8 November 2013 Last updated at 07:34 GMT
A growing wealth gap is one issue China's leaders need to tackle
More balanced development is needed to tackle severe pollution, observers say
Why China's Third Plenum matters
http://www.bbc.co.uk/news/world-asia-china-24846815
At a busy open-air market in the centre of Beijing, shoppers are focused on finding the freshest, cheapest vegetables on offer.
Slices of pumpkin sold for 40 cents a pound were too expensive for one elderly woman. After berating the pumpkin stall owner, who barely shrugged in response, she shuffled off in search of a less expensive option.
Though it is likely to be held only few kilometres west, the upcoming big meeting of the Communist Party's top bosses, or the third session of the 18th Communist Party Central Committee, seems light years away.
The Third Plenum is simply the third time that Xi Jinping will meet with his top brass in his role as the party chairman. It is a closed door meeting attended by the ruling party's bigwigs. But it is important because the grand plans that come out of this meeting could affect everyone in China - and beyond.
President Xi Jinping is expected to unveil a new economic framework for the country after the summit. Hopes are high he will swoop in to remedy some the country's biggest headaches, from pollution to soaring property prices.
A growing wealth gap is one issue China's leaders need to tackle
But at the market, those asked about the big meeting nodded their heads to acknowledge they had heard of it, but their hopes for reform were focused on their daily lives.
"I want issues like housing prices to be discussed," explained one retiree as she bargained for a pound of cucumbers. "I hope that issue can be resolved for the families in need."
'Low efficiency'
In the past, the Third Plenum has done more than that; past leaders have seized on their third meeting with other party officials as a chance to announce dramatic changes to the Chinese economy.
Former Communist leader Deng Xiaoping was the first one to use a major party meeting in 1978 to announce China would open itself up to global trade.
Fifteen years later, Zhu Rongji, the country's vice-premier who then ascended to the role of prime minister, endorsed another round of restructuring combining private enterprise with strong support for state enterprises. That mixture spurred China to become the world's second-largest economy.
China's leaders want a more modern economy, shifting further from a centrally planned system, though experts all have differing opinions about where the government should start.
For some, the problems with China's cumbersome state-owned banks pose a huge bottleneck in economic growth.
"State-owned banks are more interested in lending to state-owned enterprises because this is politically safer. Leaders of state-owned banks are more interested in political promotions rather than profitability of the bank," explained Zhu Guozhong, professor at Peking University's Guanghua School of Management.
"So this leads to a very low efficiency in the allocation of funds. More funds go to less efficient state-owned enterprises and we have very active, very creative private firms. They need finance but they don't get it. I think this is a very urgent problem in China."
Others believe that government monopolies in sectors like oil and telecommunications are the real issue.
"State-owned companies, especially industrial state-owned companies, are generally in debt. This is unfair because they take up a lot of state resources, such as land and loans," explained Sheng Hong, director of the Unirule Institute of Economics, a private think tank based in Beijing.
"They haven't made profits in about two decades, but those officials receive unlimited salaries and bonuses. Chinese people hand resources to this group of people but they don't reward the people at all."
'No silver bullet'
Xi Jinping will have to negotiate between competing interests if he hopes to engineer ambitious reforms to the country's state-owned assets. Any new plans will be the product of months of closed door meetings between officials who represent competing interests.
More balanced development is needed to tackle severe pollution, observers say
A comprehensive plan will need to take many moving parts of the economy into account.
"It would be wrong to say there is one silver bullet that will solve all the problems," explained Axel Van Trotsenburg, World Bank Vice-President for East Asia and the Pacific. "All issues need to be put together, co-ordinated and a consensus towards implementation."
Even if Mr Xi shows willingness to steer China away from its centrally-planned past towards a more dynamic future, be sure to take his initial plans with a pinch of salt.
It is no secret in China that it is much easier for reforms to be announced, but that is just the start of a long process. It is very difficult for those reforms to be carried out, particularly if they threaten local interests.
Still, Xi Jinping is under pressure from many parts of Chinese society to unveil radical changes. If he doesn't, the big meeting might be an equally big disappointment.
8 November 2013 Last updated at 07:31 GMT
Economic reform and a widening wealth gap are key issues for China's leaders
8 November 2013 Last updated at 07:31 GMT
Q&A: China's Third Plenum
http://www.bbc.co.uk/news/world-asia-china-24846812
By Dong Le
Economic reform and a widening wealth gap are key issues for China's leaders
As China's top leaders prepare for the Third Plenum, the BBC looks at why the meeting matters and how it came to be such a significant economic and political event.
Q: What is the party plenum?
