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Chinese leaders promise bigger role for free market
Question of the Day
BEIJING (AP) — China’s leaders finished a closely watched policy meeting Tuesday with a promise to give market forces a bigger role in the country’s state-dominated economy but failed to produce dramatic reforms to overhaul a worn-out growth model.
In a report after a four-day meeting that reform advocates hoped would unleash a wave of change, Communist Party leaders gave an unusually strong endorsement of private companies as “important components” of the economy but said state industries will remain its core.
The market will play a “decisive role” in allocating resources, the party said. The official Xinhua News Agency said that position was an upgrade from the “core role” assigned to the market in party policy over the past two decades.
Chinese leaders are under pressure to replace a growth model based on exports and investment that delivered three decades of rapid expansion but has run out of steam. Reform advocates say Beijing should open an array of state-controlled industries to private competition, but any moves to curb the privileges of politically favored companies are likely to face resistance.
The party said it will create a committee to “deepen reforms” and gave no indication when more changes might be approved. That suggested party leaders, as many observers expected, agreed on broad themes but put off battles over details such as the status of state companies that control vast swathes of China’s economy, including banking, energy and telecoms.
“Many of us hoped they would use the opportunity to say something really striking, really pushing forward the momentum, and it’s fair to say they have not done that,” said Barry Naughton, a specialist in the Chinese economy at the University of California at San Diego.
“I think the way they did it reflects they do not yet have consensus to move forward to dramatically reform.”
Another key area that reformers say is ripe for change is control of land. The report said farmers should have more property rights but made no commitments.
All land in China is owned by the state. Farmers are tenants who cannot mortgage or rent their land to buy better seeds and technology. Giving them ownership or at least more control would unlock wealth in the countryside but also might jolt real estate markets and affect local governments that rely on sales of land-use rights for revenue.
Because of that, some analysts said land reform is likely to be left until later.
Before the meeting, Communist leaders raised hopes and the political stakes by promising “unprecedented” reforms.
The meeting was seen as symbolically significant because it was the 205-member Central Committee’s third plenum — or full meeting — of the party’s 18th Congress. Such meetings at this point in the party’s five-year political cycle are seen as a launching pad for changes in economic direction after Deng Xiaoping used a third plenum in 1978 to unveil his reforms.
The plenum offered a platform for President Xi Jinping, who became party leader last year, to make clear his own vision for the world’s second-largest economy.
Communist leaders have been trying to make the economy more efficient and productive by gradually injecting more market forces into areas such as bank lending. Regulators eliminated controls on interest rates charged on commercial loans in July in a move that ultimately will lower costs for borrowers with stronger credit records.
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