China unveils economic reforms after third plenum

Tuesday 12 November 2013 22.31
Paramilitary policemen patrol outside the Great Hall of the People where the Communist Party's 205-member Central Committee gathered for its third annual plenum
Paramilitary policemen patrol outside the Great Hall of the People where the Communist Party's 205-member Central Committee gathered for its third annual plenum

China's leaders have pledged to let markets play a "decisive" role in the economy.

They announced a reform agenda for the next decade, looking to secure new drivers of future growth.

China aims to achieve "decisive results" in its reform push by 2020, with economic changes in focus, the ruling Communist Party said.

The announcement came at the end of a four-day summit of its 205-member Central Committee, known as the Third Plenum.

The self-imposed deadline for progress together with the creation of a top-level working group and an emphasis on "top-level design", suggest a more decisive reform push by the new administration.

Still, the party did not issue any bold reform plans for the country's state-owned enterprises (SOEs), saying that while both state firms and the private sector were important and it would encourage private enterprise, the dominance of the "public sector" in the economy would be maintained.

While the statement was short on details, it is expected to kick off specific measures by state agencies over the coming years to reduce the role of the state in the economy.

Historically, such third plenary sessions of a newly installed Central Committee have acted as a springboard for key economic reforms, and this one will also serve as a first test of the new leadership's commitment to reform.

Among the issues singled out for reform, the party said it would work to deepen fiscal and tax reform, establish a unified land market in cities and the countryside, set up a sustainable social security system, and give farmers more property rights - all seen as necessary for putting the world's second-largest economy on a more sustainable footing.

President Xi Jinping and Premier Li Keqiang must unleash new growth drivers as the economy, after three decades of breakneck expansion, begins to sputter, burdened by industrial overcapacity, piles of debt and eroding competitiveness.

Few China watchers had expected Mr Xi and Mr Li to take on powerful state monopolies, judging that the political costs of doing so were just too high.

Many economists argue that other reforms will have only limited success if the big state-owned firms' stranglehold on key markets and financing is not tackled.

But instead, the focus will be on indirect steps to limit the power of state behemoths and open up space for nimbler, private and foreign rivals - opening up key markets to private and foreign investment and deregulation tested in free trade zones.

Some reforms could face stiff resistance from powerful interest groups such as local governments or state-owned monopolies, people involved in reform discussions have said.