A Peek into Third Plenum Resolution
Key takeaways of China's ruling party's presser on its reform-themed meeting
On July 19, one day after the heavyweight third plenum concluded, the Party’s ranking officials jointly conducted a press conference to elaborate on the result of the reform-themed leadership meeting. Compared to the concise, sometimes cryptic plenum communique just released yesterday, they have got into the nitty-gritty of China’s future reform agenda that aligns with the plenum resolution, which is yet to be published. Among them, Han Wenxiu, who is responsible for the work on economy, finance, and rural development, has revealed the possible national policies in these respective fields.
I have translated his part of the statement and offered background notes on his key talking points:
大家好！习近平总书记指出，进一步全面深化改革要以经济体制改革为牵引，以促进社会公平正义、增进人民福祉为出发点和落脚点。党的二十届三中全会通过的《决定》，坚持把高质量发展作为全面建设社会主义现代化国家的首要任务，对经济和民生领域改革作出全面部署，分量很重。我从7个方面作些介绍。
Good morning, everyone. General Secretary Xi Jinping pointed out that to further comprehensively deepen reform, we should regard economic structural reform as the spearhead and greater social fairness and justice and improvements in the people's wellbeing as our ultimate objectives. The Resolution adopted at the Third Plenary Session of the 20th CPC Central Committee takes high-quality development as the primary task in building China into a modern socialist country in all respects, and makes comprehensive arrangements for reforms in the economic and livelihood fields, which is of great significance. I would like to brief you from seven aspects.
首先，构建高水平社会主义市场经济体制。《决定》强调要更好发挥市场机制作用，创造更加公平、更有活力的市场环境，激发全社会内生动力和创新活力。要坚持和落实“两个毫不动摇”，促进各种所有制经济优势互补、共同发展。
First, we will build a high-standard socialist market economy. The Resolution stressed that we must better leverage the role of the market, and foster a fairer and more dynamic market environment. We will unswervingly consolidate and develop the public sector and unswervingly encourage, support, and guide the development of the non-public sector, thus enabling entities under different forms of ownership to complement each other and develop side by side.
Note: The “high-standard socialist market economy” is sort of a key phrase at this plenum. The goal of finishing building it by 2035 was first proposed in the political bureau meeting on June 28, in which the exact date for this year’s third plenum was announced. Up till this meeting, most official documents still used the phrase “socialist market economy,” which was officially enshrined in the Party’s national congress in 1992. The inclusion of “market economy” into the communist party’s platform was a landmark event back then, as many Party officials were concerned about the “capitalist” nature of the phrase, and some of them wanted to dial it down to the “socialist commodity economy.” This time, adding the prefix “high-standard” could be considered a move to allow the meeting to carry more weight, and is certainly in line with Xi’s idea of promoting high-quality development.
一方面，要深化国资国企改革，推动国有资本和国有企业做强做优做大，增强核心功能，提升核心竞争力，要开展国有经济增加值核算。国有企业要打造原创技术策源地。要推进能源、铁路等行业自然垄断环节独立运营和竞争性环节市场化改革。
For one, we should deepen the reform of state-owned capital and state-owned enterprises (SOEs), make them stronger, better and bigger, and enhance their core functions and competitiveness. We will carry out accounting for the added value of the state-owned economy. State-owned enterprises should create original technology hubs. We will promote market-oriented reforms in competitive operations in sectors with natural monopolies such as energy and railways.
Note: The last round of state-sector reform focused on the incremental opening of monopolized businesses to market competition. It involved the sectors of electricity, telecommunication, railways, petroleum, and natural gas. In 2016, a negative list for market access was first introduced with 328 items of limited or denied access, which was later downsized to 117 items in 2022.
另一方面，要为非公有制经济发展营造良好环境、提供更多机会，完善民营企业参与国家重大项目建设长效机制，支持有能力的民营企业牵头承担国家重大技术攻关任务，规范涉民营企业行政检查。法治是最好的营商环境，要制定出台民营经济促进法。
For another, we should create a good environment and provide more opportunities for the development of the non-public sector, improve the long-term mechanism for private enterprises to participate in the construction of major national projects, support capable private enterprises to take the lead in undertaking major national technological research tasks, and standardize administrative inspections of private enterprises. The rule of law is the best business environment, and we will formulate and introduce a law to promote the development of the private sector.
