In advance of the Communist Party Central Committee meeting that has just concluded in Beijing, China’s leaders promised fundamental economic reforms. Some even likened the meeting’s significance to the historic party plenum in 1978, at which Deng Xiaoping launched the market reforms that provided the basis for 35 years of extraordinary growth.
So has the Communist party leadership, led by President Xi Jinping, delivered on its bold promises? Those who want to believe that China is indeed entering a dramatic new period of economic liberalisation have latched on to a phrase in the closing statement – the pledge that the market would henceforth play a “decisive” role in directing the Chinese economy.
A bold interpretation of that word could indeed release a cascade of far-reaching reforms. If market-forces were unleashed across the entire economic system, then one could envisage a liberalisation of prices and interest rates, eventual full convertibility of the Chinese currency and a drastic restriction of the role of China’s state-owned enterprises (SOEs).