Rallying Around Reform

　　Yang Guanglin used to be a farmer in southwest China’s Sichuan Province. Seven yearsago his family said goodbye to their rural villagelife and made the move to the provincial capitalChengdu. Yang picked up work on constructionprojects while his wife waited tables in a small cityrestaurant. The migrant couple and their only sonhave been battling against the odds to put downroots in the city， but because of a piece of paper，they battled on in vain.

　　Despite the fact that the family can save around20，000 yuan ($3，282) a year， they never feel asense of belonging in the city. That’s because theydo not have an urban hukou (permanent householdregistration certificate)， and can never be regardedas genuine urban dwellers.

　　“I don’t have a Chengdu hukou， therefore I canonly enjoy social security if my employer is willingto offer me that benefit. However， we constructionworkers are temporary workers who frequentlymove from project to project. No one is willing tobuy us that [social security]. Things are similar for mywife. We don’t dare to go to hospitals because wecan’t afford it，” Yang told People’s Daily.

　　The biggest headache for Yang， however， is hisson’s education. With the absence of local hukou，Yang has to pay a considerable amount of the socalled“sponsorship fees” to urban public schoolsbefore his eight-year-old boy can be enrolled， somethingthe family cannot afford to do.

　　“There are also two primary schools for migrantworkers’ children， but they don’t even have the[right] educational qualifications and the conditionsare very poor.”

　　Yang is just one of the hundreds of millions ofmigrant workers in China who flock to cities to seeka better life， and， despite their hard work， never feelwelcome in their new urban locales.

　　However， a ray of hope shone through the gloomof migrant workers plight after the closure of theThird Plenary Session of the 18th Central Committeeof the Communist Party of China (CPC)， heldfrom November 9 to 12 in the nation’s capital ofBeijing.

　　During the four-day closed-door session， Chineseleaders vowed to establish a more fair and sustainablesocial security system for both urban and ruralresidents. According to a communique releasedafter the plenary session， more efforts will be madeto improve social welfare and deepen institutionalreforms to release social justice and equality.

　　The third plenary sessions of the CPC CentralCommittee often focus on reforms since the late1970s. China’s landmark reform started right afterthe Third Plenary Session of the 11th CPC CentralCommittee held in 1978. The reform and openinguppolicies ever since have brought China more thanthree decades of rapid economic expansion.

　　The recently concluded 205-member 18thCPC Central Committee plenary session， whichhas drawn attention from around the globe， marksthe beginning of a new round of comprehensivelydeepening reforms in the world’s second-largesteconomy.

　　The general objective of the reform is to improveand develop socialism with Chinese characteristicsand push on with modernization of the country’sgoverning system and capabilities， according to thecommunique.

　　This round of comprehensivereforms will go farbeyond economic changesand will cover the socialistmarket economy， democracy，social harmony and ecologicalmatters.

　　Issues singled out forchange include establishinga central leading team forreform， giving the market amore important role in allocatingresources， creating abetter social security system，giving farmers more rights over the collectivelyowned rural land， establishing a unified land marketin cities and countryside， setting up a national securitycommittee， deepening fiscal and tax reform，cracking down on corruption， fostering judicialindependence and more.

　　The pending reforms， like any reform in theworld， are bound to face stiff resistance from vestedinterest groups. It’s going to be an arduous task， saidanalysts.

　　Plenary highlights

　　China’s top leaders have been emphatic aboutreforms and repeatedly called for comprehensivelydeepening reforms on many occasions.

　　Since the 18th CPC National Congress held in November2012， when Xi Jinping and Li Keqiang wereselected as top Party leaders， the two have made 17inspection tours in the country， all leading to callsfor the urgency of deepening reforms.

　　In July 2013， when on a visit to central China’sHubei Province， President Xi talked about the methodologyof comprehensively intensifying reforms.

　　Reform， he said， is a balance between creativity andreality， between urgent breakthroughs and comprehensiveness，between leadership and grassroots，between courage and care， and between reform，development and stability.

　　To that end， China will set up a central leadingteam for reform. The team will be in charge ofdesigning reforms on a holistic basis； arranging， coordinating，and pushing forward reforms as a whole；as well as supervising the implementation of reformplans， according to the communique.

　　A top-level team and an emphasis on “top-leveldesign” suggest a more decisivereform push by the new leadership，said analysts.

　　Wang Yukai， a professor from theChinese Academy of Governance，said such a team is vital for futurecomprehensive reform， which isbound to go well beyond economicchanges.

　　Wang said China is currentlyfacing four major risks - economicslowdown， mounting incomedisparity， a crisis of confidence andcorruption.

　　“Only by deepening reform in anall-round manner can China solvethose crises，” said Wang.

　　“China’s reform has reacheda turning point， which requiresconcerted efforts in all areas，including economic， political， social，cultural and ecological reforms. It’simperative to have such a team fortop-level institutional designs andoverall coordination. With such ateam， reforms of all areas will becarried out in a coordinated way，unlike only focusing on economicreforms in the past.”

