Economy

We think, therefore we are

Which think tanks are shaping Chinese policymaking?

Liu He w

Liu He: co-author of the 383 Plan

When Mark Leonard, the author of What Does China Think, visited the Chinese Academy of Social Sciences (CASS) in 2003, he was amazed to learn that 4,000 researchers were working there. CASS is the largest example in a diverse ‘industry’. According to a study by the University of Pennsylvania last year, China now has more think tanks (429) than any country bar the United States (1,823).

The bigger issue is less with their quantity and more with their prowess. Only three think tanks from China made it into the report’s top 50 (which is topped by the Brookings Institution). CASS earned the best score but was only ranked 17th overall. The Development and Research Centre (DRC) of the State Council, the top in-house researcher of the Chinese government, came a lowly 100th. Even the highly influential Party School of the Central Committee came just 12th in a sub-ranking for politically-affiliated peers.

The Chinese response is that outsiders don’t grasp the significance of these organisations. “Most foreign institutes don’t fully understand the importance of China’s official think tanks,” the 21CN Business Herald explained, pointing out that much of their research directly shapes policymaking but goes unrecognised because the contribution isn’t made public.

Aside from the key think tanks under the State Council and the Party, other bodies such as the Ministry of Finance and the central bank also have their own research units. China Business News said researchers generally submit proposals as internal documents which then become the basis for planning blueprints. For instance, the DRC helps to draft the State Council’s annual Government Work report, while the NDRC’s Academy of Macroeconomic Research is directly involved in formulating China’s five-year plans.

Whilst it’s true that China’s think tanks are often well-funded and enjoy direct access to the organs of government (their American equivalents concentrate more on influencing legislators) the drawbacks are obvious too: limited independence and less readiness to offer alternative or dissenting opinion.

Some are trying to raise their profiles. Before the Third Plenum – that began last weekend and ended Tuesday – the DRC caused something of a stir by publishing its own proposals for reform. This was a first: normally these reports are circulated internally. Dubbed the “383 Plan”, it called for sweeping changes ranging from interest rate reform to dismantling the hukou system (see WiC215). The China Economic Times has also noted that Xi Jinping has made encouragement of “well-established policy advisory mechanisms” and “high-quality think tanks” a key planning task since late 2012. “Improving the strategic planning prowess of Chinese think tanks is crucial in enhancing our country’s soft power,” the newspaper said.

More competition from the private sector would help. According to a survey by Tsinghua University last year, the number of research units is higher than foreign estimates (it put the actual figure closer to 2,500). But less than 5% are non-governmental. “There hasn’t been proper dialogue between the government and private-sector think tanks over the past 20 years,” Qilu Evening News noted.

In a proposal published in May, the DRC also called for policy incentives to encourage private sector research and advisory groups. Given the political sensitivity of many domestic issues, these look more likely to develop in fields like foreign policy or China’s role in the international economy. For instance, the China Centre for International Economic Exchanges, a “super think tank” formed by retired senior government officials, was set up in 2009 to promote international economic research (former Hong Kong leader and shipping magnate, Tung Chee-hwa was a key advocate of this body).

The world of finance also has candidates of its own. The China Economists 50 Forum (CE50) was founded in 1998 as an independent research entity and is backed by prominent economists including Liu He, a key aide to President Xi and a co-author of the 383 Plan, as well as the China 2030 report, which was published last year in conjunction with the World Bank (see WiC140). Also a member: central bank chief Zhou Xiaochuan.

Likewise, the China Finance 40 Forum (CF40) was formed in 2008 by 40 members of the financial elite, including up-and-coming regulators. Its early promoters were newspaper 21CN and Bank of Communications, an institution in which HSBC owns a major stake.

But will more ambitious think tanks lead to more vibrant debate, and more transparency in policymaking? CBN thinks it will be a lengthy process but hopes that government decision-making will become “more scientific and democratic” as a result. More specifically, China’s entrepreneurs will be hoping that a new generation of think tanks will push a pro-business agenda, perhaps also arguing against privileging state-owned firms.

And though the average person may have little awareness of them, it is clear that these types of institutions can have a powerful long term impact.

This is one of the lessons of the The Right Nation, co-authored in 2004 by John Micklethwait, editor of the Economist, which charts the rise of the conservative movement in response to Lyndon B Johnson’s ‘Great Society’ policies. After Republican candidate Barry Goldwater lost to LBJ in 1964, the right was at a low ebb. But a group of tycoons – notably Joseph Coors, the brewery heir – intervened, bankrolling two conservative think tanks: the Heritage Foundation from 1973 and the Cato Institute, from 1977. “This new network of thinkers owed much to five particularly generous benefactors, who were businessmen and trust funders so worried about the country’s drift to the left that they decided to build a conservative counter-establishment to haul it back to the right,” writes Micklethwait.

By the 1980s the Heritage Foundation agenda of free markets and deregulation was widely accepted and it would later co-opt Bill Clinton, a Democrat president. The Right Nation argues that the political tides could not have turned so dramatically without the foundation’s contribution.

Might something similar happen in China? Clearly, the political landscape is very different but it’s not too far fetched to imagine the likes of Jack Ma or Vanke’s Wang Shi (see WiC207) pushing for a ‘Consumer Rights Foundation’ to promote ideas to further deregulate the economy.


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