Nov 08, 2013 06:07 PM

Caixin Explains: The Third Plenum

(Beijing) – The third plenary meeting of the Communist Party's 18th Central Committee will take place in the capital from November 9 to 12. It is expected to set China's economic reform agenda for the next decade and many people have high hopes that significant progress will be made. Here are some things to know about the meeting.

What exactly is the third plenum?

The 205 members of Central Committee and 171 alternates meet about once a year during their five-year terms to discuss major policy decisions. Outside experts are sometimes invited, depending on the topic. 

This Central Committee's first meeting was in November 2012, just after the party's 18th National Congress chose its membership. The second meeting was held in February, so the third plenum is simply the third such full meeting of the Central Committee. The closed-door conclave will likely take place in the Great Hall of the People in Beijing.

Why is this meeting so important?

The third plenum has historically been when a new leadership rolls out important economic policies. Usually the first and second plenums after a new leadership comes to power concentrate on personnel matters.

There is broad consensus that China is not only ready for comprehensive reforms, but badly needs them to guarantee continued economic growth. Issues ranging from a lack of social welfare to land expropriations by local governments are begging for solutions. Other factors are pressing policymakers to restructure the economy. Two of the biggest are the need to liberalize the finance sector and the need to address a slowing economy hurt by weak foreign demand and overreliance on government-driven investment. The public is also increasingly concerned about damage to the environment, and is especially worried about the brutal air pollution blanketing many cities.

Top leaders including the president and party general secretary, Xi Jinping, and the premier and party No. 2, Li Keqiang, have recently said a comprehensive plan of reform is ready and will be presented to participants of the meeting.

Usually, the third plenum will review plans and pass a "decision," which then becomes the guidelines for economic development in next few years.

Are third plenums just about the economy?

Usually they are, but this year's meeting will have a much wider scope. The Politburo reviewed a draft report to be presented to the third plenum on October 29. Xinhua says the document centered on "comprehensive deepening of reform," which would develop a "market economy, democratic politics, advanced culture, a harmonious society and  ecological civilization." So it goes beyond economy.

What have previous third plenums done?

A number of third plenums have changed the course of China's history.

In 1978, the third plenum of the 11th party congress stopped the party's focus on class struggle and shifted it to the chief goal of Deng Xiaoping, the country's then "paramount leader": building a modern China. Although the final report of that conclave was about one somewhat philosophical issue – that practice is the sole criterion for testing truth – and significant economic reforms came a year later, it is still generally viewed as the starting point of China's reform and opening up to the outside world.

The third plenum in 1993 established the "socialist market economy" and laid the foundation for reforming state-owned enterprises (SOEs) and the banking sector.


Will the country look different on November 12?

No. The Central Committee will deliver a long report on the last day of the plenum. The new measures may be aggressive or conservative, but most will be abstract. Details on implementation of reforms will need to be worked out by various government departments.

What are the key issues this year?

One major issue is defining the boundary between the government and the market. Others involve strengthening the rule of law, and adjusting the way power and tax revenue are divided by the central and local levels of government. It's worth bearing in mind that what should be done is usually not the same as what is feasible. Also, some reforms need years to take effect.

An important think tank linked to the State Council, the country's cabinet, gave a proposal for reforms to decision-makers. The proposal, dubbed the 383 Plan, gives a sense of the types of changes being mulled.


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