China's reform roadmap gets clearer

NO BEATING AROUND THE BUSH

China's decision makers spent more than nine years researching and debating before the State Council issued a guideline on income redistribution in early February.

Ye Qing, deputy chief of the Hubei Provincial Statistical Bureau and a deputy to the 11th National People's Congress, thinks the guideline has offered a glimpse of the complexity of the most urgently needed reforms in China's key areas.

"The CPC's new leadership has taken a series of measures over the past three months to advocate frugality and administrative transparency and build a good public opinion atmosphere for advancing reforms. It is against such a backdrop that the guideline has been issued," said Ye.

Global credit-rating agency Moody's takes the 35-point guideline as "credit positive" because it includes a recognition by Chinese leaders that state-funded investment growth is not viable over the long term, and that a more moderate and sustainable pace of economic growth will enhance China's economic resilience and sovereign credit-worthiness.

Ye said he believed income redistribution will be heatedly discussed at the annual meetings. "I hope more detailed and feasible measures can be constituted by relevant government departments," he added.

CPPCC member Jia Kang, director of the Institute for Fiscal Science Research under the Ministry of Finance, told Xinhua on Saturday that the government must "face public concerns squarely" to have the guideline smoothly implemented.

In his proposal to the CPPCC National Committee, Jia advocated the government spread the use of collective pay bargaining in companies, expand consumption taxes to luxury entertainment and luxury goods, tighten monitoring of officials' non-salary and property income and introduce tougher punishment over power-for-money deals, bribery and corruption.

"To change China's pyramid-shaped income structure to an olive-shaped one, the government must seize time to listen to the opinions of NPC deputies and CPPCC members and make timely responses to public calls," urged Jia.

WISDOM MATTERS MORE THAN COURAGE

Xi Jinping, general secretary of the CPC Central Committee, has vowed not to stall in reform and opening up. He called on all CPC members to garner more political courage and wisdom to waste no time pushing reforms in key areas.

The road ahead for the Party and the government, however, is a rough one because a variety of key reforms are to be completed, ranging from narrowing the wealth gap, reducing monopolies, supporting private enterprises, environmental protection, reducing corruption, streamlining taxation, improving administrative efficiency, to ensuring equal access to medical services, education and old-age pensions.

According to Moody's research, the key credit challenges facing the leaders taking office in March mainly revolves around re-balancing growth toward private consumption, furthering market reform and maintaining social stability.

Apart from the income redistribution reform which will help narrow the wealth gap and reduce the country's extra dependence on foreign trade for economic growth, China has activated reforms in many spheres since the conclusion of the 18th CPC National Congress in mid November.

The NPC Standing Committee has deliberated on a draft amendment of the Land Administration Law, submitted by the State Council, which proposes raising compensation for farmers whose collectively owned land is expropriated and suggests more strict rules to manage excessive land expropriations.

Given land expropriation has been a source for rural protests, the move is expected to defuse social instability through better protection of farmers' property rights.

Responding to public grumbles over the urban-rural gap, the CPC has decided in its first policy document for 2013 to accelerate household registration reform, helping rural residents urbanize by loosening control on household registration in small townships and medium-sized cities.

The National Development and Reform Commission, the economic planner, also prioritized resource taxes for the year's price reform, and aimed to optimize the pricing mechanism for refined oil products and natural gas.

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2013 NPC & CPPCC