Oct 01, 2013

    Soon: Plans for China's Great Transition

    CHINA'S leaders will lay out plans to transform the world's second-largest economy at a key party meeting next month, leaving the question of how to do it largely unanswered as much of the reform agenda is still a matter of heated internal debate.

    People familiar with the discussions say that out of a long list of reforms that the Communist Party's 200-member Central Committee is set to announce, only a mooted financial overhaul has reached a point where there is a plan and a roadmap.

    Fiscal, land and residency-registration reform - all key ingredients of China's declared goal of boosting its urban population - are the major sticking points as politicians debate how to implement the changes and as they also face resistance from powerful interest groups

    Still, the November meeting, the third plenary session of the Communist Party's top body, is being billed as a watershed for China's development, just like one in 1978 when strongman Deng Xiaoping unveiled his historic reforms to open China to the rest of the world, or one in 1993 when the party endorsed a "socialist"market economy.

    "The meeting will deepen reforms on all fronts," said a senior economist with a government think-tank in Beijing which has been involved in drafting the reform blueprint.

    The changes will lay out how China intends to overhaul the economy to allow greater domestic consumption to drive growth, moving away from an export- and investment-led model.

    A major part of that is an urbanisation plan aimed at drawing hundreds of millions of Chinese to live in towns and cities.

    Progress in working out those and other reform details will serve as clues to investors and observers as to whether and how soon China's promised Great Transition will become a reality.

    Political reform and an overhaul of China's state-owned enterprises will be low on the agenda, think-tank sources familiar with the discussions say. Beijing sees reform of state giants - a key pillar of national security and a major employer - as less urgent, analysts say.

    At the end of the day, government analysts expect Beijing to move slowly and carefully, employing Mr Deng's gradualist formula: "Cross the river by feeling the stone."

    "The fear is that it could be chaotic if you push changes on all fronts and you may fall off a cliff if you take too big a stride," said Mr Zhang Bin, an economist at the Chinese Academy of Social Sciences.