China announces sweeping reforms

Written by Agencies | Beijing | Updated: Nov 16 2013, 08:49am hrs
China released a raft of detailed reform plans on Friday, promising sweeping changes to the economy and the countrys social fabric as it seeks to unleash new sources of growth after three decades of breakneck expansion show signs of faltering.

A reform document released by the Communist Party following a four-day conclave of its top leaders said China would accelerate capital account convertibility, scrap residency restrictions in small cities and townships, integrate urban and rural social security systems and push forward with an environmental tax, among many other measures.

China will also ease its family planning policies and abolish a controversial labour camp system, according to the document, the official Xinhua news agency said on Friday.

The labour camp or re-education through labour system was established to punish early critics of the Communist Party but now is used by local officials to deal with people challenging their authority on issues including land rights and corruption.

Pu Zhiqiang, a prominent Beijing lawyer who has represented several former labour camp detainees in seeking compensation, welcomed the abolition of the extra-legal system.

There have been many methods used recently by this government that are against the rule of law, and do not respect human rights, or freedom of speech, but by abolishing the labour camps ... it makes it much harder for the police to put these people they clamp down on into labour camps,' Pu said. This is progress.

The document was approved by the leaders meeting. In an initial communique they had promised decisive results by 2020.

It also eased its decades-old one-child norm. Chinas family-planning policy currently limits most urban couples to one child and allows two children for rural families if their first-born is a girl. It also allows two children for parents who themselves are both singletons. The new policy will allow two children for families where only one parent was an only child.

Whilst further assessment and detail is needed, the policy moves on the surface appear to be a sizeable step in the right direction, said Keith Bowman, equity analysts at Hargreaves Lansdown. Any actions which aid the domestic Chinese economy and therefore help re-balance the global economy should be welcomed with open arms.

The statement was in line with a leaked document that circulated widely on social media earlier, helping fuel the stock markets strongest rally in two months.

Chinas economy has grown at a double digit rate for three decades but the government expects the rate of expansion to slip to 7.5% this year, the weakest pace in 23 years.

The reforms are part of government plans to shift the main growth drivers away from investment and exports to services and consumption, more in line with developed economies.

To achieve that, Beijing wants to encourage millions of rural Chinese to move to live in urban areas, but that requires major land and residency reform that currently are seen as impediments to the plan.