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China vows "decisive" role for markets

Source: Agencies | November 12, 2013, Tuesday | Online Edition

China's ruling Communist Party pledged to let markets play a "decisive" role in allocating resources as it unveiled a reform agenda for the next decade on Tuesday, looking to overhaul the world's second-largest economy to drive future growth.

China aims to achieve "decisive results" in its reform push by 2020, with economic changes a central focus of overall reforms, the Party said in a communique released at the end of a four-day closed-door meeting of the Third Plenary of its Central Committee.

"The core issue is to straighten out the relationship between government and the market, allowing the market to play a decisive role in allocating resources and improving the government's role," the communique said.

"Both public and non-public sectors of the economy are important components of the socialist market economy and significant bases for economic and social development," according to the document.

China will stick to the dominant role of public ownership, playing the leading role of the state-owned economy, while encouraging, supporting and guiding the non-public sector, enhancing its vitality and creativity, it said.

A united and open market system with orderly competition will be built so that the market will play a "decisive" role in allocating resources, according to the communique.

Government functions must be transformed in a manner to build a law-based and service-oriented government, it said.

It added that China would set up a central leading team for "comprehensively deepening reform," responsible for "designing reform on an overall basis, arranging and co-ordinating reform, pushing forward reform as a whole, and supervising the implementation of reform plans."

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 China 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.

Out of a long list of areas that the meeting was expected to tackle, most analysts have singled out a push towards a greater role of markets in the financial sector and reforms to public finances as those most likely to get immediate attention.

As part of that, China is expected to push forward with capital account convertibility, and the 2020 target date for making significant strides on reform could set off expectations that the government will be looking to achieve breakthroughs on freeing up the closely managed yuan by then.

Another key area that reformers say is ripe for change is control of land. The Party said in its communique that farmers should have more property rights.
China will "push forward land reform and give farmers more property rights", it said, including having one market for development land in both cities and the countryside.

It did not mention China's one-child policy, which had been trailed as a possible area for reform, and only obliquely addressed the divisive hukou residency system, which denies people who have migrated from the countryside to the cities equal access to benefits.

A state security committee will be set up to "improve systems and strategies to ensure national security", the communique said, pointing out the need to "effectively prevent and end social disputes and improve public security."

"The Party must give full play to its core role of commanding the whole situation and coordinating the efforts of all quarters, and improve the leadership and governance to ensure the success of reform," it said.

Modern armed forces with Chinese characteristics will be built, the communique said.

The communique also urged building of a comprehensive system for ecological progress that protects the environment.

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