Page 14 - 2017 White Paper
P. 14
7 White Paper on the Business Environment in China
1.1 China’s Economic Reforms: Opportunity
or Adversity?
Sentiment among China watchers 2016 so not even a year has passed since the Plan
about the country ’s provided a framework for China’s goals, principles
ongoing economic transitional period of reform has and targets for its development through to 2020. It
always veered between optimism and pessimism. is worth noting that this is the first Five-Year Plan to
These days, however, the pessimists may be forgiven be developed under President Xi Jinping’s leadership
for suffering from unusually severe predictions about and the first since China’s economy entered its “new
China’s future. normal” pace of economic growth. The Plan sets an
annual GDP growth target of 6.5% over the next five
The mood of doom and gloom is a far cry from years, reflecting the Chinese Communist Party’s long-
the atmosphere of almost breathless excitement and term goal of doubling the country’s GDP and household
cheerful, determined optimism that first greeted the income in the decade from 2010 to 2020. In seeking to
wave of economic and financial reforms and anti- achieve a more balanced, sustainable and mature rate of
corruption initiatives announced in China nearly economic development for China, the Plan also reflects a
four years ago. When the blueprints for the country’s move towards more domestic consumption, innovation
ambitious 13th Five-Year Plan were introduced in and entrepreneurship, objectives which seemingly go
2015 and the Plan itself approved in early 2016, the hand-in-hand with the leadership’s emphasis on reform
determined optimism was still there but markedly initiatives.
muted. The major reason for this shift in mood is the
perception from the foreign business community in It would seem that China is intent on implementing
China that progress, after nearly four years, on the such a broad, ambitious and sweeping Plan because
country’s roster of economic reforms is still scant and by October 2016, more specific guidelines on the
that absent any reassurance on reform progress, the implementation of the 13th Five-Year Plan for economic
expectation is that overall economic growth will stall. and social development were issued. The guidelines, as
stipulated in Xinhua, mandated “appropriate handling
What is causing reforms to stall? And why, for that of the relationship between the government and the
matter, are reforms being stalled? market”, synergies between both central and local
governments, coordinating priorities with overall
Defenders point out that there has been a con- development and “strengthening the leading and
centration, of late, on central consolidation of restrictive role of the plan”. Relevant departments were
power in Beijing, or that the current administration’s told to be “clear about their own targets and tasks” and
anticorruption campaign is taking up too much of its that in implementing the plan, “priorities should be
time, resources and focus. Others are pointing out that it set on major obligatory targets” and that these targets
simply takes time to build a national, central consensus were to be identified, broken down and “allocated to
on controversial reforms, such as tackling China’s state- local governments before October 2016”. The guidelines
owned enterprises (SEOs), opening up financial system also emphasized “accelerated implementation of major
to market competition and liberalizing land and labour projects and launching of major reform policies” (Huaxia
markets. 2016).
It bears remembering, however, that China only In addition, as documented in the following sections
officially approved its 13th Five-Year Plan on 15 March of this year’s White Paper, the central government, most
14
1.1 China’s Economic Reforms: Opportunity
or Adversity?
Sentiment among China watchers 2016 so not even a year has passed since the Plan
about the country ’s provided a framework for China’s goals, principles
ongoing economic transitional period of reform has and targets for its development through to 2020. It
always veered between optimism and pessimism. is worth noting that this is the first Five-Year Plan to
These days, however, the pessimists may be forgiven be developed under President Xi Jinping’s leadership
for suffering from unusually severe predictions about and the first since China’s economy entered its “new
China’s future. normal” pace of economic growth. The Plan sets an
annual GDP growth target of 6.5% over the next five
The mood of doom and gloom is a far cry from years, reflecting the Chinese Communist Party’s long-
the atmosphere of almost breathless excitement and term goal of doubling the country’s GDP and household
cheerful, determined optimism that first greeted the income in the decade from 2010 to 2020. In seeking to
wave of economic and financial reforms and anti- achieve a more balanced, sustainable and mature rate of
corruption initiatives announced in China nearly economic development for China, the Plan also reflects a
four years ago. When the blueprints for the country’s move towards more domestic consumption, innovation
ambitious 13th Five-Year Plan were introduced in and entrepreneurship, objectives which seemingly go
2015 and the Plan itself approved in early 2016, the hand-in-hand with the leadership’s emphasis on reform
determined optimism was still there but markedly initiatives.
muted. The major reason for this shift in mood is the
perception from the foreign business community in It would seem that China is intent on implementing
China that progress, after nearly four years, on the such a broad, ambitious and sweeping Plan because
country’s roster of economic reforms is still scant and by October 2016, more specific guidelines on the
that absent any reassurance on reform progress, the implementation of the 13th Five-Year Plan for economic
expectation is that overall economic growth will stall. and social development were issued. The guidelines, as
stipulated in Xinhua, mandated “appropriate handling
What is causing reforms to stall? And why, for that of the relationship between the government and the
matter, are reforms being stalled? market”, synergies between both central and local
governments, coordinating priorities with overall
Defenders point out that there has been a con- development and “strengthening the leading and
centration, of late, on central consolidation of restrictive role of the plan”. Relevant departments were
power in Beijing, or that the current administration’s told to be “clear about their own targets and tasks” and
anticorruption campaign is taking up too much of its that in implementing the plan, “priorities should be
time, resources and focus. Others are pointing out that it set on major obligatory targets” and that these targets
simply takes time to build a national, central consensus were to be identified, broken down and “allocated to
on controversial reforms, such as tackling China’s state- local governments before October 2016”. The guidelines
owned enterprises (SEOs), opening up financial system also emphasized “accelerated implementation of major
to market competition and liberalizing land and labour projects and launching of major reform policies” (Huaxia
markets. 2016).
It bears remembering, however, that China only In addition, as documented in the following sections
officially approved its 13th Five-Year Plan on 15 March of this year’s White Paper, the central government, most
14
