19 Nov, 2013

Summary: China’s 60-Point Reform Plan to Chart Development Course for Next Decade

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Beijing, 2013-11-16 (China Daily) – The Decision on Major Issues Concerning Comprehensively Deepening Reforms was adopted at the close of the Third Plenary Session of the 18th CPC Central Committee on Tuesday. The following is an abridged version of the full text of the document:

I—Significance and principles

1. Reform and opening-up has been a crucial choice that China has made regarding its destiny in modern times. But there can never be an end to the need for the emancipation of individual thought or for continuing reform and opening-up. China must deepen its all-round reform with a new starting point.

2. China must stick to the socialist market economy as the orientation of its reform, must promote social fairness and justice and must seek to advance the well-being of the people. The general purpose of deepening its all-round reform is to develop socialism with Chinese characteristics, to advance modernization in the State governance system and governance capability. The basic economic system should evolve on the decisive role of the market in resource allocation. Political reform must evolve around the leadership of the Communist Party of China and advance the institutionalization of socialist democracy. Cultural reform must evolve around the socialist core value system. Social reform must evolve around the protection and improvement of the people’s livelihood and advance fairness and justice. The development of an eco-conscious civilization must evolve around the building of a beautiful China. The reform of Party building must evolve on the effort to raise the level of governance to be scientific, democratic and according to the law.

3. The reform of the economic system is the focus of all the efforts to deepen the all-round reform.

4. The successful experience of the past reform and opening-up must be built upon. Decisive results are to be obtained in key areas in 2020.

II—Basic economic system

China’s economic system is one with public ownership serving as its main body but allowing for the development of all types of ownership. Both public and non-public ownership are key components of China’s socialist market economy.

5. Complete the property rights protection system. Property rights are the key factor of ownership. The property rights of the public economy are inviolable, as are the property rights of the non-public economy. The government protects the property rights and legitimate interests of all kinds of ownership by ensuring that various ownerships have equal access to production factors, open and fair market competition and the same legal protection and supervision.

6. Actively develop a diversified ownership economy. Diversified ownership integrated by State capital, collective capital and private capital is the prime method for materializing the basic economic system, helping improve functions, increase value and promote the competitiveness of State capital. Allow more State-owned enterprises and other ownership enterprises to develop into mixed-ownership enterprises. Non-State shares will be allowed in State capital investment projects. Mixed-ownership enterprises will be allowed to utilize employee stock ownership to form a vested community of capital owners and workers. Improve the State-owned assets-management system and strengthen State-asset supervision by focusing on capital management. Establish a number of State-owned capital operating companies and back the transformation of qualified State-owned enterprises into State-owned investment companies. Transfer some State-owned capital to social security funds. Improve the State-owned capital operation budget system and increase the proportion of State capital gains paid in public financing to 30 percent by 2020, which will be used to ensure and improve people’s livelihoods.

7. Push for a modern system for State-owned enterprises. Accurately define the functions of different SOEs. Increase State capital’s contribution to public services. In the natural monopoly industries held by State capital, the separation of government and enterprises, of government and funds, and of franchise operation and government supervision are the main thrust of the reform. Further break all forms of administrative monopoly. Improve coordinated and effective corporate governance structure. Establish a professional management system. Establish long-term incentive and restraint mechanisms, strengthen SOE’s investment accountability and explore ways to publicize important information, including SOEs’ financial budgets. State-owned enterprises should reasonably increase the proportion of market-oriented recruitment, reasonably determine and strictly regulate SOE executives’ wage levels, and position benefits, consumption and business spending.

8. Support the healthy development of the non-public economy, which will play an important role in fostering growth, promoting innovation, expanding employment and increasing tax revenues. Adhere to the equality of rights, equality of opportunity and equality of rules; abolish all forms of unreasonable regulations on the non-public economy, eliminate hidden barriers and fix specific measures promoting non-public enterprises entering franchising fields. Encourage non-public enterprises to participate in SOE reform, encourage their capital holdings of diversified-ownership enterprises and encourage qualified private enterprises to establish modern enterprise systems.

III—Modern market system

Efforts are to be made to build a market system that is uniform but open, orderly and competitive.

