Page 36 - 2017 White Paper
P. 36
7 White Paper on the Business Environment in China
facilitation, financial innovation, risk management, and major issues concerning comprehensively deepening
administrative licensing (US-China Business Council reform, or simply the decisions, was accompanied by
2014). personal Explanatory Notes under President Xi’s name
alone. With this, Mr. Rosen’s report notes, the president
- In November 2013, President Xi Jinping and “was asserting his power and intention to drive economic
his government laid out, at the Communist Party’s Third change, rather than settle for a speed limit imposed by
Plenum of the CCP’s 18th Party Congress, a road map for consensus. [President] Xi’s program set a hard date of
the reform necessary to replace the current economic 2020 for completing a broad slate of reforms” (Rosen
model and reinvigorate China’s growth. Known as the 2014).
“Decisions”, the report at its core called for market
forces to assume “a decisive role in allocating resources” The first important element in the Decisions was
(Powell 2014). The Third Plenum served as a platform a “revised mission statement for government” with
for the broader reform agenda, through both high-level instructions for focus on eight core objectives:
statements and a set of post-plenum documents that
provided more detail on the direction of reform. These - Maintain macroeconomic stability
documents included key indicators of priorities, including - Strengthen and improve public services
setting a “decisive” role for the market in the economy, - Safeguard fair competition
reforming China’s tax and finance regime, and improving - Strengthen oversight of the market
foreign investment (US-China Business Council 2014). - Maintain market order
- Promote sustainable development
Daniel Rosen, a principal at the Rhodium Group, a - Promote common prosperity
New York consultancy, and author of a November 2014 - Intervene in situations where market failure
report published by the Asia Society on the prospects occurs (Rosen 2014).
for economic reform in China, argues that “China’s
development model is obsolete and in need of urgent, In 2014, President Xi Jinping and his administration
not gradual, replacement” (Powell 2014). then followed through with bold reform measures in
several aspects of the Chinese economy, confirming, in
In Mr. Rosen’s report, he notes that “to justify the risks Mr. Rosen’s opinion, that “the Decisions was a starting
[of reform], President Xi quoted an impassioned plea for point, not an empty text” (Rosen 2014).
policy modernization by his predecessor Deng Xiaoping:
the only way to avoid a dead end – a blind alley – is to In June 2014, Communist Party leaders approved a top-
deepen reform and opening both at home and with the level national plan for deepening fiscal and tax reforms;
world” (Rosen 2014). specifying reform priorities and tasks; and, boldly setting
an interim deadline of 2016 for “basically” finishing major
In the same report, Mr. Rosen outlines the intriguing tasks. Finance Minister Lou Jiwei elaborated on specific
conundrum faced by China in the next several years, implementation - emphasizing measures to reform
speculating that “if Beijing shifts direction along the lines budget management and improve the taxation system
it has announced, the behavior of Chinese companies, (Rosen 2014). Although Mr. Rosen stipulates that further
government agencies, and individual members of society clarification is still required, the Decisions also touched
is likely to change in remarkable ways – and thereby on reform of China’s powerfully entrenched State-Owned
create opportunities for the rest of the world. Should the Enterprises (SOEs). These reform goals include “dilution
reform program stall, the effects will be just as profound. of state shareholding through the introduction of
Either way, China’s new policy design, and its success or private shareholders; extracting more profit from SOEs to
failure in achieving it, will have a major influence on the finance public expenditures; specifying which industries
international economy and stability and security in Asia legitimately require state control; and making clear that
and beyond” (Rosen 2014). when the state remains a non-controlling shareholder
in a competitive industry, normal market competition
The core document issued in November 2013 during should apply” (Ibid.).
