The central government has issued a guideline to “accelerate the improvement of its socialist market economy in the new era”, which analysts are saying is the boldest economic reform launched by the current leadership since President Xi Jinping took office.
According to Xinhua, the country’s goal is to “build a high-level socialist market economy that is more systematic, mature and well-shaped”, which would keep public ownership “as the mainstay” while allowing “multiple forms of ownership to develop together.” It stressed minimizing the government’s “direct allocation of market resources and direct intervention in microeconomic activities.” Read Xinhua for the full text.
Noted China analyst Bill Bishop has written on his Sinocism blog that, “we should not discount that the pressures inside the system may lead to more progress on some of the reforms than we have seen in recent years. However, whatever reforms may occur, remember that the guideline stressed ‘efforts to uphold and strengthen the Party’s overall leadership to ensure the effective implementation of the reform measures’.”
Bishop quotes analysts at Plenum.ai as being more upbeat: “By releasing a reform guideline amidst the pandemic, the Chinese government is signaling that it is still dedicated to market reforms, and that it is hoping to drive growth with reform measures instead of relying solely on monetary and fiscal stimulus.”
We here at Greater Bay Insight have been predicting for months, if not years, that China’s Reform and Opening era is entering Act II. This is the clearest evidence of it. And the GBA is where these reforms will happen fastest, which is why we saw last week’s announcement of the approval for cross-border trading of wealth management products.
Stay tuned, there is plenty more to come.