10/28/2013, 00.00
CHINA
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Xi Jinping's economic reforms face a bumpy road ahead

by Wang Zhicheng
The State Council's Development Research Centre is calling for less government in the economy, pensions, health care and education for all, an end to the hukou (household registration) system, a stop to illegal farmland sales, and the use of the yuan in international trade. It is silent on political reform. All its proposals will be vetted during the Third Plenum in November.

Beijing (AsiaNews) - The Third Plenum of the Central Committee of the Chinese Communist Party (CCP) is expected to announce major economic reforms, whilst reiterating the party's hold on power. As the date for the meeting approaches - the exact date has not been fixed yet but it should be in early November - there are growing signs that it will deal with "unprecedented reforms", as indicated by Yu Zhengsheng, No. 4 of the Politburo's Standing Committee.

Since last year, Prime Minister Li Keqiang has described himself as a proponent of economic reforms, but so far, no one has understood what kind of reforms he meant.

Recently, the State Council's Development Research Centre (DRC) released a detailed plan for economic reforms that is expected to be debated in the upcoming plenum. One of the paper's authors is the think tank's chief, Li Wei, who served as secretary to former Prime Minister Zhu Rongji, and Liu He, a top economic adviser to Xi.

The study, published in Xinhua, calls for looser controls by the central and provincial government on the economy, and allowing the private sector into areas hitherto monopolised by state companies, like banking, energy, infrastructure and telecommunications.

The study even calls for the government to abolish government rankings to appoint officials to state companies, requiring them instead to be chosen on merit, not party loyalty.

The study also recommended the convertibility of the yuan, as well as its use as a major international trade-settlement and invoicing currency by 2020, and as a reserve currency in "regional markets", especially Southeast Asia.

Two other proposals could have a big impact on people, namely a social security package to provide every Chinese with a minimum pension, low health care costs and assistance in education, and the elimination of the hukou or household registration system, which has been used to keep peasants on the land and out of the cities.

The hukou has been a source of great injustices against migrants who work in the city. Because they are officially resident in their home villages, migrants are not entitled to health care and their children cannot go to schools in the cities.

Another important proposed measure is to ensure that all farmers have the opportunity to sell village lands at a price equal to the value of urban land. Until now, only village chiefs could sell land, a practice that favoured corruption and price manipulation. In recent years, injustices related to the sale of land have been the cause of most peasant revolts.

It is still unclear how much this "Chinese dream" can be realised. Some reforms - such as those about the hukou, pensions and land sales - have been proposed in past years, but never followed through.

It should also be noted that the draft proposals by the State Council's think tank are among many studies commissioned by the CCP in preparation for the Third Plenum.

As much as they might be discussed during the meeting, such proposals are likely to come under pressure from certain interest groups. In particular, those groups tied to state industries and monopolies could put up a fight in order not to lose their privileges. It is estimated in fact that at least half of plenum members made their career (and wealth) in state-owned industrial conglomerates.

It is also worth noting that mainstream media has stopped talking about political reform, focusing instead only of economic reforms.

After a few hints at the beginning of his mandate about the primacy of the law, even in the case of party members, Xi Jinping has gone back to defending the CCP's monopoly of power and prosecuting all those who voice criticism against it.

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