Xinhua Insight: China's reform roadmap gets clearer

Chinese government departments will be put in the hot seat in the upcoming fortnight as political advisors and legislators will push them to implement the reform consensus cemented by the new leadership of the ruling party.

On March 3 and March 5, the National Committee of the Chinese People's Political Consultative Conference (CPPCC), China's political advisory body, and the National People's Congress (NPC), the parliament, will separately convene their annual sessions for the first time since the Chinese Communist Party (CPC) launched its new leadership late last year.

Chi Fulin, director of the China (Hainan) Institute for Reform and Development, a domestic reform think tank, expects the meetings to shed light on China's future reforms as NPC deputies and CPPCC members will make proposals to the government on issues concerning people's livelihoods and state affairs.

Without a clear reform roadmap in sight, analysts say there remain questions marks over how far China's new leaders can go in reforms, especially in terms of the areas crucial to stability and development.

According to the forecast of Byron R. Wien, the vice chairman of Blackstone Advisory Partners who has announced his annual list of "Ten Surprises" predicted in economic, financial and political fields since 1986, China's new leaders will surprise the market in 2013 by implementing reforms to root out corruption, to keep the economy growing at 7 percent or better and to begin to improve healthcare and retirement programs.

The Shanghai Composite Composite will finally come alive and "A" shares will rise more than 20 percent in 2013, in contrast with the previous year when Chinese stocks were down and some developing markets, notably India, rose, he forecasted.

Byron defines a "surprise" as an event to which the average investor would only assign a one out of three chance of taking place but which he believes is "probable," having a better than 50 percent likelihood of happening.

Byron was not available to elaborate on his forecast on Chinese leaders' reforms.

Chi Fulin said the uncertainty of the reforms mainly resulted from the complexity of the task.

"A main challenge facing China's new leaders is how to strike a balance in the interest adjustment among stakeholders to secure both stability and development potential of China," said the think tank director.

No beating around the bush

China's decision makers spent more than nine years researching and debating before the State Council issued a guideline on income redistribution in early February.

Ye Qing, deputy chief of the Hubei Provincial Statistical Bureau and a deputy to the 11th National People's Congress, thinks the guideline has offered a glimpse of the complexity of the most urgently needed reforms in China's key areas.

"The CPC's new leadership has taken a series of measures over the past three months to advocate frugality and administrative transparency and build a good public opinion atmosphere for advancing reforms. It is against such a backdrop that the guideline has been issued," said Ye.

Global credit-rating agency Moody's takes the 35-point guideline as "credit positive" because it includes a recognition by Chinese leaders that state-funded investment growth is not viable over the long term, and that a more moderate and sustainable pace of economic growth will enhance China's economic resilience and sovereign credit-worthiness.

Ye said he believed income redistribution will be heatedly discussed at the annual meetings. "I hope more detailed and feasible measures can be constituted by relevant government departments," he added.

CPPCC member Jia Kang, director of the Institute for Fiscal Science Research under the Ministry of Finance, told Xinhua on Saturday that the government must "face public concerns squarely" to have the guideline smoothly implemented.

In his proposal to the CPPCC National Committee, Jia advocated the government spread the use of collective pay bargaining in companies, expand consumption taxes to luxury entertainment and luxury goods, tighten monitoring of officials' non-salary and property income and introduce tougher punishment over power-for-money deals, bribery and corruption.

"To change China's pyramid-shaped income structure to an olive-shaped one, the government must seize time to listen to the opinions of NPC deputies and CPPCC members and make timely responses to public calls," urged Jia.