At ATol, Willy Wo-Lap Lam provides an overview of the 5th-generation PRC economic reform agenda:
Premier Li has set an overarching goal to “let go of administrative powers and return to the market whatever can best be handled by the market”. The Chinese media have reported that the Central Committee Third Plenum in October will approve overhauls of economic and social policies to address the following key areas: financial, monetary and fiscal policies; creating a fair competitive environment for private enterprises; liberalizing the prices of producer goods and utilities; trimming the number and procedures of bureaucratic reviews; narrowing the income gap between rich and poor; and liberalizing the land ownership and household registration systems so as to speed up urbanization. […] While the State Council has ordered 1,400 manufacturers in sectors including steel, cement, copper and glass to curtail output because of oversupply, the Li cabinet is set to resume long-stalled investments into the nation’s ambitious railway and highway networks. Moreover, while apartment prices have been going through the roof, the State Council has avoided drastic measures to cool the real-estate bubble so as not to upset the delicate socio-economic balance.
With bubble trouble a near-inevitable learning experience at some point, the long-term measure of success will be the quantity of investment that doesn’t disappear into froth. Strengthening socio-economic storm shelters, without unnecessarily scaring people, counts as an especially responsible course. Sustainable urbanization, functional transport and communications infrastructure, and the continuing development of a resilient enterprise culture are all good candidates for that. Once the top blows off the market, it will be easier to see what has really been built. (Our confident expectation: A lot.)