China announces economic policy meeting
China’s ruling Communist party has set a date for a policy meeting that reformists hope could yield new moves to liberalise the economy, although chances of more political openness seem less likely. The third plenum of the 18th CPC Central Committee – in other words, the third time the Communist party’s 200 highest-ranking officials meet under the current leadership – will run from November 9 to 12, the Xinhua news agency said on Tuesday.
The third plenum is seen as a potentially crucial meeting for Xi Jinping, who formally became head of state in March, to lay out his policy objectives for what is expected to be his coming decade in charge of China. In a meeting with foreign business leaders earlier this month, Mr Xi Jinping, who also heads the Communist party, said: “We will study the issue of comprehensive reform and make an overall plan at the 18th third plenary session.” But observers have gradually lowered expectations for what those reforms might be, as censors have tightened control over the internet and silenced academics and critical activists. There are also doubts about just how far the government will be willing to push on economic reforms. Many now expect cautious further steps towards financial liberalisation and little progress on the thorny issues of state-owned enterprises’ role in the economy or meaningful land reform, where powerful interest groups hold sway. The influential Development Research Center, a think-tank under the State Council, recently issued a long list of reformist suggestions, including breaking up state monopolies and giving local governments greater control over their own finances. But analysts caution that the DRC report is representative of just one voice in the debate, and quite a liberal one at that. “If the new leadership were to execute this plan, it would certainly be a major positive to China’s long-term prosperity as well as short-term business confidence,” said Wei Yao, an economist with Société Générale. “However, we caution that the road map to be delivered at the plenum may be notably less aggressive.” Announcements at the plenum are likely to be phrased in the turgid, general phrases commonly used in official documents in China, making it hard to parse their significance. With so much up for discussion, investors have been looking for yardsticks to judge just how reformist or conservative China’s new leaders are. Jian Chang, an economist with Barclays, said moves to address the country’s fiscal imbalances, which have saddled local governments with big spending responsibilities but little taxation power, would be key. “We are cautiously optimistic,” she said. “Meaningful fiscal reforms will be our gauge of the new leaders’ ability to build a consensus for the urgent but complicated reforms China needs.”