The season of speculation is in full swing ahead of a big Chinese policy meet. A date has been set, agendas distributed and speeches drafted.
On November 9, two hundred or so of the most politically influential people in the country will assemble at the Third Plenum in Beijing to discuss the future direction of China’s economy. What is known is that there will be grand bargaining between reformers and conservatives. Everything else is up in there air, with opinions based on hearsay and readings of the tea leaves.
So when an influential body that advises the government on economic policy released a report listing major reform points for consideration, hopes surged that something radical would emerge. Some of the optimism unleashed has been quite sweeping.
“The proposal is a comprehensive reform package, probably the most ambitious top-down economic reform initiative in the history of the People’s Republic of China,” Dong Tao, a Hong Kong-based economist with Credit Suisse said in a report this week.
Known as “Plan 383”, the document in question lists “three key concepts,” “eight areas of reform” and “three correlated reform combinations” that when thrown together will unleash further economic development. “This is a very reform-minded and comprehensive set of policy initiatives, exceeding our expectation and probably also the market’s expectation,” noted Dong.
Weight has been given to the report because it was drafted by the Research and Development Centre of the State Council, an influential government think tank. The lead authors are also both heavyweights. Liu He is a deputy director of China’s main economic planner and a key adviser to President Xi Jinping. Li Wei was a secretary to the former reformist premier Zhu Rongji.
For many other observers, however, Plan 383 is not a sign of anything beyond that reform is now a key issue among senior policymakers. Much of its content covers topics that for the past decade have been flagged by Beijing “key” areas to be addressed, such as breaking up state monopolies and reforming land use rights, but on which there has so far been little movement. There is little in the plan to suggest this time is different as it contains no solid information, Zhou Hao, a Shanghai-based economist with ANZ, told China Economic Review.
As for the significance of Liu, while his status could be an indicator of the clout the document carries in the upper echelons of power, the reform ideas it contains are not surprising because Liu is a reformist and that is what he would be expected to include, Zhou noted.
“It’s a wish list rather than a blueprint,” Qinwei Wang, a London-based economist with Capital Economics, said of Plan 383. Wang expects the final report issued at the end of the plenum to be “less ambitious” than the proposal submitted by the Research and Development Centre.
Crucially, “there is little evidence about the political side [of reform] or the rule of law” in the document, Wang noted. Without this, there can be no meaningful progress on creating a stronger market system, changing the role of government and giving more space to private enterprises within the corporate system – the three main concepts of the plan.
Perhaps the biggest strength of Plan 383 is that is has pulled together crucial reform points into a single document for reading by top officials. This indicates that consensus on where China goes next is starting to move in one direction.
But it is just one of many documents submitted for consideration at the plenum by various agencies and interest groups. And as Zhou remarked, “it’s not clear” at all that the government will even accept its recommendations.