9. Make market rules that are fair, open and transparent. Implement a unified market entrance system, with market players of all kinds able to enter equally and legitimately into areas that are not on the negative list. Reform the market regulation system, erasing regional protection, illegitimate favorable policies and monopoly. Perfect the market exit mechanism to promote the survival of the fittest.

10. Perfect a mechanism where prices are determined by the market. Any price that can be affected by the market must be left to the market. Push ahead with price reforms of water, oil and natural gas, electricity, transportation and telecommunication. Areas in which the government sets prices will be confined to public utilities, public service and areas that are naturally monopolized.

11. Form a construction-land market that unifies urban and rural areas. Allow the sale, leasing and demutualization of rural, collectively owned buildable land under the premise that it conforms to planning. Enlarge the area in which State-owned land can be leased. Reduce land allocation that does not promote public welfare.

12. Improve financial markets. Further open up the financial industry. Allow qualified private capital to set up financial institutions such as small- and medium-sized banks, under enhanced supervision. Push ahead with reform of policy-based financial institutions. Promote reform toward a registration-based stock-issuing system and increase the proportion of direct financing. Improve market-based exchange rate formation mechanisms for the renminbi. Accelerate interest rate liberalization and capital-account convertibility. Build a deposit insurance system and complete the market-based exit system for financial institutions.

13. Deepen science and technology system reform. Set up and complete a system that encourages innovation. Perfect a market-based system that encourages technological innovation. Strengthen intellectual property application and protection. Explore ways to set up intellectual-property courts. Break executive-leading and departmental segmentation, building a system where the market decides innovation program selection, resource allocation and result assessment. Improve the venture capital system, innovate business models and promote capitalization and industrialization, and scientific and technological achievements.

V—Government role

The government must effectively shift its role by building itself into a service-type government that bases its functions on the law.

14. Improve macroeconomic regulation and control. Government review and approval procedures will be removed for investors except in areas relating to national security, ecological safety, important arrangements for manufacturing capacity, development of strategic resources and crucial public interests. Establish and improve the long-term mechanism to prevent overcapacity in manufacturing sectors. Form a comprehensive assessment system for officials’ performance to rectify the one that overemphasizes GDP growth. Produce charts of assets and debts of central and local governments, and set up integrated credit and real-estate data platforms.

15. Perform government duties comprehensively and correctly. Further deepen the reform of administrative review and approval procedures, and reduce the central government’s control over market operations to a minimal level. The government should withdraw from business activities that can be regulated and modulated by market rules. Competition must be introduced and strengthened in the government’s purchase of services. Gradually abrogate the administrative rank of publicly funded organizations and set up a registration mechanism for such organizations.

16. Streamline government structure. Actively and steadily carry out reform that merges ministries that have overlapping functions. Encourage some provinces to explore provincial government’s direct administration of cities or counties. Strictly control the number and expense of government employees.

V—Fiscal and tax system

The fiscal and taxation system is an important guarantee of State governance. It must balance the interests of central and local governments.

17. Improve the budgetary system. Establish a standard and reasonable debt-management system for central and local governments and a risk-alert system. In principle, a shortfall in local government should be filled by general transfer payments. Clean, merge and standardize special transfer payments.

18. Improve the taxation system. Perfect the local taxation base by gradually raising the share of direct taxation. Advance value-added tax reform and simplify rate levels, and adjust the scope and rate of the consumption tax. Energy and pollution-intensive products and high-end consumer products will be subject to a consumption tax. Also, Accelerate property-tax legislation and related reform at an appropriate time. Change the current environmental-protection fee into an environment tax.

19. Establish a system in which the government’s administrative authority is commensurate with its spending responsibility. Increase the administrative authority and spending responsibility of the central government. The central government will oversee expenditure for defense, diplomacy, national security and other issues related to national market rule and management. Keep the current fiscal power of central and local governments stable. Close the fiscal revenue divide between central and local government.

VI—Urban-rural development

The existing urban-rural dual structure is a main obstacle to integrated development. Efforts must be made to allow farmers to participate in China’s modernization.

