China’s State Council think tank sets out roadmap for reform

Yu Zhengsheng

Yu Zhengsheng

A top government think tank has unveiled a detailed road map for a series of far-reaching economic policy changes, in one of the strongest indications yet that the Communist Party intends to stay on the path of reform.

The recommendations by the State Council’s Development Research Centre came ahead of the much-anticipated third plenum of the party’s 18th Central Committee next month, a critical opportunity for President Xi Jinping to advance his economic and social reform agendas.

In addition, their release was accompanied by a prediction from Yu Zhengsheng – the No4 member of the party’s supreme Politburo Standing Committee – that the annual gathering would result in “unprecedented” reforms.

The proposals span eight areas: finance, taxation, land, state assets, social welfare, innovation, foreign investment and clean governance, according to a copy of the 10,000-word report published over the weekend by China News Service. It recommends sensitive changes like breaking up state monopolies and speeding land reforms.

The source of the recommendations was as interesting as the details. Among its authors were the think tank’s chief, Li Wei, who served as secretary to former premier Zhu Rongji, and Liu He, a top economic adviser to Xi.

Although the road map would be subject to behind-the-scenes horse-trading during the plenum, the document was clearly aimed at restricting the government’s role in economic matters and allowing more freedom in the market. It sets a timetable for action extending to 2020.

The report recommends an ambitious plan to make the yuan a major international trade- settlement and invoicing currency within 10 years, as well as a reserve currency in “regional markets”.

It highlighted three projects key to advancing economic reform: relaxing control over market access, setting up a “basic social security package” for all residents and allowing sales of collectively owned rural land.

The national social security package would provide all citizens with a social security card to claim modest but equal pension, medical insurance and education subsidies.

Meanwhile, the unpopular hukou system – which for decades has discouraged migration by tying mainlanders’ benefits to their registered place of residence – would be phased out.

The road map also proposes granting farmers the right to trade their collectively owned land under a unified open market in which urban and rural lands would be valued equally.

Currently farmers only have rights to use collectively owned land and receive meagre compensation when their land is claimed by local governments for development projects. The situation has emerged as a leading cause of social unrest.

The plan proposed fighting rampant official corruption by establishing a clean governance allowance, which officials could claim after retirement if they are found to have been honest during their careers. But some experts questioned the feasibility of the reform plans, given the many possible vested interests.

“The top leadership may view it necessary to push for reforms, to things such as land rights and the social security system, but how the ideas will be received by the interest groups remains to be seen,” said Professor Hu Xingdou, of the Beijing Institute of Technology.

Guan Qingyou, assistant dean at the Minsheng Securities Research Institute, cautioned that the road map was only one of several research reports submitted to the top leadership ahead of the party plenum.

Source: SCMP “State Council think tank sets out roadmap for reform”
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4 replies

  1. SocGen analyst Wei Yao says these think tanks always overstate the scale of the reform agenda and that this time is nothing different. Check out more of Wei’s thinking at



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