China pledges to let markets play a decisive role in nation's future
China's ruling party pledged to let markets play a "decisive" role in allocating resources as it unveiled a reform agenda for the next decade 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 ruling Communist Party said in a communique released by state media yesterday the end of a four-day closed-door meeting of the party's 205-member 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 party said in its statement.
It added that it 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".
In previous policy statements, the Communist Party had often described markets as playing a "basic" role in allocating resources, Xinhua news agency said, meaning the new language amounts to an upgrading of its role in the party philosophy.
"They are looking to break away from government control, allowing the markets to take the lead. In the past, prices and investment decisions were predominantly made by the government," said Dong Tao, Asia ex-Japan chief regional economist with Credit Suisse in Hong Kong.
"This is a revolutionary philosophy, by Chinese standards."
Still, the party did not issue any bold reform plans for the country's state-owned enterprises (SOEs), saying that while both state firms and the private sector were important and it would encourage private enterprise, the dominance of the "public sector" in the economy would be maintained.
While the statement was short on details, it is expected to kick off specific measures by state agencies over the coming years to 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.
Among the issues singled out for reform, the party said it would work to deepen fiscal and tax reform, establish a unified land market, set up a sustainable social security system, and give farmers more property rights.
President Xi Jinping and Premier Li Keqiang must unleash new growth drivers as the economy, after decades of break-neck expansion, begins to sputter, burdened by industrial overcapacity, debt and eroding competitiveness.
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 attention.
As part of that, Beijing 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 yuan by then. (Reuters)