China Signals ‘Unprecedented’ Policy Changes on Agenda at Plenum
Chinese Politburo member Yu Zhengsheng said reforms to be discussed at a Communist Party meeting next month will be unprecedented, adding to signs that leaders are resolved to spur far-reaching policy changes.
Yu’s comments, made in a speech at a forum to promote relations with Taiwan, were reported by the official Xinhua News Agency on Oct. 26. Yu is ranked fourth in the seven-strong Politburo Standing Committee headed by party chief and President Xi Jinping.
Premier Li Keqiang has pledged to cut the state’s role in the economy, change the financial and fiscal systems, and overhaul land and household registration rules to sustain growth. Analysts surveyed by Bloomberg News this month said policies flowing from the meeting, called the third plenum, will reduce the odds of a severe slowdown and help China become a high-income country by 2030.
The meeting “will focus on studying comprehensive and deep reform,” Yu was quoted as saying in Xinhua’s report. “The depth and strength of the reforms will be unprecedented and will promote profound changes in every area of the economy and society.” The report didn’t refer to any policies or measures.
Yu’s remarks follow comments Xi made to foreign business executives last week that “comprehensive reforms” would be “planned out” during the plenum, according to an English-language Xinhua report on Oct. 23 that didn’t specify any policies. Dates for the meeting haven’t been announced.
“We must properly handle the relations between reform, development and stability, and with greater political courage and wisdom, further open our minds, unleash and develop social productivity, and enhance the creative forces of the society,” Xi was quoted as saying.
Next month’s gathering will be the third full meeting, or plenum, of the party’s current Central Committee, including Xi, Li, ministers and the heads of the biggest state firms and banks, who took over in a once-a-decade power transition that started in late 2012. Thirty-five years ago, a similar Communist Party gathering saw Deng Xiaoping and his allies inaugurate a series of reforms that began to open up China to foreign investment and loosen state controls over the economy.
“I don’t expect to see concrete measures announced at the meeting, but I do expect to see concrete setting of a clear direction and objectives,” said Louis Kuijs, chief China economist at Royal Bank of Scotland Plc in Hong Kong who previously worked for the World Bank in Beijing. “It’s clear that in the financial and monetary areas there’s a full mandate to move ahead, but so far we haven’t had the same signals in other key areas of reform.”
The government has already made progress in areas including cutting regulation, “but that’s low hanging fruit,” Kuijs said. “Some recent statements, such as on the fiscal front, seem to indicate it’s going to be pretty tame.”
China has pared its growth ambitions, targeting annual expansion of 7 percent this decade, compared with the 10.5 percent average pace of the last 10 years.
Bloomberg’s survey of analysts conducted from Oct. 11 to Oct. 18 indicated that the odds of a severe slowdown in China or a credit crisis will fall after the summit as leaders tackle local-government debt and financial reforms.
Fifteen of 23 economists and political analysts said policies flowing from the meeting will reduce such risks, and a majority said the plans will help China become a high-income economy by 2030.
Asked which reforms are most needed now and most likely in the next 12 months, survey respondents ranked changes in financial markets and local-government funding as both most urgent and probable. Expectations were lower for reforms to the residence-registration or hukou system, which limits labor mobility, the rule of law and state-owned enterprises.
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