The Congress of the Chinese Communist Party, currently being held in Beijing, is expected to result in the retirement of many of the party’s present leaders, and the inauguration of a new generation, generally expected to be more favorable to the private sector and foreign investment.
These leaders recognize that China needs foreign investment and expertise if it’s to continue its strong economic growth. While insurance in the People’s Republic has long been a state monopoly, except for the limited number of licenses granted to foreign companies, mainly in the commercial and life areas, things may change.
When it joined the World Trade Organization, China undertook to admit more foreign insurance companies, and even some brokers, but these admissions have been slow in coming. This is partly due to the rigidity of the Chinese regulators, who have been slow to change and adopt more open policies, and partly due simply to an underlying mistrust of foreign control, following decades of exploitation.
Now ideological and regulatory barriers may start to crumble, both as a result of China’s need for foreign capital and expertise, and the recognition of the inefficiencies inherent in a state-controlled system that prevents growth, promotes stagnation and stifles competition.
There will certainly be opposition. The companies and their managers will resist change that may cost them their privileged positions, if not their jobs, but the new generation of leaders that will eventually take power seems genuinely committed to further reforming the system as the best way to insure future growth.
None of the new leaders, however, are in favor of abandoning the political control of the party. At some point party interests may well clash with economic reforms as China’s rapidly growing middle class seeks to have a voice in the system, and to limit the corruption and cronyism that are still everyday facts of life in China.
Was this article valuable?
Here are more articles you may enjoy.