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Economic overhaul: China opens doors to more private competition

Published time: November 15, 2013 14:57
Reuters/Jason Lee

Reuters/Jason Lee

In the biggest economic turnaround in two decades China’s leaders have pledged more private competition in dominant state industries. The new economic plan aims at rejuvenating a slowing economy and also eases limits on foreign investment in e-commerce.

The changes promised in a Friday report issued after a closely watched Communist Party conference compares with the effort at market-style reforms in 1978 that launched China's economic boom, the Associated Press says citing the state media.

The lengthy policy document - officially named "a decision on major issues concerning comprehensive and far-reaching reforms" - was approved by the Third Plenary Session of the 18th CPC Central Committee, a four-day key meeting which ended on Tuesday.

The ruling party said private competitors should have lower barriers in the markets currently controlled by state companies, though they reaffirmed that the state – owned industries will remain at the core of the economy.

“We must promote orderly opening to the outside,” the report said.

The new plan envisages more freedom to create privately owned banks, as well as use the market forces to allocate resources. Both measures are hoped to help domestic private companies that create most of China's jobs and wealth but struggle to get financing.

Foreign companies would enjoy fewer limitations in investment in many of China’s industries including e–commerce

China has recently been struggling to make a major turnaround from an export – oriented economy to one driven by domestic demand. The existing paradigm that delivered three decades of rapid growth has run out of steam, with the economic growth standing at 7.8 percent in 3Q, marginally higher than the two – decades low of 7.5 percent produced in 2Q 2013. 

In a move possibly aimed at responding to the rapidly aging Chinese population, the report said the ruling party also will ease the country's “one child” birth policy. It said the party will allow couples in which one partner is an only child to have two children.

Beijing says the thirty year-old birth policy, which is widely disliked by many Chinese couples, has helped the country by slowing population growth and conserving resources. But as the average age of the country's population of 1.3 billion people rises, Chinese leaders worry there will not be enough workers to support a growing group of retirees.


Comments (4)

 

Ingvar Kyi 19.11.2013 03:11

Welcome to the final stage of Chinese Perestroika. Wonder if Bo Xilai (and Zhou Yongkang) would've expedited or foil it.. Depends on which side of the elite they've played. "Private competition" doesn't work, never has. Capitalism is extensive (as opposed to intensive) system. Unless China is ready to get out and capture some new markets...

 

Karel Cleuren 18.11.2013 20:17

They should start with adapting the laws of minimum wage requirement, so people don't have to work for a pay that allows them to buy enough food to live and if lucky some place to live. Then they can be lucky that they can work or live in a safe building under somewhat decent circumstances.

At least like this the overall comsumer rate would go up. Leading to a healthier economy. Nature could use a hand (kind a whole lot of people could be put on that, jobs for the unemployed and homeless?). The finances? Do what the rest of the world does print it. If everyone is broke at least you got infrastructure.

 

漢陰陽 18.11.2013 09:07

stan2013 16.11.2013 09:37

just don't allow [privatization] into key resource-based companies. Government should keep 50% of the shares.

  

Agreed.

View all comments (4)
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