"History will be the ultimate judge, but there is good reason to believe that China’s recently completed Third Plenum will come to be regarded as a pivotal moment in the country’s development. At long last, China’s senior leadership has endorsed a raft of reforms that could impel the economy’s shift from reliance on exports to consumption-led growth''.
The Third Plenum calls for specific measures aiming to alter the behavior of fear-driven Chinese families. "Especially important is the proposal to channel 30% of the profits of state-owned enterprises (SOEs) – currently running at close to $400 billion – into the country’s woefully under-funded social safety net. China’s national health-insurance plan, for example, boasts nearly universal coverage, but the benefits it provides are negligible".
There are two other important reforms from the Third Plenum, changes in the "one-child policy is especially important, given the need to relieve pressures arising from the inevitable decline in China’s working-age. And the reform of the hukuo system to allow citizens to transfer their welfare benefits from one city to another is vital for an increasingly flexible labor force that now includes almost 200 million migrant workers".
The Third Plenum calls for specific measures aiming to alter the behavior of fear-driven Chinese families. "Especially important is the proposal to channel 30% of the profits of state-owned enterprises (SOEs) – currently running at close to $400 billion – into the country’s woefully under-funded social safety net. China’s national health-insurance plan, for example, boasts nearly universal coverage, but the benefits it provides are negligible".
There are two other important reforms from the Third Plenum, changes in the "one-child policy is especially important, given the need to relieve pressures arising from the inevitable decline in China’s working-age. And the reform of the hukuo system to allow citizens to transfer their welfare benefits from one city to another is vital for an increasingly flexible labor force that now includes almost 200 million migrant workers".
Chinese consumers will also benefit from a market based for deposit rates on their savings
accounts,"which will reinforce incremental growth in wage income".
"Finally, Xi’s power base is far broader than that of his two predecessors, Jiang Zemin and Hu Jintao, both of whom had shaky transitions in the first years of their leadership. Unlike Jiang and Hu, Xi assumed quick command of the Chinese Communist Party, the government, and the military, and very effectively shepherded the Third Plenum’s historic reforms.
As always, proof will come only with implementation. But with China’s leaders now focusing squarely on aligning the vast population’s behavioral norms with the next phase of transformation, the case for a consumer-led China has become more compelling than ever".
Source: Project-Syndicate
