China at a turning point
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What a difference a week makes! When the top-level findings of the Communist Party of China's Third Plenary Session of the 18th Central Committee first came out mid-month, they were generally dismissed as containing little significant reform. However, aft
The session’s communique contained more than 300 reform measures, among them land reform, reform of SOEs, more competition in the banking industry, relaxation of price controls on key industries and opening up to foreign investment in line with the model of the Shanghai Free Trade Zone.
On the social side, the communique proposed ending China’s one-child policy (if any spouse is an only child, they can have two children), more funding for social security, reform of the hukou (residential) system to make it easier for rural people to move into the cities, and raising the retirement age.
One very interesting aspect of the session was how it reflected the new leadership style – combining a willingness to take bold steps with a commitment to consultation. President Xi Jinping led the reform process, which began in April, by inviting proposals from all levels of government and society including municipalities, autonomous regions, the armed forces and NGOs.
A working group then spent several months drafting a strategic plan for deepening reform in all areas.
Adopted unanimously
In July the draft plan was circulated to various departments and party members and it received 2,564 proposals for amendment, of which 24 per cent were accepted in the final document. When it was presented to the Central Committee on November 12, it was adopted by unanimous vote.
While it will take time to analyse all the details, effectively they present a detailed roadmap for China to achieve its desired goal of becoming a well-off society by 2020.
It is a clear departure from the old development model based on investment and export-led growth. Rather than central planning, “the market will play the decisive role in allocation of resources”, according to President Xi.
“The government will maintain a stable macroeconomic environment, provide public service, safeguard fair competition, supervise the market, promote sustainable development and step in when the market fails.”
Chi Fulin, head of the China Institute for Reform and Development, a leading think tank, described the meeting as “a turning point of Chinese history”.
If successful it will not only be a turning point for China but will have wide-reaching implications for the rest of the world, given China’s growing stature as an economic powerhouse and
global leader.
