Bloomberg News Online, Reuters News, and other newswires reported during late Asian markets trading on November 15, 2013 on an apparent leaked statement coming from an unnamed source in China, outlining details of a renewed 60-point plan which was being laid out following the conclusion of the Third Plenum Meetings, or the 18th Central Party Policy Committee on November 12, 2013. The renewed 60-point plan included some notable details, namely the relaxation of the long-standing one-child only policy which allow families to have at most two children; abolishment of the controversial labour camps; pricing of fuel and other commodities are to be determined by market forces as opposed to the previous arrangement of fixing prices by the country’s National Development and Reform Commission or (NDRC); opening up its capital account and comprehensive financial liberalisation reforms; revamping the Mao-era ‘hukou’ policy which will now be applicable only for ‘mega’ cities, with the exception of medium-size cities which will see greater relaxation, among others. The renewed 60-plan point helps to provide greater clarity to the seemingly vague statements following the conclusion of the Nov. 09-12 Third Plenum Meetings. Asian markets, especially the Shanghai Composite Index (SHCOMP) reacted to the news release by scoring its biggest gain for the month, ending its intraday high, up by approximately 1.7 percent to 2,135.83. Hong Kong’s Hang Seng Index (HSI) also ended its session highs by approximately 1.7 percent, or 383.0 points to 23,032.15. However, the Chinese interbank money market rates, as measured by the Shanghai Interbank Lending Offered Rate, commonly known as SHIBOR, spiked up the most this week to approximately 4.71 percent as of the close of Asian trading hours on November 15, 2013. It was reported by Bloomberg News that the country’s Central Bank, the People’s Bank of China (PBOC) was reportedly to have drained its reserves by close to 15.0 billion Chinese Yuan (USD 2.5 billion) during the past four days, as compared to 5.0 billion Chinese Yuan last week.
Several economists and market analysts Bloomberg News and Reuters interviewed with expressed their optimism over the renewed 60-point plan. There is much more clarity in terms of how the Chinese government led by President Xi Jiping, and Premier Li Keqaing in taking China on a more sustainable path of economic growth during the next decade. Some of the notable quotes by economists in reaction to the news release include Mr. Stephen Green, Research Head for Greater China at Standard Chartered Plc in Hong Kong, saying that “Now, it’s going to be the hard and complicated slog of implementation.” Others such as one of the Hong Kong-based economists for UBS AG, Mr. Wang Tao, who has also worked for the International Monetary Fund (IMF), was quoted by Bloomberg News as saying that, “ The bottom line is that there’s a sweeping reform plan; At least from the blueprint, it seems very exciting.”
One of the notable reform plans coming from the released 60-point statement is the country’s long-standing one-child only policy which has inhibited much of China’s economic growth for the past few decades since the death of President Mao Tse Tung in 1978. The ratio of men to women has grown wider, and there were not enough brides for the men to get married, settled down, and start a family. The traditional Chinese belief calls for favouring the males more than the females, which have also led to the increasingly disproportionate number of males, versus the female population. Bloomberg News has also cited research findings undertaken by a group of Australian academics which showed that the one-child only policy has resulted in behavioural changes among children and adults, who are seen as selfish, having personality issues, and are touted as a generation of the so-called ‘Xiao Huang Di’ or ‘Little Chinese Emperors’. According to Bloomberg News, the Chinese government defines working-age population as those people between the ages of 15 to 55 years old, and there has been a shortage of labour being experienced in certain industries such as the craft industry, and other labour-intensive industries. Along with the gradual decelerating economic growth, coupled with China slowly losing its manufacturing hub prowess, the Chinese government leaders realised that it has to make some adjustments to the one-child only policy so as to allow families to have at most two children, which could alleviate some of the issues faced by many Asian countries relating to an increasingly aged society. The Chinese government will also want to avoid similar issues being experienced in other countries, such as Japan, which has seen its rise in the number of centennials in its population. According to a United Nations study, it estimated that the number of 15-to-24-year-olds, the mainstay of factories that drove growth for two decades, will shrink by approximately 67.0 million by 2030. This is quite an alarming trend, and the Chinese government is determined to avoid the potential pitfalls associated with a declining population, and not enough to support the elderly, and the continued sustainability of the overall pace of economic growth.
World leaders, including comments made by US Treasury Secretary, Mr. Jack Lew, during his brief stopover in Beijing, was quoted by Reuters as saying, “ambitious” and noting that the key was how soon will the Chinese government implement the comprehensive reforms in order to provide the added assurance of its words. Other critics include Ms. Elizabeth Economy, director for Asia studies at the Council of Foreign Relations in New York, who was quoted by Bloomberg News as saying, “That remains to be played out”.
Summing up much of the conclusions drawn from the reactions by economists, Chinese market observers, and quotes from world leaders indicate that there is still a general optimism in what is touted as the boldest set of government reforms being put forward by President Xi, and Premier Li, since the era of the late Presidents Mao and subsequently Premier Deng Xiaoping during late 1970s and early 1980s where comprehensive market reforms were being introduced in China, resulting in much of what China is today. There is still a lot to catch up, which includes the implementation process, timing, and other policy adjustments needed to ensure sustainable path of economic growth going forward. The detailed outline of the 60-point plan does give much clarity to the Chinese people, global community, and financial markets. The next task for the Chinese government is to start rolling out the reforms, which will eventually prove to the global markets that China does intend to open up its economy, and maintain a sustainable path of economic growth going forward.