Conditions are ripe for President Xi Jinping to overcome obstacles to reform, in part because he has assembled a strong team to handle domestic and world affairs, says a former Australian ambassador to China.
Geoff Raby also suggests that China be more open to foreign investment.
Raby told the South China Morning Post on the sidelines of the annual Boao Forum for Asia - a three-day event on the southern resort island of Hainan - that recent appointments to a powerful economic team were "encouraging".
"It's a very strong team being assembled that understands reform and is capable of implementing it. And Xi has the power," said Raby, who is now a non-executive director of Australia's Fortescue Metals Group (FMG), the world's fourth-largest supplier of seaborne iron ore. "I think the circumstances and conditions are there for [reform] to happen. But … obviously there are challenges for Xi."
The forum emphasises regional economic integration.
Xi's economic team retained Zhou Xiaochuan as chief of the People's Bank of China, with the former chairman and Lou Jiwei, chairman of China Investment Corp, the nation's sovereign wealth fund, named minister of finance.
There was a big reform agenda that must be addressed, Raby said, pointing specifically to financial sector reform, the internationalisation of the yuan and a gradual easing of interest rate controls.
However, he suggested that any changes should not be too "dramatic" or they would risk being "too disruptive".
"The whole history of China's reform since 1978 has been about gradualism and incrementalism," Raby said.
He also noted that Beijing tended to "embrace" technological transfers from abroad, but the national leadership appeared "very reluctant" to encourage foreign players to compete in domestic industries such as the financial services sector.
"I think China is more ambivalent about foreign investment," Raby said.
Meanwhile, Australian leaders of industry generally appear to be less concerned about security issues related to their staff working in China, even after bilateral ties cooled in 2009 when Beijing jailed Stern Hu, an Australian national and a former Rio Tinto executive, for corruption and espionage.
In his response to a media question about the security situation on the mainland, FMG chairman Andrew Forrest called China a country that was evolving.
Its new leaders had pledged to pay closer attention to ensuring equality and improving the rule of law, he noted.
"I have the personal confidence that it is improving quickly," Forrest said, adding that "in the language of the new leadership, I've been very pleased to hear of the openness".
Raby said he believed that China was capable of achieving sound economic growth that will help its economy flourish over the next decade, bolstered by urbanisation and also given its still-low per capita income.
"I'm very confident that China's growth story still has a long way to run, providing there are no shocks from the political system," Raby said.