Ability to evolve seen as key to progress

Like the People's Republic of China as a whole, the Communist Party of China has evolved over the century since its founding. This evolution has impacted virtually all areas in which it is involved, including its approach to managing the country's economy.

The economic challenges China faces today from its position as the second-largest economy in the world are quite different from they were a century ago or even a few decades back. The changes are, in many ways, a testament to the CPC's ability to adapt and put in place policies that create the conditions for growth.

"The most important contribution of the CPC to economic development is that it realized the importance of local competition and adopted reasonable measures to maintain the competition in different historical phases," said Lu Xi, of the Lee Kuan Yew School of Public Policy in Singapore.

The first phase was in the 1980s when China created what Lu called an M-form economic structure. Local governments set up their own economic systems, which created the institutional foundation of local competition.

"The CPC's contribution is fully exploiting the potential of this M-form structure and precisely targeting fiscal reforms as the priority," said Lu. "There were four rounds of fiscal-decentralization reforms in the 1980s. These reforms greatly stimulated the enthusiasm of local governments in economic construction and promoted the vigorous development of the nonstate economy."

The second phase started in 1994 when, as the dividends of fiscal decentralization gradually disappeared, "the CPC made another right decision".

Lu said personnel controls were mixed with fiscal incentives in local management and the performance of local officials became critical for promotions. This competition "brought China another golden period of economic boom".

The CPC's approach continued to facilitate the economic growth the country needs.

"China's success is not an accident. The CPC made timely institutional adjustments at key points in history.

"These adjustments provided the necessary foundation of economic development. In short, the Chinese-style meritocracy has proven to be an important driving force for economic successes."