Hoping for important reforms
Print Edition
CHINA’S much-anticipated annual parliamentary sessions, dubbed the “Two Sessions,” are expected to lay a foundation for further reforms as the world’s second-largest economy adapts to the “new normal” of slower growth but a higher quality economy, experts say.
When the National People’s Congress (NPC), the top legislature, and the Chinese People’s Political Consultative Conference (CPPCC), the top political advisory body, meet from tomorrow, China’s economic policy and implementation of its reform agenda will be watched closely by experts from around the world.
This year is particularly important because it marks the final year of China’s 12th five-year plan, said Scott Kennedy, deputy director of the Freeman Chair in China Studies at the Center for Strategic and International Studies, a US think tank.
“They (Chinese policy-makers) need to come to some conclusions about how successful the 12th five-year plan has been and think about the goals of the 13th five-year plan, which will be published next spring when they hold the Fourth Plenum of the NPC,” Kennedy added.
As a leading expert on Chinese business and political economy, Kennedy said he usually looks at four things during the meetings to grasp a general picture of China’s political and economic landscape — the personnel, general discussions about economic policy, proposals being considered by the NPC and foreign policies.
The focus would be on economic policies whereas there would be no major changes in the other three areas, Kennedy said. “I expect this NPC meeting to focus on the efforts to bring the debt problem under control, and lay the foundation for additional reforms, and encouragement for pushing reforms out this year to have implemented,” he said.
Kennedy believes that China will stick to the reform agenda although the country’s economic growth rate fell to a 24-year low of 7.4 percent last year.
“I think the government’s primary focus is implementing economic reforms, not just simply making people feel less pessimistic in the short term. If you overstep addressing the growth concerns now, that makes it harder for general economic reforms.”
“I also hope that the government moves more quickly to implement important reforms,” David Dollar, a senior fellow at the Brookings Institution, another US think tank, said. “The moves in 2014 to simplify business registration have helped. These could be complemented by efforts to open up the service sectors to international trade and investment.”
Dollar said he didn’t expect government to announce a new big stimulus program at the upcoming meetings because “that would spur investment and create more problems of debt and over-capacity.”
Of China’s economic growth forecast, Kennedy said: “I don’t think we’ll see a high economic growth rate this year. We’re seeing estimates between 6.5 percent and 7.3 percent. I think that’s probably a reasonable range.”
Saying farewell to the “old normal” of over three decades of double-digit growth, experts still believe China will continue to be a vital ballast for the world economy.
“Even with lower economic growth, China will be such a profound presence that it’s hard to imagine some degree of change that really undermines their centrality in the global economic future,” said Jonathan Pollack, a senior fellow at the Brookings Institution.
Looking back at last year’s reforms, Kennedy said one of the challenges was that there were so many, and policy-makers had a hard time prioritizing them.
He expected China to make local government financing reform a top priority this time round.
Kennedy said his impress was that the “Two Sessions” reflected some amount of engagement with broader Chinese society, and it was a useful exercise.
“It does provide some barometer on the performance of the government. But it could become much more influential if they could meet more often and reform other elements of the NPC system, and its relations with the State Council and the Party,” he said.
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