BEIJING – Building on the substantial headway made in pushing reforms so far this year despite COVID-19 challenges, China has outlined more moves for across-the-board reform as the country steers toward post-pandemic recovery and long-term growth.
China will rely on reforms to tackle changing situations and open up new prospects, while encouraging exploration in key spheres, according to the 14th meeting of the central committee for deepening overall reform held late last month.
The meeting outlined a series of reform plans in areas ranging from State-owned enterprises (SOEs) to the integrated development of new-generation information technology and the manufacturing industry.
Analysts say current headwinds only highlight the necessity of using reforms to shatter institutional shackles and unleash vitality for sustained growth.
Key areas of reform now include the market-based allocation of production factors, SOEs, the fiscal and financial system, the piloting of free trade zones, the further opening of the country to foreign investment, as well as the continued stability of the supply chain, said Liu Xiangdong, a researcher at the China Center for International Economic Exchanges.
A review of China’s major reform moves in the past six months reveals clues to the country’s endeavor to modernize its system of governance for deeper involvement in the global market.
Two overarching plans unveiled in April and May, one on the market-based allocation of resources and the other on improving the socialist market economy, both centered on protecting the market’s role in the Chinese economy so as to nurture the growth of both domestic and foreign-funded companies alike.
The master plan on building the southern island province of Hainan into a globally influential free trade port, released in early June, showed China experimenting with further opening-up measures in areas including trade, investment, logistics, financial services, personnel travel and taxation on a par with the most advanced free trade ports worldwide, with many of the policy details hammered out within a month.
In late June, China shortened the negative list for foreign investment again, slashing the number of sectors that are off-limits for foreign investors to 33, down from 40 in the 2019 version.
The long-term commitment to such reforms has honed China’s appeal as an investment destination for global firms. Despite the COVID-19 pandemic, China remains one of the top three destinations for 63 percent of respondents in a new survey conducted by the European Union Chamber of Commerce in China and global consultancy firm Roland Berger.
For the rest of the year, analysts expect more reform measures directed at SOEs, the ballast of China’s economy.
One of the major tasks of SOE reform, according to the meeting of the central committee for deepening overall reform on June 30, is optimizing the layout and structure of the State-owned economy to make it more competitive, innovative, controllable, influential, and more able to withstand risks.
The layout and structure of the State-owned economy will be adjusted around the goal of building a modern economic system, said Zhu Changming, a partner at Sunshine Law Firm.
Through mergers, acquisitions and restructuring, State-owned capital should gravitate more toward emerging industries, advanced manufacturing, as well as other sectors that have bearings on the people’s well-being and national security, said Liu Xingguo, a researcher at the research department of the China Enterprise Confederation.
The capital market will play a major role in SOE reform as a platform for financing, stock issuance, as well as mergers and acquisitions, said Liu.