China is revving up its economic reform drive again, as Liu He pledged in Davos
Deng Yuwen says there are many reasons China must recommit itself to its reform and opening up policy, not least because further reforms would help it meet its own development goals, and avoid a trade war with the US and Europe
In his New Year address, President Xi Jinping said reform and opening up should be advanced at a faster pace this year. Illustration: Craig Stephens
President Xi Jinping’s top economic aide Liu He, a Politburo member of the Chinese Communist Party who is widely expected to be named a vice-premier in March, told global elites at the World Economic Forum this month that a more extensive package of market-opening measures will be introduced to mark the 40th anniversary of China’s reform drive. And some of these reforms will go beyond “the expectations of the international community”, he said.
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Liu’s speech in Davos could be seen as an effort to reassure the international community.
In an article published before the 19th party congress last year, I outlined the three trends we could expect of China’s development in the next five years. One was that Beijing’s grip on the economy would start to ease and the pace of economic reform would pick up. Liu’s speech has proven this prediction right.
What Liu said was nothing new; he merely elaborated on the Chinese economic blueprint that was unveiled at the 19th party congress. But given Liu’s position, global investors and analysts were right to pay attention.
Liu said China’s economic policy in the next few years would be centred around “one key necessity, a main task and three critical battles”. The key necessity involves shifting the economy from a phase of rapid growth to one of high-quality development, and all of Beijing’s macroeconomic, structural and social policies would be designed to support this transition. The three critical battles are: preventing and resolving major financial risks; making targeted efforts to reduce poverty; and controlling pollution.
On economic reform, Liu said it would be deepened to allow the market to play a decisive role in allocating resources, protect private property, especially intellectual property, and give full play to the role of entrepreneurs. This would encourage competition, curb monopolies and improve the macroeconomic regulatory regime.
