Hopes of economic reforms in China rise after think tank report

HONG KONG - Expectations for the new Chinese leadership’s reform agenda have been running high ahead of the Third Plenary meeting in November (specific dates have not been announced). In a meeting last week with international business leaders, President Xi Jinping was reported to have said that the Third Plenary meeting will set out a roadmap for “broad and deep reforms.” And over the weekend a published report of the State Council’s think tank, The Development Research Centre (DRC), entitled “The Strategy and Roadmap for the New Round of Reform” received wide press attention.

BBVA Bank Research says the report may be a precursor to reforms to be announced at the November Plenary meeting of the Chinese Communist Party. The report highlights three areas - “marketisation” of the economic system, government administration reform, and innovation of enterprises.

Within these broad areas, the report emphasises policies to promote competition through monopoly and antitrust rules, land reform, financial reform, fiscal reform, SOE reform, and environmental policies, promotion of the service sector and boosting foreign investment.

BBVA says the breadth of the reforms are encouraging, although it remains to be seen whether key elements of the report will survive the final outcome of the Plenary meeting; moreover, implementation will be key given well-known resistance of vested interest groups.  The Bank says one positive concrete step was taken last Friday by the State Council to eliminate minimum capital requirements for business registration, aimed at lowering the threshold for business start-ups.  www.bbvaresearch.com.. (ATI).