Third plenum expected to determine new relationship between state and private sectors

The business and financial worlds will soon learn how far Chinese President Xi Jinping is willing to go to jump-start the world's biggest economy.

At a major party meeting - the third plenum of the Communist Party's Central Committee, which runs from today until Tuesday - Xi and his coterie are expected to unveil measures that will spur domestic consumption and industrial innovation.

In particular, Xi and Premier Li Keqiang have promised to boost consumption and innovation by reducing the power of state monopolies, easing market access for private enterprises and deregulating the corporate sector.

These moves, experts say, are critical to bolster the economy, where growth has cooled from a peak of more than 14 per cent in 2007 to less than 8 per cent in recent quarters. The target for this year is 7.5 per cent.

But the gathering is unlikely to break up the vast monopoly of state-owned enterprises, a necessity if private and foreign investors are to compete with state-run behemoths. Currently, state-owned oil giants, such as PetroChina and Sinopec have exclusive access to the best crude oil, from which they reap massive oil processing profits. And the mainland still has no private banks.

Xi clearly needs to make bold moves and fast. Financiers worry that the golden era for foreign investment may be gone, partly because the mainland's labour costs have climbed, while the country's desire for foreign exchange has faded as it sits on the world's largest foreign exchange reserves.