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August 27, 2013

China to Hold Key Economic Reform Meeting in November

by Reuters

China's Communist Party will hold a key meeting in November to discuss deepening reforms, the official Xinhua news agency said on Tuesday, as leaders look to set the country's economic agenda for the next decade.
 
The meeting will mark the third time China's elite 200-member Central Committee has gathered since a leadership transition last year, though political reform is not expected to be a major talking point.
 
Historically, such meetings, known as third plenums, have been a springboard for key economic change in China.
 
“The decision to hold the third Plenary Session of the 18th CPC Central Committee in November was made at Tuesday's meeting of the CPC Central Committee's political bureau,” Xinhua said.
 
President Xi Jinping is likely to use his first such meeting since taking the role in March to push ahead with his agenda to reform the structure of the economy. He is looking to wean it off a heavy reliance on exports, credit and investment and towards more consumer-driven growth.
 
The priority is likely to be financial and tax reforms but the meeting may also discuss how to loosen the grip of the household registration, or hukou, system that constrains labor mobility and how to push land reform to help quicken urbanization.
 
Some have cautioned that the reforms could face resistance from vested interests, especially state firms.
 
Many economists see this as a critical period for China if it wants to avoid the so-called middle income trap, where wealth creation stagnates as market share is lost to lower-cost competitors and the attainment of high-income country status stays out of reach.
 
Some critics said the previous administration of President Hu Jintao and Premier Wen Jiabao had delayed economic reforms and failed to deal with the fallout from China's four trillion yuan ($650 billion) stimulus package in 2008.
 
The package insulated China from the global financial crisis but left a mountain of local government debt and contributed to record house prices as the free cash went into property speculation.
 
China's economic growth is at its weakest in 13 years, although still the envy of any major economy.
 
The date of the plenum was later than expected as most investors and analysts had expected it to convene in October.
 
Former leader Deng Xiaoping launched historic reforms at the third plenum of the 11th party committee in 1978 to rescue the economy from the verge of collapse after Mao Zedong's disastrous Cultural Revolution.
 
The third plenum of the 14th committee in 1993 endorsed the “socialist” market economy, paving the way for sweeping reforms spearheaded by former Premier Zhu Rongji.