The drifting of China’s reforms. Economic policy during Xi Jinping’s first term
The slackening pace of important economic reforms, as well as the stimulus measures taken in response to the 2008 crisis to boost investments, have all led to a huge build-up of debt and created imbalances in the Chinese economy, including in the financial markets and the industrial sector. The new generation of Chinese leadership has previously shown a strong ambition to overcome the status quo and resume reforms, setting out a new economic reform agenda in 2013.
Vested interests, which grew out of state owned enterprises and the bureaucracy, have been regarded as the main line of resistance to further reforms. President Xi Jinping has centralised the decision-making over economic reform by expanding the structures of the Communist Party of China. The new tools for implementing reform turned out to be marred by several defects, which contributed to further stagnation of key reforms. Moreover, the slowing down of China’s economic growth has sparked a debate among the country’s top decision makers on the ultimate shape of economic policy, and the pace of subsequent reforms.