The policy agenda is also stagnant in these areas due to political limitations and a wide range of vested interests in the party-state system. The CCP is far from a homogenous block and includes different political factions from liberal reformists to more hardline Marxists. While factionalism is likely at its lowest point in decades under Xi’s consolidation of power, elements of it persist for now and any structural reforms will need to balance between interests of the different factions.
The vested interests of various factions frequently prove to be stumbling blocks. SOEs maintain tremendous amounts of influence over policy, and repeatedly push back on market reforms and changes to financial markets that are necessary to create a stronger foundation for SMEs to thrive in. Similarly, regional disparity alleviation efforts are often hamstrung by the officials and affluent middle class in the country’s developed coastal provinces. This has been seen from resistance to transfer payments to opposition to plans that would require more spots at top universities be reserved for students from poorer provinces.
Another key inhibitor is the mix of policy making and implementation approaches in China. While a strength for achieving quick gains, Beijing’s campaign style approach to policy implementation produces a flurry of activity from officials that dissipates over time. This style, in contrast to institution building, seriously restrains the long-term effort demanded by structural challenges.
One example is in the final months of 2018 when the “battle for blue skies” campaign led zealous officials in Northern China to replace coal heaters with gas ones. This was rushed, and in a demonstration of political zeal, coal heaters were prematurely destroyed even though gas lines and supplies were not yet established. The ensuing winter cold left millions freezing, and once infrastructure was in place, supplies ran short, leading to shortages in industrial centers as far south as the natural gas-rich Sichuan Basin.
Finally, the large host of potential crises facing the CCP at any given moment leads to a kind of policy schizophrenia that inhibits their ability to achieve progress in long-term issues. For example, the 2021 Central Economic Work Conference emphasized stability as the key goal in 2022, but otherwise had a laundry list of every possible economic matter spread over seven broad categories, leaving officials with no clear understanding of where they should put their focus — they know where the problems lie, but do not know which to tackle first. In effect, when officials are expected to achieve progress everywhere, they often end up advancing change nowhere.