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Communist Party third plenum

The Chinese Communist Party's third plenum of the 18th Party Congress traditionally sets the economic tone for the Chinese government's next five-year term.

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POLITICS

Party's third plenum pledges 'decisive role' for markets in China's economy

Third plenum promises economic change and announces launch of new, powerful organs to spearhead reforms and co-ordinate security strategy

PUBLISHED : Tuesday, 12 November, 2013, 7:10pm
UPDATED : Wednesday, 13 November, 2013, 8:20am
 

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13 Nov 2013
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Communist Party leaders yesterday pledged to give market competition a "decisive role" in the economy and strengthen judicial independence in a vaguely worded reform blueprint.

The communiqué issued at the end of a four-day party conclave laid down broad policy directions, but contained few particulars.

The focus of the restructuring of the economic system... is to allow the market [forces] to play a ‘decisive role’ in the allocation of resources
THIRD PLENUM COMMUNIQUÉ

The only concrete move was to set up two powerful organs - one to spearhead reforms and another to formulate a co-ordinated national security strategy.

The main objective of the key policy meeting, called the third plenum, was to forge consensus among the party elite and set a general tone for the country's development.

The plenum was attended by 204 full members of the Communist Party Central Committee and 169 alternates. More specific policy measures will be announced in coming months.

The communiqué - the first policy blueprint unveiled by the new leadership under President Xi Jinping and Premier Li Keqiang - struck a bold tone on economic reform, but a conservative one on the political front.

The leaders pledged to strengthen the independence of the judiciary and improve the anti-corruption mechanism.

But these measures are aimed at shoring up the legitimacy and control of the ruling party. No Western-style political reform ideas were mentioned.

The stress is still on developing the economy, which the leadership believes to be the key to the problems facing China.

Already the second-largest world economy, the country is struggling with unprecedented challenges, such as a slowdown in growth, a widening gap in pay, widespread social injustice and rampant corruption.

Yesterday's meeting was overseen by Xi himself. "The focus of the restructuring of the economic system... is to allow the market [forces] to play a 'decisive role' in the allocation of resources," the communiqué said.

For the first time, the party also said the private sector should be treated on the same footing as state-owned enterprises. It said: "Both the public and private sectors are the same important components of a socialist market economy and the important bases of our nation's economic and social development."

The party decided to set up a powerful organ to steer the reform crusade. "The central leading group on comprehensively deepening reforms will be responsible for the overall reform design … and the implementation of reform policies," it said.

On other fronts, the party vowed to "promote the rule of law and respect for the constitution", which will be crucial for a market-oriented economic system to flourish.

Some analysts questioned whether the initiatives could work without introducing equally significant political change.

"My view is that without substantial effort toward political liberalisation, the market economic reform could hardly succeed," said Zhang Ming , a political scientist at Renmin University.

The leadership also announced the formation of a state security committee "to perfect the state security system and state security strategy, and to ensure national security".

 


Highlights of the third plenum

Highlights and recommendations of the third plenum of the Central Committee of the Communist Party:

1. Achieve "decisive accomplishments" in major fields, build a sound, scientific and effective institutional system in all sectors by 2020.

2. Economic reform is the key to comprehensive reforms. Streamline the relationship between government and the market. The latter will play a "decisive role" in allocating resources.

3. Safeguard the authority of the constitution and law. Deepen law enforcement reform, guarantee the independent use of authority by the judiciary and prosecutors in accordance with the law; improve protection of human rights within the judicial system.

4. Establish open and transparent market rules; let the market play a major role in pricing. Establish a unified market for construction land in cities and the countryside; improve the financial system; deepen reform of science and technology sectors.

5. Set up a national security committee.

6. Set up a leading committee on comprehensive reforms at central level to take charge of the overall design of reforms, co-ordination, implementation and supervision.

7. Establish a comprehensive environmental protection regime, including better delineated property rights over natural resources and regulation of resource use; set up charging mechanism for their use.

8. Allow farmers to enjoy the same benefits of urbanisation as urban residents. Grant farmers more property rights and push for equal resource allocation among urban and rural areas.

9. Maintain the dominance of public ownership while encouraging development of non-public sectors to spur the economy's vitality and creativity. Strengthen the protection of property rights, and make state-owned enterprises adhere to modern corporate practices.

10. Transform the role of government and deepen reforms of its administration. Improve the government's credibility by making it more law-based and service-oriented.

