* Party had previously said market role in economy was
* Sets 2020 as target for significant results
* To set up working group to co-ordinate reform
* Advocates "top-level design" for reforms
* Says state sector to retain a leading role
By Jason Subler and Kevin Yao
BEIJING, Nov 12 China's leaders pledged to let
markets play a "decisive" role in the economy as they unveiled a
reform agenda for the next decade on Tuesday, 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 in a communique released by state media at the end of
a four-day conclave of its 205-member Central Committee.
The self-imposed deadline for progress - rare for Beijing to
lay out in such clear terms - 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 administration of
President Xi Jinping and Premier Li Keqiang than under the
They must unleash new sources of growth as the economy,
after three decades of breakneck expansion, begins to sputter,
burdened by industrial overcapacity, piles of debt and eroding
"You should look back in history. When Deng Xiaoping started
the reform and opening movement, he actually did something very
similar in nature, creating a very powerful working group," said
Steve Wang, China chief economist with The Reorient Group in
"These guys report direct into the power centre of the
Communist Party. This is definitely not something to be looked
at as another layer of bureaucracy, this is something to speed
things up, to make things more efficient."
The leaders also set up a state committee to improve
security as Beijing seeks to tackle growing social unrest and
unify the powers of a disparate security apparatus in the face
of growing challenges at home and abroad.
While the statement was short on details, which prompted
disappointment on social media, it is expected to kick off
specific measures by state agencies over the coming years to
gradually 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 the follow-up to this meeting will serve
as a first test of the new leadership's commitment to reform.
CAUTIOUS ON STATE-OWNED ENTERPRISES
While the party effectively upgraded the importance of
markets in its philosophy - previous policy statements often
described markets as playing only a "basic" role in allocating
resources - it also made clear that it had no plans to radically
reduce the role of the state in the economy.
State-owned enterprises, which now control large swathes of
the economy, will continue to play a leading role, even while
the government creates more room for private enterprise by
opening up more industries to private capital, it said.
Among the issues singled out for change, the party said it
would work to deepen fiscal and tax reform, establish a unified
land market in cities and the countryside, give farmers more
property rights, and develop a sustainable social security
system - all seen as necessary for putting the world's
second-largest economy on a more stable footing.
Today, expanding the urban population to help transform the
economy to one that is led more by consumption is being thwarted
in part by a rigid residence registration system.
The system ties entitlement to public services, such as
pension, healthcare insurance and free public schooling, to home
villages and towns.
That makes it hard for the migrant workers that Beijing
wants to encourage to move and work in cities to become
full-fledged urban dwellers and consumers.
Restrictions on farmers from selling their land also impede
this process, leaving many caught between the city and village.
HUNGRY FOR DETAILS
Out of a long list of areas the meeting had been expected to
tackle, most analysts singled out a push towards a greater role
for markets in the financial sector and reforms to public
finances as those most likely to get immediate attention.
As part of that, Beijing is expected to push forward with
freeing up the movement of capital in and out of China. The 2020
target date for making significant strides on reform could fuel
expectations the government will be looking to achieve
breakthroughs in freeing up the closely managed yuan
Still, some observers were sceptical about just how far its
efforts would go.
"Top billing is given to granting markets a 'decisive' role
in resource allocation, which could mean a great deal, or very
little," Mark Williams, chief Asia Economist with Capital
Economics in London, wrote in a note.
The reaction on Chinese social media was broadly of
disappointment over the lack of details.
"What is there to be said about the third plenum? Having
read it, it feels like not having read it at all - there are no
details, no regulations," said one user named Yu Chunxi, who
says he works for a state-run asset management company.
Even with its new focus on central co-ordination of reform
efforts, Beijing will likely face stiff resistance from those
who benefit from the status quo - powerful heads of state
companies to local officials who can benefit, often through
graft, from the current focus on land sales and infrastructure
Few China watchers had expected Xi and 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 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 markets to private and
foreign investment and deregulation tested in free trade zones.
Beijing also predictably drew a line in the sand about how
far it was willing to go on reforms - while it would move
towards a more market-oriented economy and seek to weed out
corruption and onerous bureaucracy, it would not entertain
serious political reforms, or "change the flag", as it put it.