China's pledge of economic reform met with cautious welcome

Businesses await details to gauge policy changes' impact

- Lim Min Zhang and Joyce ZK Lim

Senior officials from the Communist Party of China (CPC) on July 19 sought to give further assurances of Beijing’s commitment to reform, a day after a party conclave set out the blueprint for the country’s economy in the next five years.

But businesses and analysts remain cautious on whether optimism is warranted just yet, even as the officials pledged at a press conference in Beijing to do more, from an “orderly” expansion of markets, covering services to commodities, to a more equitable environment for foreign businesses.

The third plenary session of the CPC’s current Central Committee, or the Third Plenum, was highly anticipated for China’s plans to grow a sluggish economy, including how existing hurdles – from government debt to a housing slump to dwindling foreign investment – would be tackled.

The four-day meeting that involved some 360 party officials concluded on July 18 with a communique that said China will “basically realise socialist modernisation” by 2035 – implying Beijing still sees decent economic growth as crucial in the next decade.

Among other things, the country will foster “new quality productive forces” – the party leadership’s latest slogan for its economic strategy of science and technology innovation and industrial upgrading.

The European Union Chamber of Commerce in China said it is “positive” that China’s leadership has again acknowledged the headwinds facing the country’s economy and signalled intent to deepen reforms “to create a fairer and more dynamic market environment”.

But the chamber added a caveat that the communique did not offer enough details on whether there will be meaningful policy changes.

The communique said China will prevent and defuse risks in “real estate, local government debt and small and medium financial institutions”.