20. Accelerate the building of a new agricultural-operation system based on a mix of family, collective, cooperative and enterprise operations. Land-contracting rights will be protected. Farmers are allowed to become shareholders in the agriculture-industrialization via their land-contracting rights. Private capital is encouraged to invest in a modern planting and breeding industry, and for introducing modern production and management methods.

21. Farmers will be given more property rights. They are encouraged to develop a shareholding system from which they can realize benefits. Meanwhile, they can also sell a share or take it as collateral or warranty. They also have the right of succession. Moreover, the homestead system in rural areas will be improved, and farmers’ usufruct rights of homestead will be ensured. A pilot program will be carried out in some areas to discover other channels for improving farmers’ income. A rural property-rights trading market will be established.

22. A more balanced allocation of public resources between urban and rural areas will be promoted. Migrant workers should get the same pay for the same job. Farmers should receive a fair share of the profits from land-value appreciation. Deposits in rural financial institutions should be mainly used to finance the development of agriculture and rural areas. The agricultural subsidiary system and insurance system will be improved. Social-capital investment is encouraged for construction in rural areas.

23. Build a healthy urbanization that puts people at the center. Reform of the hukou (or household registration) system will be accelerated to help farmers become urban residents. The country will relax overall control of farmers settling in towns and small cities, and relax restrictions on settling in medium-sized cities in an orderly manner. China should set reasonable requirements for rural residents to obtain hukou in large cities, and strictly control the size of population in megacities. Efforts should be made to make basic urban public services available to all permanent residents in cities, including all rural residents. This includes the affordable-housing system and the social security network.

VII—Further opening-up

Efforts are to be made to facilitate overseas companies’ entry to China and Chinese companies’ expansion abroad.

24. Widen investment access. The finance, education, culture and medical sectors will enjoy an orderly opening-up to market access, while nursery, pension, architecture design, accounting and auditing, trade and logistics, and e-commerce investment restrictions will be eased. Further liberalization will be achieved in general manufacturing, and the streamlining of special customs supervisory areas will be accelerated. Based on practices in the China (Shanghai) Pilot Free Trade Zone, a number of qualified areas will be built into FTAs. Enterprises and individuals will be encouraged to invest overseas and undertake contract and labor cooperation projects at their own risk, through greenfield investment, mergers and acquisitions, equities and joint investment. Investment treaty negotiations with other countries and regions will be expedited.

25. Construction of free-trade zones will be sped up, with adherence to the rules of world trade system and insistence on bilateral, multilateral and regional cooperation. Reforms will be carried out in market access, customs supervision and inspection and quarantine management. Negotiations in emerging issues such as environmental protection, investment protection, government procurement and e-commerce will be accelerated to form a global, high-standard network of free trade zones.

26. Inland and border areas will be further opened up. With the formation of industrial clusters, inland cities will be encouraged to open international passenger and cargo air routes, and develop multimodal transportation. An exchange of information, mutual recognition of supervision and assistance in law enforcement will be achieved among coastal border clearance and port management departments. Special methods and policies will be implemented at key borders, and in bordering cities and economic cooperation zones to promote personnel exchanges, logistics and tourism. Financial institutions focusing on development will be established to accelerate infrastructural connections among neighboring countries and regions.

VIII—Political system

Efforts are to be made to uphold and improve the People’s Congress system, the CPC-led multi-party cooperative system and political consultative system, the system of autonomous government in ethnic areas, and the system of grassroots-level mass autonomous government.

27. Push forward the system of people’s congresses to keep up with the times. The quality of legislation should be improved to prevent local protectionism and prevent some departments from legalizing their interests. People’s congresses should provide more supervision of the government’s financial budget and State-owned assets. Governments at all levels must report to the local people’s congresses before adopting important policies.

28. Push forward the multi-layer development of the consultative democracy system. Enhance the construction of new types of think tanks with Chinese characteristics. Promote a consultative policy system. Strengthen and develop equal, unified and harmonious ethnic relationships. Governments should seek advice from the local Chinese People’s Political Consultative Conference before making important decisions.

29. Develop grassroots democracy. Improve the system of grassroots election, discussion, publicity and responsibility. Improve supervision by urban residents and villagers. Improve the democratic management system, such as the workers’ representative conferences, in companies and government institutions.

