Did the US play a role in China’s long-term market reform plans? Wait for the policy details

Victoria Ruan says a clearer picture of China’s long-term economic reform blueprint, which may have been formulated in anticipation of tough US trade action, will emerge only when leaders lay out annual policy in December

Reading Time:4 minutes

If Beijing hopes to convince the world of its sincerity to push forward reform, it needs to address some persisting puzzles. Illustration: Craig Stephens

Published: 11:17am, 19 Nov 2017Updated: 7:14pm, 19 Nov 2017

The US$250 billion worth of deals announced during US President Donald Trump’s state visit to China made headlines. And, while the value of the newly signed and legally binding contracts in the package may be much smaller, the deals will help the two countries to narrow the trade gap somewhat.

However, what represents more substantial changes is the set of longer-term reform plans on easing market access recently announced by Beijing. This could be partly in anticipation of tough US action on trade and investment in the months ahead. Coming shortly after the 19th party congress, the announcements also fuel hope that China’s domestic reform may eventually pick up pace after getting largely stalled in the past five years. Of course, uncertainty remains over the details of the plans and how they will be implemented.

Deputy Finance Minister Zhu Guangyao said Beijing has decided to treat foreign and domestic investors equally when they take stakes in banks. It also plans to let foreign investors take a majority stake of up to 51 per cent in domestic life insurers after three years, and pledged to remove the limit permanently within five years.

Starting next year, China will also adopt a unified negative-list system for the whole country, meaning foreign investors – in theory – would enjoy equal treatment with domestic players, except in fields restricted by the list.

Xi Jinping’s economic point man suggests ex-US treasury chief read this book

And, the government has pledged to reform the pricing mechanism for items ranging from natural gas to agricultural products and utility fees by 2020. Echoing these plans, Vice-Premier Wang Yang wrote a lengthy commentary in the People’s Daily, calling for “forming a new pattern of comprehensive opening up of the market”. Wang emphasised that this opening up “isn’t a tactic of expediency” but a long-term strategy.