6 December 2019
Despite its modern facade
Despite its modern facade

CPC PLENUM: The week at a glance

Will Chinese rulers bite the reform bullet?

As China’s top leaders prepare for a key party meeting this week, there are hopes Beijing will lower entry barriers and further ease administrative approval procedures to encourage more private capital into key sectors and break the long-held dominance of state monopolies.

Some initiatives are likely to be unveiled at the Nov. 9-12 plenum of the Communist Party’s 18th Central Committee but achieving the overall objectives will not be easy for the new administration, economists say.

Luring private capital into industries such as telecom, oil and gas and railways will be particularly difficult, they say, citing the entrenched interests in these industries and the huge investment it entails in the initial phase for relatively low returns. [full story]

Urbanization holds key to economic restructuring

The government is betting on urbanization to drive economic reform. The massive program to relocate hundreds of millions of rural residents to urban centers and spruce up decaying neighborhoods is expected to gain impetus during the upcoming meeting of senior party leaders.

President Xi Jinping {習近平} and Premier Li Keqiang {李克強} see the program as a lynchpin of their ambitious plan to introduce structural changes to the world’s second largest economy.

More than shepherding the biggest mass migration in human history and transforming crumbling villages into urban centers — themselves herculean tasks — the government faces an array of formidable challenges from decades of central planning. [full story]

If not now then when for RMB convertibility?

The gathering will be in Beijing but all eyes will be on Shanghai and its free trade zone when party leaders assemble for a four-day direction-setting meeting from Saturday.

The zone is a test bed for China’s experiment to open its capital account, a proving ground for efforts to achieve full renminbi convertibility. But deciding how quickly this opening takes place will be one of the toughest hurdles for the country’s leaders over the next two years, some observers say.

A lack of consensus on the issue highlights its complexity. When central bank chief Zhou Xiaochuan {周小川} joined some top economists in suggesting that the capital account be opened by 2015, various academics responded with strong opposition. A May 21 report by 21st Century Business Herald about Zhou’s proposal was pulled within hours, triggering speculation the matter had stirred uproar in the party.

Opponents said the 2013 timetable could result in large-scale capital outflows if the United States raises interest rates over the next two years. [full story]

– Contact the reporter at [email protected]