IX—Rule of law

Efforts are to be made to deepen the reform of the justice system, to protect the people’s rights and let the masses feel equality and justice in every court verdict.

30. Uphold the Constitution and laws. Establish a system of legal counsel and improve the review mechanisms on regulations. Give big cities the right to make regulations.

31. Deepen reforms of administrative law enforcement. Centralize administrative powers and allocate more law enforcement resources in key areas, including food production, medicine production and environmental protection. Improve the service quality of urban management.

32. Ensure independence and fairness in courts and prosecuting bodies. Unify the management of staff members and properties of courts and procuratorates below the provincial level. Separate the jurisdiction of courts from administrative divisions.

33. Let the judicial system be more transparent. Record and keep all court files. Strictly regulate procedures of sentence commuting, parole and medical parole.

34. Boost the judicial system to protect human rights. Improve mechanisms to avoid false accusations and confessions obtained through torture. Gradually reduce the number of charges that could lead to a death penalty. Laojiao, or re-education through labor, will be abolished. Meanwhile, strengthen the judicial relief and legal aid system.

X—Supervision of power

The key to empowering the system is to keep it open and easy to monitor by the people and to have a complex system governing its proceedings.

35. Establish a scientific and effective means of power restriction, with a coordination mechanism. Improve the leadership system of the Party and the State, and insist on enforcing the principle of democratic centralism. Specify the responsibilities and scope of power of officials at various levels. Provide a list of the powers of local governments and affiliated bodies at various levels.

36. Enhance innovative systems for identifying corruption. Anti-corruption responsibility belongs to the Party committee, with the commission for discipline inspection being responsible for supervision. Ensure that the Central Commission for Discipline Inspection sends discipline inspectors to central-level Party and government organs and exercises unified management.

37. Normalize a system for improving the work style of officials and government departments. Speed up reform to fight formalism, bureaucracy, hedonism and extravagance. Reduce meetings and simplify official documents. Improve the financial budgeting process, along with approval and audit systems, and focus on the control of administrative expense. Reform the evaluation process for officials and focus on solving the problem of vanity projects.

XI—Cultural system

Building a culturally strong country, and increasing its cultural power is the root of China’s cultural development.

38. Transfer the role of the government from being the provider of cultural products to the manager. Improve the mechanism for dealing with emergencies on the Internet. Institutionalize the government information release system and standardize the vocational qualifications of journalists.

39. Further transform State-owned, for-profit cultural institutions into enterprises. Encourage the development of non-public-owned cultural enterprises, allowing them to participate in overseas publishing and online publishing. Expand government subsidies and procurement, and strengthen copyright protection.

40. Build a modernized public cultural services system. Establish a feedback mechanism to ensure that cultural programs can effectively meet the demands of the people. Encourage social forces and capital investment in cultural services. Cultivate nonprofit organizations.

41. Further open up cultural markets by enlarging the scope of cultural exchanges. Support key media to expand cultural exchange into national and international markets.

XII—Social services

Reform is to be quickened to allow more benefits from the development to be more equally shared by all people.

42. Deepen educational reform. Continue reforms of the examination and enrollment system by evaluating students not only by their final exam scores but also their performance in school. Students should get more than one chance to take an exam that decides their enrollment. Provincial-level educational authorities and schools should enjoy greater autonomy.

43. Improve the supporting mechanism for employment and entrepreneurship. Employment-supporting policies should target college graduates, migrant workers, impoverished city dwellers and retired soldiers. Entrepreneurship of college students and making better use of government funds to help graduates work and start their own businesses should be promoted.

44. Optimize the income distribution system. Improve collective bargaining between capital and labor to decide salaries and pay raises. Protect investors’ legal rights and improve the investment return system for listed companies. Increase residents’ income by diversifying investment channels. Improve tax deduction policies on charitable donations. Clean up gray income.

45. Establish a fairer and more sustainable social welfare system. Stipulate policies for gradually suspending the retirement age of employees. The central government will take over the social pooling component of pensions for urban and rural residents. Speed up reform of pension programs for employees in public institutions affiliated with government departments. Diversify investment vehicles for the national social security fund. Further develope the elderly services industry and improve protection mechanisms for left-behind children, women and seniors.

