In November, the Third Plenary Session of the 18th Central Committee of the Communist Party of China (CPC) undoubtedly proved to be the most noteworthy event in China. Deciding the country’s direction for the next five to 10 years, the meeting’s significance is no less than that of the Third Plenary Session of the 11th CPC Central Committee in 1978, where the reform and opening up policy was drawn up. Currently, China is facing various severe challenges. Its reform has come to a decisive stage of leaving shallow waters behind.

As expected, the meeting centered on comprehensive reform in this new historic period. The decision adopted by the session clarified “comprehensively deepening reforms” as the general goal. To be specific, the reforms will focus on improving and developing socialism with Chinese characteristics and pushing on with modernization in the country’s governing system and capabilities.

The decision emphasized that economic reform is key, and that the core solution relies on a proper relationship between the government and market, leaving the latter to play a decisive role in the allocation of resources.

From this we can tell that comprehensively deepening reforms would provide historical breakthroughs in the next five to 10 years. In terms of general deployment, the design attaches extra importance to the economy, politics, culture, society, ecology and Party building, with detailed reform tasks in each area. As for the timetable, results must be achieved in key sectors by 2020.

Dr. Martyn Davies, CEO of Frontier Advisory, a South Africa-based emerging markets consultancy firm, said the session had lived up to the reform expectations set out by the Chinese Government leading to the event. It is ironic to note that the [Western] financial crisis from September 2008 laid the basis for the recent announcement of dramatic policy reform in China.

The crisis and subsequent plummeting demand in consumer spending in the U.S. and Western European economies caused China to respond through a financial stimulus package, which ramped up China’s growth but which also led to massive distortions in the Chinese economy. The rise of the state-owned sector during this period was arguably detrimental to the overall health of the economy. This has resulted in the sweeping reform announcements [recently] from Beijing, said Davies. To move forward in its reform and developmental drive, it is imperative that China accelerate its liberalization and “marketization” process.

Current systems in China need urgent improvement. Laws pertaining to the socialist market economy are incomplete. The non-public economy is weak. Fiscal and taxation system reform needs to be accelerated. Budget integrity and transparency is inadequate. The tax structure is unreasonable, while spending on people’s livelihoods and public services is low.

Reform of all these issues is no easy task, as it will have an impact on certain interest groups. The reform designers need more courage and resolution. Rapid development of China’s economy and society relies on determined reform. So does the country’s future.

THE EDITOR