Date
23 October 2017
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The Big Picture: STRUCTURAL REFORM

The Communist Party of China (CPC) has approved a plan to deepen economic structural reform, state media reported after the party’s 18th Central Committee concluded a four-day plenum on Tuesday. By 2020, there should be substantial progress in key areas, with an efficient and standardized system in place, Xinhua news agency cited a statement as saying.

It is important to change the relationship between government and market to allow market forces to determine the allocation of resources, the statement said. The party will establish a task force to set the specific reform agenda and coordinate the effort among different government departments.

In stressing the role of socialism in a market economy, the statement said the public and private sectors are both essential parts of China’s economic and social development.

While the overall policy tone was in the right direction, observers however expect China’s economic structural reform for the next decade to be implemented at a slow pace as Beijing does not want to see a jump in the unemployment rate, fearing that it could threaten social stability and the party’s grip on power.  

The plenum’s reiteration of the importance of the public economy, together with recent speeches made by Premier Li Keqiang {李克強}, suggest that the nation’s new leaders are unlikely to carry out any big structural reform on state-owned-enterprises (SOEs) despite the country’s general direction to boost the private sector.  

Even if the local governments try to ensure a level-playing field when granting projects, SOEs will still enjoy an advantage given their large size and strong financial background. Also, as the state firms are expected to enhance their efficiency during the marketization process, private firms will find it hard to offer a stiff challenge. 

The State-owned Assets Supervision and Administration Commission, which said previously that it will announce an SOE reform plan after the plenum, will now be watched for any new announcements.  

Govt seen copying FTZ model to open up border areas

The Chinese government is likely to copy the free trade zone model to speed up economic opening-up in border areas, the China Securities Journal reported Wednesday, citing Li Jian, a researcher with an agency under the commerce ministry. Piloted FTZ program in Shanghai could serve as a model to be copied by border areas, and even in inland regions, according to the report. 

Cultural industry reform to be stepped up

China will accelerate the reform of the country’s cultural sector, the China Securities Journal reported Wednesday, citing a statement released after the CPC plenum. Party leaders pledged to build a modern public cultural service system and a modern cultural market system. Observers said the government may further encourage mergers and acquisitions among state-owned cultural enterprises while lowering the thresholds for private investment in the cultural industry.

–Contact HKEJ at [email protected]

JP/AC/RC

 

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