The Chinese Communist Party is the world's largest political party. Its constitution stipulates that the party holds a National Congress every five years. Delegates gather in Beijing to attend it. One of their jobs is to elect the Central Committee, the party's highest decision-making body, and its anti-corruption watchdog, the Central Discipline Commission.
Each Central Committee is numbered sequentially, adopting the number of the congress that elects it. As the congress which was convened last November was the 18th, so the 18th Central Committee is now in office.
Its 376 members - who occupy top posts in the party, government and military - meet in Beijing once or twice a year until a new National Congress convenes. The meetings are officially known as plenums - which are also numbered sequentially. The upcoming plenum, from 9-12 November, is the Third Plenum of the 18th Central Committee.
It is the plenums, rather than the party's National Congress or even the top legislature, the National People's Congress, that really matter in Chinese politics. The outcomes of some of the plenums have fundamentally changed the course of history in China.
Q: Why is the Third Plenum significant?
Historians attribute it to the Third Plenum of the 11th Central Committee in 1978 when China, under Deng Xiaoping, embarked on economic reform and opened a door to the outside world.
In 1977, a year after the death of Mao Zedong, Mr Deng was "rehabilitated" after being purged during the Cultural Revolution.
The 10th Central Committee was in office at the time and at its much-delayed third plenum in the summer of 1977 Mr Deng was restored to his former party and state posts.
In August 1977, the 11th National Congress elected the 11th Central Committee. After an intense power struggle, Mr Deng ousted Hua Guofeng, Mao Zedong's chosen successor, and rose to a position of supreme power, equal to if no less than that enjoyed by Mr Mao.
On 18 December 1978, the party's 11th Central Committee held its Third Plenum. Mr Deng's economic reform and open-door policy was adopted. China has since prioritised a modernisation that is ruthlessly pragmatic. The plenum is seen as the catalyst for the transformation of what was an economic backwater into the world's second-largest economy.
It was held in a nondescript hotel in western Beijing in a bitterly cold winter. State media heaped praise to the meeting and said spring had already come at that time. They almost ran out of superlatives.
A tradition has since been established. Generations of leaders have used the Third Plenum to launch far-reaching reforms.
When a new generation of leaders take power, the Third Plenum is normally held a year after they assume office, giving them enough time to consolidate power, study various proposals and reach consensus.
The party has held six such plenums after the meeting in 1978, with each marking major turning points in the political and economic history of modem China.
Q: What can we expect from this Third Plenum?
It has been a year since President Xi Jinping took office. As he is expected to be in power for 10 years, this will be his first Third Plenum.
Under his predecessor Hu Jintao, China has developed into the world's second largest economy. But now its export-driven growth has slowed down - with fears for a knock-on effect on social stability.
Meanwhile rampant official corruption, a widening gap between rich and poor, and environmental degradation continue to cause public discontent.
The country's political system has grown inadequate for dealing with the needs of its economy and society, as a rising number of mass protests has shown.
The party has released few concrete details about the agenda. But its mouthpiece, the People's Daily, quoting senior leaders, has said the plenum will launch "a comprehensive reform plan... and its scope and impact will be unprecedented".
Speculation is rife that the meeting will see major steps taken to overhaul the economy, but it is unlikely that the party will embark on political reform.
"The upcoming plenum will be a huge disappointment if you want to see the party engage in political liberalisation," said He Ping, a prominent US-based analyst on the Chinese Communist Party.
Recent signals from the party all indicate that it is determined to continue its authoritarian rule and will repulse challenges, Mr He told the BBC.
Whatever the outcome, one thing is clear. The meeting will offer an indication of how Xi Jinping intends to lead China in the next decade.