the Communist Party’s Third Plenum of the CCP’s 18th
Party Congress, known as Decision of the Central Among SOE reform efforts to date, Mr. Rosen’s report
Committee of the Communist Party of China on some observes that President Xi’s team has “successfully gone
after recalcitrant management at many of the most
36
facilitation, financial innovation, risk management, and major issues concerning comprehensively deepening
administrative licensing (US-China Business Council reform, or simply the decisions, was accompanied by
2014). personal Explanatory Notes under President Xi’s name
alone. With this, Mr. Rosen’s report notes, the president
- In November 2013, President Xi Jinping and “was asserting his power and intention to drive economic
his government laid out, at the Communist Party’s Third change, rather than settle for a speed limit imposed by
Plenum of the CCP’s 18th Party Congress, a road map for consensus. [President] Xi’s program set a hard date of
the reform necessary to replace the current economic 2020 for completing a broad slate of reforms” (Rosen
model and reinvigorate China’s growth. Known as the 2014).
“Decisions”, the report at its core called for market
forces to assume “a decisive role in allocating resources” The first important element in the Decisions was
(Powell 2014). The Third Plenum served as a platform a “revised mission statement for government” with
for the broader reform agenda, through both high-level instructions for focus on eight core objectives:
statements and a set of post-plenum documents that
provided more detail on the direction of reform. These - Maintain macroeconomic stability
documents included key indicators of priorities, including - Strengthen and improve public services
setting a “decisive” role for the market in the economy, - Safeguard fair competition
reforming China’s tax and finance regime, and improving - Strengthen oversight of the market
foreign investment (US-China Business Council 2014). - Maintain market order
- Promote sustainable development
Daniel Rosen, a principal at the Rhodium Group, a - Promote common prosperity
New York consultancy, and author of a November 2014 - Intervene in situations where market failure
report published by the Asia Society on the prospects occurs (Rosen 2014).
for economic reform in China, argues that “China’s
development model is obsolete and in need of urgent, In 2014, President Xi Jinping and his administration
not gradual, replacement” (Powell 2014). then followed through with bold reform measures in
several aspects of the Chinese economy, confirming, in
In Mr. Rosen’s report, he notes that “to justify the risks Mr. Rosen’s opinion, that “the Decisions was a starting
[of reform], President Xi quoted an impassioned plea for point, not an empty text” (Rosen 2014).
policy modernization by his predecessor Deng Xiaoping:
the only way to avoid a dead end – a blind alley – is to In June 2014, Communist Party leaders approved a top-
deepen reform and opening both at home and with the level national plan for deepening fiscal and tax reforms;
world” (Rosen 2014). specifying reform priorities and tasks; and, boldly setting
an interim deadline of 2016 for “basically” finishing major
In the same report, Mr. Rosen outlines the intriguing tasks. Finance Minister Lou Jiwei elaborated on specific
conundrum faced by China in the next several years, implementation - emphasizing measures to reform
speculating that “if Beijing shifts direction along the lines budget management and improve the taxation system
it has announced, the behavior of Chinese companies, (Rosen 2014). Although Mr. Rosen stipulates that further
government agencies, and individual members of society clarification is still required, the Decisions also touched
is likely to change in remarkable ways – and thereby on reform of China’s powerfully entrenched State-Owned
create opportunities for the rest of the world. Should the Enterprises (SOEs). These reform goals include “dilution
reform program stall, the effects will be just as profound. of state shareholding through the introduction of
Either way, China’s new policy design, and its success or private shareholders; extracting more profit from SOEs to
failure in achieving it, will have a major influence on the finance public expenditures; specifying which industries
international economy and stability and security in Asia legitimately require state control; and making clear that
and beyond” (Rosen 2014). when the state remains a non-controlling shareholder
in a competitive industry, normal market competition
The core document issued in November 2013 during should apply” (Ibid.).
the Communist Party’s Third Plenum of the CCP’s 18th
Party Congress, known as Decision of the Central Among SOE reform efforts to date, Mr. Rosen’s report
Committee of the Communist Party of China on some observes that President Xi’s team has “successfully gone
after recalcitrant management at many of the most
36
