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 yesterday, 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 Chinese Communist Party (CCP) said in a communique released by state media at 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 coordinating reform, pushing forward reform as a whole, and supervising the implementation of reform plans.”
In previous policy statements, the CCP 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 (陶冬), 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 state-owned enterprises, 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 launch 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, and this one will also serve as a first test of the new leadership’s commitment to reform.
Among the issues singled out for reform, the party said it would work to deepen fiscal and tax reform, establish a unified land market in cities and the countryside, set up a sustainable social security system and give farmers more property rights.
The Xinhua statement also said a National Security Council would be established to “perfect the national security system and national security strategy and safeguard national security.”
If patterned on the US National Security Council, it would serve as the principal forum for the president to take advice from intelligence, military, police and other advisers, potentially alleviating a chronic problem among Chinese agencies of not sharing information.
Additional reporting by AP