China Politics Weekly No. 40 – February 9, 2015

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Economic opening, ideological closing

It’s a busy time in Beijing and around the country as ministries and local governments finish up annual meetings to review 2014 work and set priorities for 2015. Provincial governments have already released government work reports; meanwhile, State Council, NPC, NDRC, MOF, SPC and SPP work reports have been drafted and are undergoing revisions in preparation for the lianghui in March.

Drafting for the 13^th Five Year Plan also continues, with the NDRC currently finalizing the overall framework for the plan. Being the last year of the current five-year plan, 2015 government work in relevant areas will be heavily influenced by a need to achieve targets laid out five years ago.

Looking ahead, the thrust of economic policy will continue to be towards further market liberalization and less government intervention. The number of administrative approvals will decrease further while laws and regulations will be enforced in a more transparent and consistent manner.

On the whole, the direction of economic policy is a welcome sign to foreign businesses operating in China, but there are risks as well. Many companies have benefitted from tax breaks and other favorable policies at the local level; such benefits will become ever more scarce as the government creates a more unified national market.

There are other risks as well. Efforts to improve economic efficiency are happening in tandem with efforts by the Party to more tightly control the political narrative. This includes efforts to more directly appeal to the people (think “Chinese Dream” and the Mass Line Campaign), as well as stricter controls on information and enhanced efforts to silence opinions and ideas that could challenge the Party. Sectors seen as posing a risk to the Party’s control of information- in particular, IT, education and media- will see an already difficult business environment get even worse.