How China’s reforms went from arms wide open to an ‘eternal theme’ of risk prevention in the past decade

Analysts discuss why many of Beijing’s economic aspirations from 2013 have gone unfulfilled, as new reforms could be on the horizon with July 15-18 third plenum

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Published: 6:00am, 28 Jun 2024Updated: 8:40am, 28 Jun 2024

The Communist Party of China is about to hold its much-delayed third plenum, traditionally a time for unveiling major economic strategies for the next five to 10 years. Ahead of the July 15-18 gathering, this final piece in a six-part preview series examines China’s reform progress and related structural changes in the past decade.

By throwing Shanghai’s doors open with the launch of a free-trade zone in 2013, Chinese leaders put an ambitious economic engine into gear, with vows to create a bastion of international trade, free capital flows and far less government intervention in business operations.

And more importantly, the undertaking would act as “an experimental field to conduct economic reform”, laying the groundwork for the pilot zone’s success to be shared, promoted and replicated across the country.

The Shanghai Pilot Free Trade Zone was touted as the most significant attempt at economic reform since Shenzhen established the country’s first special economic zone in 1980, next to Hong Kong. And leadership was aiming to elevate China’s decades-old model for economic reform and growth to new heights.

And the pilot zone has indeed seen an extraordinary rise in terms of industrial development and economic size, hallmarked by Tesla’s Gigafactory and several other mega projects. Some of the pro-business perks – including the removal of some bureaucratic approvals, as well as the zone’s smaller “negative list” that outlines sectors off-limits to foreign investors – have gained popularity at other such zones across the country.

But at the national level, many of the 336 pro-market tasks outlined in leadership’s broader 2013 reform document, which was then regarded as a key means of unleashing the country’s long-term growth potential, have progressed more slowly than the market expected.

On the ground, pressure continues to be felt as various domestic problems persist unabated, including a property crisis, local-level financial woes, stubbornly high youth unemployment and an air of malaise in the outlook for investors.

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What will China’s third plenum bring?

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