Xinhua Insight: China's reform roadmap gets clearer(2)

Wisdom matters more than courage

Xi Jinping, general secretary of the CPC Central Committee, has vowed not to stall in reform and opening up. He called on all CPC members to garner more political courage and wisdom to waste no time pushing reforms in key areas.

The road ahead for the Party and the government, however, is a rough one because a variety of key reforms are to be completed, ranging from narrowing the wealth gap, reducing monopolies, supporting private enterprises, environmental protection, reducing corruption, streamlining taxation, improving administrative efficiency, to ensuring equal access to medical services, education and old-age pensions.

According to Moody's research, the key credit challenges facing the leaders taking office in March mainly revolves around re-balancing growth toward private consumption, furthering market reform and maintaining social stability.

Apart from the income redistribution reform which will help narrow the wealth gap and reduce the country's extra dependence on foreign trade for economic growth, China has activated reforms in many spheres since the conclusion of the 18th CPC National Congress in mid November.

The NPC Standing Committee has deliberated on a draft amendment of the Land Administration Law, submitted by the State Council, which proposes raising compensation for farmers whose collectively owned land is expropriated and suggests more strict rules to manage excessive land expropriations.

Given land expropriation has been a source for rural protests, the move is expected to defuse social instability through better protection of farmers' property rights.

Responding to public grumbles over the urban-rural gap, the CPC has decided in its first policy document for 2013 to accelerate household registration reform, helping rural residents urbanize by loosening control on household registration in small townships and medium-sized cities.

The National Development and Reform Commission, the economic planner, also prioritized resource taxes for the year's price reform, and aimed to optimize the pricing mechanism for refined oil products and natural gas.

Foreseeing tough combat to come in the year's resource tax reform, Jia Kang said reforming resource taxes will impact the allocation of basic economic resources and have a direct bearing on the development of China's market economy.

"The resource tax reform will be a substantial move to implement the Party's Outlook on Scientific Development and to optimize the country's financial and tax system," in Jia's view.

This year, the Ministry of Finance has planned to broaden experiments on property taxes, deepen national debt management and use more taxation leverage to support the private economy.

It will also report its first social security fund budget to the first session of the 12th NPC.

Ye Qing from Hubei said that a deepened fiscal system reform is the premise for China to advance reforms in other spheres.

"Thorny issues such as the wealth gap and corruption can all be associated with the waste and irrational use of public finance. I hope the upcoming two sessions can help the government unveil reform details on individual income tax, property tax and estate tax," he said.

Another eye-catching agenda at the upcoming NPC session relates to the institutional restructuring of the State Council as a draft approved at the second plenary session of the 18th CPC Central Committee will be deliberated by legislators.

According to the draft, the restructuring is to transform government functions, streamline administration and delegate power, improve efficiency and carry out super-ministry system reforms.

Looking to the future challenges, Chi Fulin said no reforms are risk-free. To minimize risks and maximize gains from economic restructuring and urbanization, the government must transform its functions and make new breakthroughs in reforms, he said.

"The key is to redefine the relationship between government and the market, and the relationship between government and the society," said Chi.