　　Another highlight of the ThirdPlenary Session is that a biggerrole is promised to the market， in atime when the Chinese economy begins to showsigns of slowing down after over three decades ofbreakneck expansion.

　　For some time after 1949， the idea of a markethad been associated with capitalism. Even afterreform and opening up in 1978， the country hadstruggled to define the market and some dogmatistsstill questioned whether socialism couldaccommodate the market economy. It was not untilthe 14th CPC National Congress held in 1992， thata socialist market economy became a consensus.The Party agreed that the market， understate macroeconomic control， shouldbe the “basic” means of allocatingresources.

　　The Third Plenary Session of the18th CPC Central Committee had achange of attitude toward the market，saying that it has a “decisive” role inallocating resources.

　　Experts say it is not only a changein wording， but more importantly， abreakthrough in China’s market reformand highlights the importance ofmarket power.

　　Xie Chuntao， a professor from the Party Schoolof the CPC Central Committee， said a new definitionof market showed the Party’s in-depth understandingof what the market economy is and what rolethe government should play.

　　Xie said the market has played an increasingrole in the domestic economy over the past twodecades.

　　“The government did a good job but sometimesjust intervened too much， which has led to highadministrative costs， low efficiency and corruption，”he said. “I think the leadership understands whatthe problems are.”

　　The core of economic reform is a proper relationshipbetween government and the market，according to the communique. The Party alsopledged to open up the market to private andforeign investment with deregulation tested in freetrade zones. This is in line with an array of reformmeasures carried out by the new Chinese leaderssince taking office.

　　The new Central Government formed in Marchhas been pushing forward an institutional reform tocut red tape and delegate power to lower levels. Sofar， it has abolished or transferred 221 administrativeapproval items to local governments.

　　Market reforms are under way as well. In July，China’s central bank canceled the floor on lendingrates. The Shanghai Pilot Free Trade Zone waslaunched in September as a testing ground forfinancial reforms， including the convertibility of theyuan and the deregulation of interest rates.

　　Decisions made at the Party plenary sessionalso paved the way for China’s long-anticipatednew urbanization process， said analysts. The hukousystem ties entitlement to public services， suchas pension， healthcare insurance and free publicschooling， to home villages and towns. Restrictionson farmers from selling their land also impedeurbanization.

　　China’s urban land is owned by thestate， while rural land is collectivelyowned by farmers. Rural land is dividedinto two types - arable land， which is usedfor growing crops， and rural constructionland， which is used for rural housing， ruralinfrastructure and rural factories. Farmerslack property rights over the collectivelyowned land， thus they are forbidden fromgains of soaring land prices.

　　The communique said China will quickenefforts to give farmers more propertyrights and establish a unified urban andrural land sales market.

　　Yi Peng， Director of the UrbanizationResearch Center under the International FinanceForum， an independent global think tank headquarteredin Beijing， said this will give farmers morebenefits from the increase of land prices and housingprices， which can to a large extent narrow theincome gap between rural and urban residents.

　　Obstacles

　　Some netizens have complained that Party plenarysession communiques are short on details andimplementation timelines.

　　“The CPC Central Committee plenary session isonly responsible for mapping out a reform orientation，”

　　said Wang Jianhui， Deputy Director of theResearch Academy of the Beijing-based CapitalSecurities. “A slate of follow-up policies is expectedto be released in the coming two years.”

　　Zhao Xijun， a professor in finance at Renmin Universityof China in Beijing， said the implementationof reform measures is the key.

　　Zhao said China has now entered “deep-waterreform，” with no experience to learn from and noerrors allowed.

　　“China should take unprecedented courage anddetermination to formulate specific reform measuresand a clear timeline for the reform.”

　　As the reform is bound to encroach on vestedinterest groups， the country is likely to confront stiffresistance from those who benefit from the statusquo， including state-owned enterprises (SOEs)， somegovernment officials and some companies in thefinancial and real estate sectors.

　　Even President Xi admitted during the plenarysession that the comprehensively deepeningreforms are bound to be thwarted by outdatedmindsets and vested interest groups.

　　“SOEs are responsible for 60 percent of China’sinvestment， but produce only 20 percent of the GDP.Their staff， which only accounts for 5 percent ofthe total workforce， will do everything they can tocompromise the reform，” Wu Xihu， a professor fromPeking University， wrote on his Sina Weibo page， thetwitter-like micro-blogging service.

　　Chang Xiuze， a professor from the Macro EconomicResearch Institute of the National Developmentand Reform Commission， said the key issueconfronting the proposed central leading team forreform would be coordinating different interestgroups.

　　“The authority of the team should be strengthened.In the past， some good reform measures werepoorly carried out. Therefore， in the future， the focusof the team’s efforts should be harnessing thoseinterest groups to make sure reform measures aresmoothly carried out.

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