China’s leaders promise reforms — but can they deliver?
After China issued its 20,000-word reform document Friday night, the media’s focus was on proposed changes to the one-child policy. But there were a slew of other ambitious economic reforms announced.
It’s easy to get lost among the sixty points of reform in a document laced with exaggerated Communist lingo, but there were a handful of proposals that encouraged economists. For example, proposals for private investors to start their own banks, farmers to sell their land, and local governments to collect property taxes so that they don’t have to confiscate residents’ land for revenue.
“There seems to be this consensus among the leadership that they need to move in the direction of a more open and a more competitive and more accountable economic and financial system, which is a good thing,” says Patrick Chovanec, chief strategist at Silvercrest Assett Management. On the other hand, “There is a big difference in announcing reforms and implementing them.”
For example, China’s already attempted allowing private investors to start their own banks in the city of Wenzhou and has also started to collect property taxes in pilot programs in select cities around the country. None of these efforts have produced results.
The other concern: If China’s government actually follows through on these reforms, it’s likely slow economic growth, threatening one of the few bright spots in the global economy.
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