Taking steps at the right time

Reforms will help China maintain a steady growth momentum in the long-term future

People notice. And it is not difficult to tell the difference between "to reform" and "not to reform". The flurry of reform proposals unveiled by the policymakers in China during the past few weeks has no doubt caught the attention of all concerned.

The State Council has rolled out a series of key reform measures after the economic data for the first six months of the year was released on July 15. Although most of the measures are targeted responses to shore up the flagging GDP growth rate, considering that the major economic indicator had edged toward the minimum during the first six months at a level that can be politically tolerated, they also come with fortified reform ingredients.

Here are some of the major reforms announced by the government.

On July 20, the government decided to liberalize the centrally regulated lending-rate mechanism by removing the floor on commercial lending rates and allowing financial institutions to fix the rates themselves.

On July 24, at a meeting chaired by Premier Li Keqiang, the State Council decided to add more funding channels for railway construction and to step up railway construction in the central and western regions.

In August, the National Audit Office started a nationwide audit of government debt to gauge the debt levels of local governments in China. This is an important step and a precursor to the next stage of government and public finance reforms.

On Aug 1, more than 6 million Chinese small enterprises, with monthly business income of around 20,000 yuan ($3,266), were granted value-added tax or business income tax exemption. This was announced even as pilot schemes for other tax reforms, especially for logistics companies, are in the works.

On Aug 11, a State Council "opinion paper" suggested speedy development of environmental industries and fixed the output value target for energy conservation and emission controls at 4.5 trillion yuan by 2015.On Aug 12, the government also urged financial institutions to provide credit services to small enterprises, something that has long been neglected by the large State-owned banks.

On Aug 14, IT was officially recognized as a consumer industry. Information-related consumption is projected to reach 3.2 trillion yuan by 2015, while its contributions to related industries would be around 1.2 trillion yuan of new revenue.

Along with this, a "broadband China" strategy was unveiled on Aug 17 that seeks to bring all urban residents and more than half of the rural residents in China, under the national broadband system by 2015.

During the same week, the State Council also held an executive meeting to discuss the nation's retirement services, which many observers believe would initiate a reform of the pension fund system and the social security network.

On Aug 19, an "opinion paper" was published regarding the reform of the railway industry's investment/equity structure, in which the State Council promised to open up ownership and management rights to the local government and private investors for the development of urban and local rail systems and to encourage "social capital", meaning funds not directly from the central government, in the development of all rail systems.

All the above measures, as the premier likes to say, are efforts to seek "dividends", or concrete economic benefits, from the reform.

For some of them, the results may still be far away, such as the increasing role of the environmental industries in the whole economy. Some, such as the attempted reform of the former state-within-a-state railway system, is bound to be a long and complicated process.

But other efforts, such as tax exemptions for small enterprises, and also the decision to invest in the central and western China railway modernization program, will almost certainly generate some additional short-term growth. The market will notice.

The author is editor-at-large of China Daily.