China's reform package beyond expectation

The detailed blueprint issued by the Communist Party of China (CPC) Friday showed that the leadership of China is able to get backing for a meaningful package of reforms, said Capital Economics, a London-based economic forecaster.

The document, with the title "Decisions on Major Issues Concerning Comprehensively Deepening Reforms", is clear, wide ranging and does not shy aware from areas of contention, said Capital Economics in its latest China Economics Update released Friday night.

The document was approved by the Third Plenary Session of the 18th CPC Central Committee, a four-day key meeting which ended on November 12.

"China's reform package beyond expectation," Capital Economics said.

The "market-determined" reforms in the sectors including water, oil, natural gas, electricity, transport and telecommunications will create a more competitive environment in the former state-owned industries. Within the financial sector, however, interest rate and capital account liberalization will continue, interprets by Capital Economics.

"Taken together, these steps should significantly improve the ability of private firms to compete with state-owned counterparts," said the economic forecaster.

China will widen market access for foreign investors. The country will keep investment policy stable, transparent and predictable, according to the document.

"There is a lot to get through - the main document is over 21,000 characters long - but it ranges across the whole spectrum of economics issues, suggesting that this could shape up to be a significant shift," said the economic forecaster.

Wang Qinwei, Economist at Capital Economics, told Xinhua that the reform package is motivated, well-rounded and in-depth, it could offer a cushion to support the long-term sustainable growth of China's economy. The company maintains its central scenario expectation that China will maintain a no-less-than 6.5 pct GDP growth by 2020.

Meanwhile, although Capital Economics does not think China's pledge to further relax the one-child policy will have a massive economic impact, it reckons that abandoning the decades-old policy will bring "a massive social change."

The economic forecaster also said that restrictions on the sale of rural "construction" land will be lifted, which will help poor rural households and give a leg up to urbanization.

"A policy document, however weighty and well put-together, does not in itself change anything on the ground. Whether or not the plenum ends up a turning point in China's development depends on how well reforms are implemented." concludes Capital Economics.