Gear change

Updated: 2013-11-15 09:54

By Hu Yuanyuan, Li Xiaokun and Zhang Chunyan (China Daily Europe)

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Gear change

President Xi Jinping, Premier Li Keqiang and other members of the Standing Committee of the Political Bureau of the CPC Central Committee vote for a reform plan at the Third Plenum. Lan Hongguang / Xinhua

State role

It was also emphasized, for the first time, that both private and state-owned enterprises are the foundations of China's economic development.

"This is ... to instill some confidence in China's private entrepreneurs who have complained about a worsening operating environment after the global financial crisis, with the state advancing and the private sector receding," Liu Ligang, chief economist of the Australia-focused lender ANZ Banking Group, says.

Xu Xiang, a private entrepreneur who runs a leather export company in Zhejiang province, however, believes that the enhanced role for markets will help businesses. "For us, the less government intervention, the better."

More steps such as lowering the entry threshold in more sectors, interest rate and foreign exchange rate liberalization are necessary to rejuvenate businesses, Xu says.

Susan Shirk, former deputy assistant secretary of state in the Clinton administration in the United States, says the new moves will help China in its globalization.

"China has been dependent on foreign investment in the past as it had a very under-developed domestic capital market. A more developed domestic capital market with fair access to different types of firms inside China, as well as international firms, will be seen as a positive measure," she says.

Wang Zhengxu, a lecturer at the School of Contemporary Chinese Studies at the University of Nottingham in the UK, expects the new reforms to make the Chinese economy more dynamic, efficient, innovation-driven, consumption-driven and service-oriented.

"Foreign companies with the technologies and know-how in helping China achieve these goals will enjoy a wide range of opportunities in China," Wang says.

"In areas such as high value-added manufacturing - especially in electronics and machinery, pharmaceuticals and clean energy, among others - foreign firms have a lot to harness."

Liu from ANZ Banking, however, feels that the comprehensive reform package may weigh down China's economic growth in the short term.

"We maintain our view that the Chinese authorities could lower the growth target for the next year to 7 percent," Liu says. The target for this year is 7.5 percent.

Although China's growth rate will slow, it will not undermine its huge influence on the global economy, Liu says. The urbanization drive means that demand for housing, infrastructure, energy and agricultural products will continue to grow in China.

Nerve center

An important outcome of the Third Plenum was the decision to set up a state security committee to deal with the rising threats from home and abroad. Although very little information is available about the committee, experts say that it will form the highest level of security coordination in China.

The statement also urged the introduction of systems to effectively prevent and end social disputes and to further improve public security.

Li Wei, director of the anti-terrorism center at the China Institutes of Contemporary International Relations, says it is unlikely that the committee will remove power from existing state departments.

"Instead, it will probably be an organization that has the power to coordinate government organs at the highest level to respond to a major emergency and incidents that pose threats to national security, such as border conflicts and major terrorist attacks," he says.

Experts say China is facing increased social conflict due to a widening wealth gap and corruption. Threats from terrorism have also spread to the political heart of the country from remote border areas.

"China desperately needs an organization such as the committee to develop long-term national strategies to tackle the problem from its roots," Li from China Institutes says.

"Having a state security committee has become a must for big countries around the world," says a recent commentary carried by the overseas edition of the People's Daily.

The US set up its National Security Council in 1947, while many other countries, such as Russia, France and Israel, have similar institutions.

The article says that competition in comprehensive national power nowadays is not restricted to hard power but also "major countries' capabilities of policymaking, coordination and implementation of diplomatic and security affairs".

It says the committee will stress "initiative, timeliness and coordination" in handling the nation's major security affairs.

The body will become the "nerve center" of policymaking and coordination on national security issues, it says.

"China is growing from a regional power to a global power, and it is time for it to set up its national security concept and a corresponding mechanism," says Ruan Zongze, vice-president of the China Institute of International Studies.

The security committee will take the nation's interests in many areas into account, he says. "It will stand at a higher point and have a more comprehensive sight."

Luo Yuan, a retired major general and military expert, says it has been quite a long time since people started talking about establishing such a security body. He and some national law makers and political advisers have delivered such proposals. "Now the time is ripe to set up such a body."

Luo says in his proposal that the committee, led by major Chinese leaders, should cover "the comprehensive security system" that includes areas such as the military, domestic security, diplomacy, economy and finance.

Shada Islam from Friends of Europe, a Brussels-based think tank, says: "I think it's not a surprise that China wants to create one, especially in a complex international environment.

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Zhao Yinan contributed to this story.

( China Daily European Weekly 11/15/2013 page1)

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