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CHINA: Party releases major economic policy document


Check this. 

On Monday, the CCP Central Committee and the State Council jointly released a document on overhauling the country’s economic management system.

Some context: The document was approved by China’s most important policymaking body, the Central Committee for Comprehensively Deepening Reform (CCCDR) back in February (see February 17 Tip Sheet). 

More context: Xi’s top economic advisor, Liu He, looks to be the driving force behind this document.

The big message: We need to give markets a bigger role.

Here’s what the leadership hopes to achieve (    

  • “[E]ffective incentives for property rights, the free flow of production factors, flexible prices that respond [to the market], fair and orderly competition, and the survival of the fittest enterprises.”

This means a reduced role for government ( 2):

  • “The guideline stressed minimizing the government's direct allocation of market resources and direct intervention in microeconomic activities.”

But don’t get too excited – it’s not like the CCP has gone all laissez-faire.

The document is HUGE and wide-ranging in terms of the "what," but pretty vague on the "how."

  • That's par for the course in high-level docs like this.

Here are a few things that caught our eye.

We could be moving towards a more flexible labor market:

  • Residents from a given city cluster can change their household registration (hukou) freely within the cluster.
  • Cities will get public service resources based on their population instead of their administrative rank.

And the doc gives some serious time to creating a better business environment. It promotes:

  • A regular review mechanism for market access policies
  • A review mechanism to weed out policies that impede fair competition
  • A class action system to protect consumer rights
  • A national evaluation of local business environments
  • But foreign companies should beware. Foreign investments will be subject to:
    • A national security review
    • Anti-monopoly review
    • Technology security management review
    • An unreliable entity list

    Certain state-owned enterprises are in for some changes. The following industries will be subject to more competition:

    • Oil and gas 
    • Power
    • Railways 
    • Postal services
    • Tobacco

    • SeeGet smart: These initiatives are still in the planning stages. They will be translated into policy over the coming months


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