The four-day behind-closed-doors Third Party Plenum has got underway. The agenda is known well-enough: the next phase of China’s economic reform to put growth on a more sustainable path— “unprecedented” changes, according to Yu Zhengsheng. The desired outlines have been sketched in the State Council’s Development Research Center blueprint known as the the 383 plan.
The first three is the actors — market, government and corporations — the eight is eight sectors that will be center stage — finance, taxation, land, state assets, social welfare, innovation, foreign investment and governance — and the final three is three bundles of high-priority policies, notably lowering entry barriers to financial markets, providing basic social security services to citizens, and allowing collective lands to be bought and sold, which implies a big change in ownership rights. (Caixin provides the summary appended below.)
Some of the 383 plan is specific and detailed, such as ending government-set prices for oil products. Other parts are broader brush, such as turning some state-owned enterprises into sovereign investment funds to pay for public services.
The big unknowns are first how much the leadership can get agreement on, and against what timeline; and second what degree of resistance both during the meeting and after will be put up by the vested interests in local government and state-owned corporations and banks that potentially stand to lose the most from moving away from the infrastructure investment-driven state capitalism of the past three decades.
We don’t expect much by way of detail to emerge during the meeting, or necessarily at the end of it. We do expect an end-of-meeting declaration of unity and a rallying cry to deepen reforms comprehensively. The loftier the rhetoric probably the less the agreement of detail.
Eight Key Sectors