Commentary: What path will economy take (2)

While there is reasonable agreement among economic and financial reforms experts on the elements of the policy agenda, the question is what will be the impact of the leadership transition on its orientation, emphasis and speed.

The reform agenda includes a broad set combining economic rebalancing, industrial upgrading and sustaining growth. One set of reforms is meant to channel resources to new and growing sectors, products and services.

They include reforms to increase prices and taxes of industrial inputs to reduce the subsidization of industry, set a level playing field for SOEs and other companies, remove entry barriers to several service sectors, separate regulators from regulated entities, and delineate more clearly the roles of the State and the market. They also include increasing competition in the financial sector, allowing banks more freedom to set lending and deposit rates, expanding non-bank financing and granting small and medium-sized enterprises and service sectors access to finance, raising the role of interest rates in the conduct of monetary policy, making exchange rate more flexible, increasing State-owned enterprises' dividends and channeling them into the overall fiscal envelope, and fostering innovation.

A second set of reforms is supposed to support more migration to cities, with migrants being able to take their families with them and live and consume like urban residents, in order to foster more labor-intensive, service-oriented and consumer based growth. The reforms include further increasing the role of the government in healthcare, education and social security, liberalizing the hukou (house registration) system, reforming the intergovernmental fiscal relations and the performance evaluation system of government officials to give local governments the means and incentives to fund public services and build affordable housing for migrants, and pursuing land reform to increase the mobility of migrants from rural areas by facilitating land consolidation and mechanization, and boosting rural residents' incomes.

Recommended Features: [Special]'Made in China' Revisited From 'Made in China' to 'Created in China' A Journey to Cultural Renaissance Gold collection issued to mark 'Year of Snake' China: A Fast-growing Force in IPR IPR in China: Local Roots Bearing Global Fruits China Int'l Industry Fair opens in Shanghai Caofeidian coal wharf put into use Canton Fair wraps up on Sunday