China's Third Plenum: Key issues
https://www.facebook.com/notes/joseph-k-h-cheng/chinas-third-plenum-key-issues/605947162796551
8 November 2013 http://www.bbc.co.uk/news/world-asia-china-24770802 On Saturday, China's leaders will hold their Third Plenum, where priorities for reform over the next decade will be discussed. China's Third Plenums, which refer to the third time new leaders of China lead a plenary session of the Central Committee, are closely watched as they tend to be the meeting where important reforms are announced. At the Third Plenum in 1978, former leader Deng Xiaoping announced the opening-up of China's economy, spearheading major market-oriented reforms. In 1993, former leader Zhu Rongji announced the "socialist market economy" and dismantled a large part of China's state-owned sector. Top Chinese leader Yu Zhengsheng has said that "unprecedented" reforms will be discussed at 9 November's plenum. The BBC looks at the key issues. ( 1 ) Opening up its financial sector is arguably one of the biggest issues. The key areas to be liberalised are the interest rate policy and tight control over the yuan's convertibility. China says it will experiment with these moves in a new free-trade zone in Shanghai. It said it will allow interest rates to be set by markets inside the zone and allow the yuan to be swapped freely for other currencies. Challenges :-So far China has relaxed its tight grip in a slow and controlled manner, and in a small geographic and economic area. Implementing reforms at national level makes the economy vulnerable to sharp movements in capital markets. As for the free trade zone, some observers have urged caution about the extent to which liberalisation may take place because detailed rules about exactly what will and won't be permitted are not yet known. ( 2 )State-owned firms dominate key sectors such as banking, telecommunications and oil and gas. Many argue these firms are riddled with excess capacity and poor governance. There are also concerns these firm have created monopolies and hampered growth. Some allege they get easy access to financing - as the four major banks are all state-owned - at the cost of smaller private firms. Analysts have long argued that China needs to reform these firms and increase competition to improve productivity and boost growth. Challenges :-To date there has been talk of reform but little action - something attributed to resistance from vested interests. These firms have been among the biggest beneficiaries of China's growth over the past few years. A key focus area is likely to be the large state-owned banks. They have lent record sums of money in recent years and there are now fears over rising levels of bad debt. And if the role of state-owned banks is diluted, the government will be less able to pump cash into the economy in case of a slowdown. ( 3 )Under China's hukou system, everyone is registered in their home town and can only access education, housing and welfare there. It prevents rural migrants and their children from accessing social services in the cities, limiting the movement of China's workers, or creating an underclass in major cities. Many in China have called for the system to be abolished. Challenges :-Hukou reform would be popular with China's 260 million migrant workers. Some individual cities, such as Chengdu, have already begun to reform their hukou systems. However others, including Beijing, still have tight controls in place to limit population growth and avoid the costs associated with providing additional social services to migrants. ( 4 )Rural land is owned collectively, so farmers cannot buy or sell their homes or their farmland. This enables local governments to appropriate land used by farmers and sell it to developers. This issue is a key source of rural discontent and periodic social unrest. The lack of land rights also keeps rural consumption down, and makes it harder for rural workers to relocate to cities. Challenges :-A plan circulated by a government-linked think tank (called the "383 plan") has advocated "giving both rural and urban land equal rights, having a unified land market, and sharing the rise of land value fairly". However, any reform could potentially face opposition from local governments who benefit from the status quo, where they are able to force demolitions and evictions, and sell land to raise revenue. ( 5 )Local governments have serious debts - amounting to a total of $1.8tn in the most recent audit. They cannot borrow directly from banks, so have used government-backed conduit companies to raise money for infrastructure and property projects. Experts expect China will start to allow them to issue municipal bonds, so they can raise funds directly and more transparently. There has also been talk of tax reform at local level, such as a move from a production-based tax to a consumption-based levy. Challenges :-Analysts describe this as one of the most pressing areas for reform. Tackling it seems to be a priority - Li Keqiang has promised "pertinent measures" to address the issue, and China ordered a nationwide audit of all government debt earlier this year. But implementation of any tax at local government level is easier said than done, especially in the property sector, and some fear a consumption tax could hit domestic growth. ( 6 )Some of China's largest protests in recent months have been triggered by environmental concerns linked to rapid development, including water, air and soil pollution. In October, air pollution levels soared 20 times above WHO-recommended levels in Heilongjiang province. There have also been high-profile protests over construction of plants that residents fear will harm their local environment. Challenges :-China has introduced measures to curb pollution, including subsidies for electric cars, and targets to reduce the use of coal. However, demand for energy is still growing and officials have been reluctant to address the issue in the past. Central orders are not always filtered down and environmental regulations can be poorly enforced at a local level, where officials are keen to promote economic growth and hit development targets. ( 7 )Coal-powered plants generate most of the power in China. For years, the government has got coal suppliers to sell to power firms at contract prices, which are generally lower than market rates, in order to keep costs in check and electricity prices stable. But China's dependence on coal is a major factor in its pollution problem. Challenges :-China has already started to reform pricing mechanisms - it says it will allow the market to determine the price of coal supplied to power plants. But that means power firms will be vulnerable to price fluctuations. Any sharp rises could hurt household incomes or profits of commercial users - but higher prices may force users to save electricity and help reduce pollution. ( 8 )While China's companies are developing fast, awareness of Chinese brands and products appears to be relatively low. The dominance of state-owned companies in China's economy, and China's poorer intellectual property protection rights, are thought to have deterred some from creating new products. Challenges :- A prominent government-linked think tank has called for reform to "expand competition" and give companies "equal access... [to] resources for innovation". However, some experts argue that without a relaxation of censorship rules, and a greater emphasis on creativity in China's education system, innovation will still lag behind. |
Q&A: China's Third Plenum
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China's Third Plenum: Key issues
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