory' before the 19th party congress," he said.
Deputy Prime Minister Tharman Shanmugaratnam believes that even if Mr Xi's administration succeeds in its reforms, the Chinese economy is moving to slower and sustainable growth, driven increasingly by innovation.
"Its working age population is beginning to decline. Innovation is going to drive their growth, but it will be slower growth. It will have to come entirely from productivity growth, and it will be difficult to sustain growth at more than 6 per cent beyond this decade. But 5 to 6 per cent will still be remarkable," he said at the forum.
This article was first published on Nov 23, 2015.
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