11. Clarify responsibilities within government; reform the tax system; improve the transparency of government budgets.

12. Open up market access, speed development of free-trade zones, and open up inland cities along the borders.

13. Build a strong army by cultivating its allegiance to the party, its combat capability and morale.

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This article is now closed to comments

Javed Mir
So market forces are being gradually recognised -- will improve commons citizen's sense of ownership of their country and will lead to enhanced patriotism which already exists.
Javed Mir
So market forces are being gradually recognised -- will improve commons citizen's sense of ownership of their country and will lead to enhanced patriotism which already exists.
xiaoblueleaf
Much ado about nothing, lots of empty words many of which are self-contradictions. As long as the economy (and market) is dominated by SOE monopolies (banks included) into which trillions are being poured into more fixed assets (infrastructure and real estate included), there is no chance for the private sector to strive and prices determined by "market forces". "Reform" is all about further tightening and concentrating more control to the center.
Sad, la!
joyalsofi
Let's see, 9 of 13 points are directed solely towards the economy. One towards the environment. I think that says it all.
HiggsSinglet
Sounded like the special interest groups are still fighting it out!!!
lpc1998
Excellent! The Third Plenum upholds China’s “socialism with Chinese characteristics” and “socialist market economy”. Those who could not understand or refuse to understand these two concepts would not understand the achievements of the Third Plenum. It also upholds the Deng Wisdom of “crossing the river by feeling for the stones” meaning there will not be any “Big Bang” economic reforms.
Those who were hoping for hasty Gorbachev Reforms (meaning reforms that cause short-term pain and long-term maim) for the Chinese economy are terribly disappointed.
The pledge to allow the market [forces] to play a 'decisive role' in the allocation of resources is consistent with a market economy. The socialist market economy is also a market economy. However, this does not mean that state plays no role in the economy. That would be the morphing of China’s socialist market economy into a capitalist market economy and China’s “socialism with Chinese characteristics” into capitalism as practised in the West.
In the socialist market economy, the state plays not only a leading role in the development of the economy, but also in mitigating the capitalist excesses and chaos in the market.
babyhenry
Well the state seems to be doing an increasingly pathethic jobs in allocating resources fairly. besides from giving their wallets diabeties.
Why invest in more roads and white elephants infrastructure only? These will come back to haunt China one day (closer than you think). If the state is doing such a fine job, the ridiculious amount of money that Wen printed out of thin air should have been used in Schools, hospitals, etc. Yet till today there are tens of milliions in China that still can't a proper meal a day, a proper class room to attend class in, a basic medical attention cannot be provided. The cost of improving such dire basic condition does not need 4 Trillion yuan, a fraction of it is more than enough to improve the situation tremendously, yet the state spend it on rubbish not efficient projects like contruction of Ghost towns, etc just for the sake of bumping up those worthless GDP nos.
In conclusion its pretty darn obvious the state IS the problem. BTW the state is growing bigger at the expense of the private sector, not becuase those SOE are any better just that they got the state backing and private enterprises are left to die.
lpc1998
In 1978, China discarded soviet communism in favour of a socialist market economy. The brilliance of Deng Xiaoping is that, after studying the “miracle” economies of the East Asian tigers, he concluded that socialism and capitalism are not mutually exclusive. He termed the economy in which socialist SOEs and capitalist enterprises function together as a socialist market economy. Unlike the capitalist enterprises, the focus of the socialist SOEs, within the country, is national development and not maximization of profits. Therefore, when capitalist market economists diagnose the socialist SOEs as “inefficient” because the socialist SOEs do not make as much profits as the capitalist enterprises, they do not know what they are talking about.
Shenzhen is an example of how the state with its socialist SOEs transformed a piece of almost empty land into a very successful economic story. The socialist SOEs created the infrastructure and other necessary conditions for the capitalist enterprises to blossom. And Deng could declare “to get rich is glorious” in his socialist market economy without contradiction as it is legitimate for the capitalists, within the law and without serious harm to society, to maximize profit, create employment and pay taxes so long as the government remains socialist.
qiaohan
"Socialist market economy" is an oxymoron if I ever heard one. Private business can't compete with state run firms because they can't get loans from state banks. All those loans go to other state industries run by good old boys who will never let go of their inefficient monopolies. Nothing will change of course, why should the leaders change it? Social unrest will only get worse, that's why they agreed at the Plenum to finally get serious about setting up China's version of the U.S. NSA to give them more power to crush anyone who they feel is a threat to their $billions. Politics has nothing to do with it.
lpc1998
Of course, China has many problems; some of them are serious and urgent. A major problem is whether China’s socialist market economy would morph into state capitalism like the tiger economies before her with her socialist SOEs turning into or becoming capitalist SOEs, focusing on maximizing profits from the people just like any other capitalist enterprise. And what to do with the existing capitalist SOEs owned by the local governments that are hurting the capitalist enterprises in China’s socialist market economy instead of supporting them.

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