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鈥檚 name
alone. With this, Mr. Rosen鈥檚 report notes, the president
- In November 2013, President Xi Jinping and 鈥渨as asserting his power and intention to drive economic
his government laid out, at the Communist Party鈥檚 Third change, rather than settle for a speed limit imposed by
Plenum of the CCP鈥檚 18th Party Congress, a road map for consensus. [President] Xi鈥檚 program set a hard date of
the reform necessary to replace the current economic 2020 for completing a broad slate of reforms鈥� (Rosen
model and reinvigorate China鈥檚 growth. Known as the 2014).
鈥淒ecisions鈥�, the report at its core called for market
forces to assume 鈥渁 decisive role in allocating resources鈥� The first important element in the Decisions was
(Powell 2014). The Third Plenum served as a platform a 鈥渞evised mission statement for government鈥� 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 鈥渄ecisive鈥� role for the market in the economy, - Safeguard fair competition
reforming China鈥檚 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 鈥淐hina鈥檚
development model is obsolete and in need of urgent, In 2014, President Xi Jinping and his administration
not gradual, replacement鈥� (Powell 2014). then followed through with bold reform measures in
several aspects of the Chinese economy, confirming, in
In Mr. Rosen鈥檚 report, he notes that 鈥渢o justify the risks Mr. Rosen鈥檚 opinion, that 鈥渢he Decisions was a starting
[of reform], President Xi quoted an impassioned plea for point, not an empty text鈥� (Rosen 2014).
policy modernization by his predecessor Deng Xiaoping:
the only way to avoid a dead end 鈥� a blind alley 鈥� 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鈥� (Rosen 2014). specifying reform priorities and tasks; and, boldly setting
an interim deadline of 2016 for 鈥渂asically鈥� 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 鈥渋f 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 鈥� and thereby on reform of China鈥檚 powerfully entrenched State-Owned
create opportunities for the rest of the world. Should the Enterprises (SOEs). These reform goals include 鈥渄ilution
reform program stall, the effects will be just as profound. of state shareholding through the introduction of
Either way, China鈥檚 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鈥� (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鈥� (Ibid.).
the Communist Party鈥檚 Third Plenum of the CCP鈥檚 18th
Party Congress, known as Decision of the Central Among SOE reform efforts to date, Mr. Rosen鈥檚 report
Committee of the Communist Party of China on some observes that President Xi鈥檚 team has 鈥渟uccessfully 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鈥檚 name
alone. With this, Mr. Rosen鈥檚 report notes, the president
- In November 2013, President Xi Jinping and 鈥渨as asserting his power and intention to drive economic
his government laid out, at the Communist Party鈥檚 Third change, rather than settle for a speed limit imposed by
Plenum of the CCP鈥檚 18th Party Congress, a road map for consensus. [President] Xi鈥檚 program set a hard date of
the reform necessary to replace the current economic 2020 for completing a broad slate of reforms鈥� (Rosen
model and reinvigorate China鈥檚 growth. Known as the 2014).
鈥淒ecisions鈥�, the report at its core called for market
forces to assume 鈥渁 decisive role in allocating resources鈥� The first important element in the Decisions was
(Powell 2014). The Third Plenum served as a platform a 鈥渞evised mission statement for government鈥� 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 鈥渄ecisive鈥� role for the market in the economy, - Safeguard fair competition
reforming China鈥檚 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 鈥淐hina鈥檚
development model is obsolete and in need of urgent, In 2014, President Xi Jinping and his administration
not gradual, replacement鈥� (Powell 2014). then followed through with bold reform measures in
several aspects of the Chinese economy, confirming, in
In Mr. Rosen鈥檚 report, he notes that 鈥渢o justify the risks Mr. Rosen鈥檚 opinion, that 鈥渢he Decisions was a starting
[of reform], President Xi quoted an impassioned plea for point, not an empty text鈥� (Rosen 2014).
policy modernization by his predecessor Deng Xiaoping:
the only way to avoid a dead end 鈥� a blind alley 鈥� 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鈥� (Rosen 2014). specifying reform priorities and tasks; and, boldly setting
an interim deadline of 2016 for 鈥渂asically鈥� 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 鈥渋f 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 鈥� and thereby on reform of China鈥檚 powerfully entrenched State-Owned
create opportunities for the rest of the world. Should the Enterprises (SOEs). These reform goals include 鈥渄ilution
reform program stall, the effects will be just as profound. of state shareholding through the introduction of
Either way, China鈥檚 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鈥� (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鈥� (Ibid.).
the Communist Party鈥檚 Third Plenum of the CCP鈥檚 18th
Party Congress, known as Decision of the Central Among SOE reform efforts to date, Mr. Rosen鈥檚 report
Committee of the Communist Party of China on some observes that President Xi鈥檚 team has 鈥渟uccessfully gone
after recalcitrant management at many of the most
36
