'Reform 2.0' to be unveiled

The top officials of the Communist Party of China (CPC) convened over the weekend for a critical meeting to lay out a blueprint charting China's reform in the next decade.[Special report]

The Third Plenum of the 18th CPC Central Committee, which kicked off on Saturday in Beijing, will conclude on Tuesday with the announcement of comprehensive reform decisions.

State media such as the Xinhua News Agency and China Central Television only carried limited coverage about proceedings of the closed-door plenum over the weekend.

According to Hong Kong-based news portal takungpao.com.hk, Xi Jinping, general secretary of the CPC Central Committee, on Saturday delivered a work report to the plenum on behalf of the Political Bureau of the CPC Central Committee.

During the meeting, the CPC Central Committee's more than 370 members and alternate members will deliberate on comprehensively deepening reform and finalizing the policy document.

Great anticipation has been raised in the media over the package of reforms expected at the end of the plenum, interpreted by many commentators as China's Reform 2.0.

Chi Fulin, president of the Haikou-based China Institute for Reform and Development, told the Global Times on Sunday that the background and stress on reform have undergone significant changes since 1978 when the Third Plenum of the 11th CPC Central Committee ushered in reform establishing a market economy.

"China is at a new historical starting point. Today's reform focus is straightening out the relationship between the government and the market and unleashing the dynamics of the market," he said. "Through upgraded reform, China will be able to avoid the middle-income trap and join the ranks of upper-middle-class countries in the next decade or a longer period."

Since the leadership transition at the 18th CPC National Congress in November last year, the new leadership has used almost every opportunity to rally support for the new round of reform.

During the last year, Xi and Premier Li Keqiang paid nine and eight visits respectively to 15 provincial-level regions. In nearly every visit, the leaders stressed the need for reform in various sectors, such as the economy, poverty alleviation, agriculture and innovation.

The calls for much-needed reform come as China's economic growth slowed to 7.7 percent in the first three quarters of this year, a sharp contrast to the double-digit growth the country enjoyed during the 2003-07 period.

Economists and institutions all agree a plenum can only give a framework and directions for reform in the next few years, not the specifics of implementation.

"We expect more concrete progress in deregulating the service sector, social welfare reform and financial market reform in the coming two years. However, a major breakthrough is unlikely in reforming the fiscal and land policies as well as State-owned enterprises in the short term," UBS AG chief China economist Wang Tao wrote in a research note sent to the Global Times.

Among the many problems that may undermine the Party and government's rule, the widening wealth gap is believed to be a key area for reform at the plenum.

Wang Xiaolu, a deputy director of the National Economic Research Institute under the China Reform Foundation, told the Global Times that in recent years the income growth of low-income residents couldn't keep pace with the growth of living costs, such as housing prices and rent.

"Therefore, existing livelihood policies are not enough to address the root cause of the widening income gap. Only by resolutely pushing forward reform in the system can we gradually eliminate the factors leading to unfair distribution," he said, citing mismanagement of public funds, unfair distribution of income by monopolized sectors and corruption.

Observers said resistance from various interest groups has been hindering the process.

A key national conference on urbanization, which was first reportedly to be held in April, has yet to be convened, which led to an absence of a national guidance expected to come out this year.

Premier Li has a particular focus on the urbanization drive, which he believes will provide the largest potential for expanding domestic consumption.

"Urbanization involves reform in a number of fronts, such as household registration or hukou and rural land, which will affect interest allocation," Chi said.

Hundreds of thousands of rural migrants who don't have urban hukou, he said, have been denied the public services enjoyed by urban residents, such as health care, housing and access to education. Such treatment has limited their purchasing power and raised social tensions.