China Stock ETF Jumps as Party Unveils Economic Policy

The biggest U.S.-listed China exchange-traded fund jumped after the government pledged to boost private investment as part of economic policy changes.

The iShares China Large-Cap ETF climbed 3.4 percent at 9:38 a.m. in New York. The Bloomberg China-US Index of the most traded Chinese stocks in the U.S. added 2 percent. The Shanghai Composite Index rose 1.7 percent and the Hang Seng China Enterprises Index of mainland companies listed in Hong Kong rallied 3 percent amid speculation about reforms before a report by the official Xinhua News Agency detailing the changes.

China vowed to allow more private investment in the state sector, loosen its one-child policy and better protect farmers’ rights to land, according to the Communist Party policy decision published by Xinhua. The document, covering 60 measures, follows a communique issued Nov. 12 after a four-day party conclave in Beijing that omitted detailed policies for the world’s second-largest economy.

“Today’s news is positive -- we have a constructive stance on China,” John Lomax, emerging-market strategist at HSBC Holdings Plc, said by phone from London. “There was a bit of disappointment from the communique -- in headline terms -- as the detail was missing, so it’s good to see it being provided.”

Couples may have two children if either parent is an only child, according to the decision. Under China’s current family-planning policy, couples are allowed to have a second child if both parents are only children. Today’s document said the party plans to implement the reforms by 2020.

Farmers Rights

The announcement builds on pledges to elevate the role of markets in the nation while keeping the state in a “dominant” position. China is seeking to balance finding new sources of growth with sustaining the Communist Party’s grip on power as President Xi Jinping faces challenges from debt to demographics.

The government will give farmers rights to share, profit from, sell, collateralize and inherit ownership in collective assets, the document said, adding that a rural property market will be established. Restrictions imposed under the household registration, or hukou, system set up under Chairman Mao Zedong will be scrapped in towns and small cities and gradually relaxed in medium-sized cities, while the sizes of mega-cities will be strictly controlled.

Before it's here, it's on the Bloomberg Terminal.