Xi weighs in on promoting market economy and private sector

September 16, 2019 09:50
Xi Jinping's comments at a party meeting have revived hopes that Beijing will implement various reform tasks outlined six years ago. Photo: Reuters

During a recent party conference, Chinese President Xi Jinping highlighted the need to implement various reform tasks set out in the 2013 third plenary session of the 18th Communist Party of China (CPC) Central Committee, which confirmed a direction to pursue market opening-up.

Reemphasizing directions set out in a meeting six years ago is extremely rare in China.

The CPC Central Committee is the core policy-making body of the party, with around 200 members. And the third plenary session is generally considered to be the most important meeting to set the tone of policy direction.

For example, in 1979, the third plenary session of the 11th CPC Central Committee decided on the nation’s opening-up, while the third plenary session held in 1993 confirmed the country will adopt a socialist market economic system.

At the third plenary session of the 18th CPC Central Committee, the top leaders agreed for the first time to let “market play a decisive role in allocating resources”, and stressed that “economic property rights cannot be violated”.

The meeting also called for the promotion of mixed-ownership economy, allowing private capital to own stakes in state-owned projects, as well as the adoption of employee stock ownership plan in mixed-ownership firms.

Simply speaking, that meeting was mostly about market reforms and opening-up.

Private entrepreneurs and foreign investors were very upbeat about the business environment outlook soon after third plenary session of the 18th CPC Central Committee. However, most of the measures suggested in that meeting didn’t materialize.

Xi’s reiteration this time has revived hopes that Beijing will continue to make progress on supporting the private sector and relying more on market economy. This is all good news. Still, we need to watch if Beijing really means it and follows up with action.

This article appeared in the Hong Kong Economic Journal on Sept 13

Translation by Julie Zhu with additional reporting

[Chinese version 中文版]

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Hong Kong Economic Journal columnist