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Opinion / Op-Ed Contributors

Impressive statement of intent

By Wang Qinwei (China Daily) Updated: 2013-11-20 06:42

Reforms to the social welfare and household registration systems are also proposed. Meanwhile, there is a pledge to further relax the strict family planning policy under which most families are allowed to have only one child. Restrictions on the sale of rural "construction" land will also be lifted, which will help poor rural households and give a leg up to urbanization.

There will be more to say about these reforms. But for now, there are a few key points to note. First, this is the "master plan" that the top leader Xi Jinping promised. The blueprint includes reform proposals in almost all areas.

To be sure, not all of this is new. Some of these reforms, notably in the financial sector, have been underway for a while. Others - such as the expansion of value-added tax to service sectors are incremental steps that were expected. Others, such as the property tax, have been proposed before but not progressed far. However, this is the first time that a high-level assessment of the problem has been combined with such detailed proposals for reform.

In addition, the Party leadership appears to have gone out of its way to explain why wide-ranging reform is needed. It published an 11,000-character statement in the name of top leader Xi alongside the Decisions document, which explains the various reforms and provides some historical context for the decisions that have been made. Embedding the reform package in a wider narrative about China's future will make it more likely to be implemented in the face of opposition. Xi's statement also makes clear that the package of reforms must be taken as a whole the reforms must be mutually "coherent" and their implementation should be "coordinated".

The one area where proposals are rather thin is in the role of State-owned firms. While the market reforms discussed above should go some way to level the playing field for private firms, the State clearly wishes to see a continued strong role for SOEs.

A policy document, however weighty and well put-together, does not in itself change anything on the ground. Whether or not the Plenum ends up a turning point in China's development depends on how well the proposed reforms are implemented. Xi's statement includes a comment that growth is "unbalanced, uncoordinated and unsustainable" which echoes a similar statement then premier Wen Jiabao made back in 2007. In doing so, it reminds us that we have heard loud calls for reform before. It is not just the speed of reform implementation that matters, but the sequencing - getting that wrong could create addition problems.

Though people might have spent more time recently grappling with the Central Committee statements on the socialist market economy than is healthy, the feeling about the prospects for China's long-term economic future is more upbeat than ever.

The author is China economist at Capital Economics, a London-based independent macroeconomic research consultancy.

(China Daily 11/20/2013 page9)

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