Alroy Commentary - Comprehensive and Deep Reform in China
The policy announcement of Third Plenary meeting unveiled a variety of planned, from easing one-child policy to financial reform, the majority of which are aimed to benefit the country over the medium to long term economic growth. In fact, the news came at the right time, while the Chinese economy lacked momentum to ensure steady long-term growth. By following, we are going to discuss four most important reforms.
Reducing the government role in the market
The majority of the reform is to redefine the relationship between government and markets. The government is expected to gradually reduce its participation in the economy and play more of a pure servicing role.
Financial reform
The reform package also stressed the importance of moving to a market-based exchange rate and full convertibility of Renminbi. Opening up development of free trade zones is also highlighted in the announcement.
Easing one-child policy
The reform will allow urban couples to have two children of just one parent is an only child. Children expected to be born will add modest growth 1 million to million births of the current 16 million births each year. As a result, the reform will have produced more worker and taxpayers to support China’s aging population in long term. In short-term, the reform will has benefit to manufacturers of baby food, toys and other goods.
Land reform
The land reforms give Chinese farmers more flexibility to sell, rent or mortgage their land. Eventually rural land should have the same rights as urban land and be traded at market prices.
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