46. Deepen the reform of the medical and health sectors. Allow couples to have two children if one parent is a single child and improve the family planning policy. Speed the reform of public hospitals. Encourage private investment in the medical sector and prioritize supporting nonprofit hospitals run by private investors. Allow doctors to have a license to work in more than one hospital. Allow medical insurance to cover private hospitals.

XIII—Social governance

Efforts are to be made to promote harmony and vitality of society and to maintain State security.

47. Innovate social governance methods. Use legal frameworks and legal methods to reconcile social conflicts. The government should continue to optimize governance and service platforms at the grassroots level and respond to the interests of the people in a timely manner.

48. Stimulate the vitality of social organizations. Social organizations will take over public services they are suitable to provide. The country will prioritize the development of industry associations, trade unions and social organizations in fields of science and charity, as well as urban and rural community services. They are to directly apply and register according to the law when they are founded.

49. Reform the project of preventing and reconciling social conflicts. A plan will be established to evaluate risks to social stability in the making of major decisions. The country will further reform the administrative review system and correct illegal or inappropriate administrative actions. The petition system will be reformed and a system established to take public petitions online.

50. Improve the public security system. The country will build a strict supervisory system covering food and drug safety. A tracing-back system will be created for food production and quality labeling. The country will set up a State security committee in order to ensure the security of the nation.

XIV—Ecological civilization

A comprehensive system is to be established, featuring the strictest possible rules to protect the ecological system.

51. Improve the property rights system for natural resources and the administration of their use. Register natural resources, such as bodies of water and forests, in the property rights system, establish a space-planning system and clarify development restrictions for land and space.

52. Draw a “red line” for ecological protection. To set up a national park system. Build monitoring and warning mechanisms for the carrying capacity of natural resources and the environment. End the GDP assessment of key poverty-alleviation areas with fragile eco-systems. Explore and establish a natural resources balance sheet, officials will receive audits on natural resources when leaving office. A lifelong responsibility system for bioenvironment damage will be established.

53. Establish a system of paid use for natural resources ecological compensation. Accelerate reforms of natural resources commodities pricing, and gradually levy taxes on all kinds of natural resources and space. Increase the price of industrial land. Develop a market for environment protection and push ahead with a trading system for pollution discharge, carbon emissions and water rights.

54. Reform environmental protection and management systems. Establish a system in which all pollutants are monitored and regulated. Release timely environmental information and improve the reporting system to strengthen social supervision. Improve the pollutant-discharge licensing system and control the pollutants. Polluters who damage the environment must compensate for the damage and could receive criminal sanctions.

XV—Defense and army reform

The People’s Liberation Army must be loyal to the CPC, be able to win and be persistent with its good traditions.

55. Deepen the reform of the military’s composition and functions. Improve the combined combat command systems of the Central Military Commission and military commands. Push forward reform of training and logistics for joint combat operations. Optimize the structure and command mechanism of the Armed Police Force. Adjust the personnel composition of the military and reduce non-combatant departments and staff members.

56. Boost the adjustment of military policies and mechanisms. A modern personnel system for officers will gradually take shape with the establishment of an all-volunteer officer system as the initial step. Improve management of military expenditures.

57. Boost coordinated development of military and civilian industries. Reform the development, production and procurement of weapons. Encourage private businesses to invest in the development and repair sectors of military products.

XVI—CPC’s leadership

The CPC must strengthen and improve its leadership in such a way to become a Party that learns, innovates and serves the people.

58. Promote intra-Party democracy and firmly maintain the central leadership, ensuring that orders are timely received and fully implemented. The Central Reform Leading Group is commissioned to design and coordinate the reform.

59. Reform the evaluation and promotion system for Party officials. Improve a system in which officials can be demoted or fired for poor performance. Encourage talent and clear barriers to recruiting the best. Smooth talent flow among Party and government bodies, enterprises and social organizations. Better attract foreign talent and overseas Chinese to develop their careers in China.

60. Encourage innovation and exploration at the local and grassroots level. Strengthen the major reform pilot program, timely sum up experience and tolerate mistakes.