Note: Regarding the private sector, this year’s plenum attached great importance to improving the “rule of law.” In the 2013 version, the emphasis was placed on the “decisive role” of the market in allocating resources and slashing the government’s sway on market activities. In this year’s communique, however, the authorities were urged to improve their governance skills to maintain a law-based order in the market. It said, “We will lift restrictions on the market while ensuring effective regulation, striving to better maintain order in the market and remedy market failures.” The expression “standardize administrative inspections of private enterprises” might refer to recent incidents of chasing private enterprises for taxes dating back years. It implies that the government bodies are obligated to abide by their own rules when enforcing the law vis-a-vis private actors.
《决定》强调弘扬企业家精神，加快建设更多世界一流企业，这是对各类经营主体的共同要求。加快建设高标准市场体系是一项重大改革任务。《决定》明确了三方面关键改革举措：一是构建全国统一大市场，包括构建城乡统一的建设用地市场，全国一体化技术和数据市场，统一规范、信息共享的招标投标和公共资源交易平台体系，一体衔接的流通规则和标准，全国统一电力市场等。二是推进要素市场化改革，健全劳动、资本、土地、知识、技术、管理、数据等要素市场制度和规则。三是完善市场经济基础制度，包括完善产权保护、信息披露、市场准入、破产退出、信用监管等制度。市场经济本质上是法治经济。《决定》特别提出，防止和纠正利用行政、刑事手段干预经济纠纷，对侵犯各种所有制经济产权和合法利益的行为实行同责同罪同罚。
The Resolution emphasizes promoting entrepreneurship and speeding up the construction of more world-class enterprises, which is a common requirement for all types of business entities. Accelerating the development of a high-standard market system is a major reform task. The Resolution makes clear three key reform measures. First, we will build a unified national market, including the building of a unified urban-rural market for construction land, a national integrated technology and data market, a bidding and trading platform for public resources with unified standard and shared information, unified turnover rules and standards, and a unified national electricity market. Second, we will promote market-oriented reform of production factors, and improve the market systems and rules for production factors such as labor, capital, land, knowledge, technology, management and data. Third, we will improve the basic system of the market economy, including improving the system of property rights protection, information disclosure, market access, bankruptcy exit, and credit supervision. The market economy is essentially a law-based economy. In particular, the Resolution proposes to prevent and correct the use of administrative and criminal means to interfere in economic disputes, and implement the same punishment criteria for violations of economic property rights and legitimate interests of all forms of ownership.
Note: It should be noted that the reform of the rural homestead land is likely to be a major policy move in the next five years. The communique specifically mentioned “deepening reform of the land system,” which was missing in the 2013 reform plan. The size of the non-tradeable rural homestead in China reaches 113,000 square km, in comparison to merely 63,000 square km of urban construction land across the country. The major obstacle to putting the land on the market is the fact that rural homestead land is collectively owned, which is a pillar of China’s “socialist” framework. The Party’s “No. 1 Document” in 2018 first introduced the idea of “Three Rights Separation,” which was meant to circumvent this dilemma. And there were pilot projects putting the idea into practice in 2020. But a full-scale reform is still pending. You are welcome to check more information about China’s land reform in my article published yesterday:
第二，健全推动高质量发展体制机制。习近平总书记创造性提出“因地制宜发展新质生产力”，这是一项重大理论和实践创新，将为高质量发展注入全新动力。《决定》提出要加快形成同新质生产力更相适应的生产关系，健全传统产业优化升级体制机制，完善战略性产业发展政策和治理体系，建立未来产业投入增长机制，完善促进数字产业化和产业数字化政策体系，促进各类先进生产要素向发展新质生产力集聚，大幅提升全要素生产率。《决定》强调要促进实体经济和数字经济深度融合，加快发展现代服务业，加强现代化基础设施建设，提升产业链供应链韧性和安全水平，这些都是高质量发展的内在要求。
Second, we will promote high-quality economic development. General Secretary Xi Jinping proposed " fostering new quality productive forces in line with local conditions," which is a major theoretical and practical innovation that will inject new impetus into high-quality development. The Resolution proposes to accelerate the formation of production relations that meet the requirements for developing new quality productive forces, improve the system and mechanism for upgrading traditional industries, improve the development policy and governance system of strategic industries, establish a mechanism for future industrial input growth, improve the policy system for promoting digital industrialization and industrial digitalization, and promote the concentration of various advanced production factors into the development of new quality productive forces, so as to lead to a substantial increase in total factor productivity. The Resolution emphasizes the need to promote the deep integration of the real economy and the digital economy, accelerate the development of modern service industries, strengthen modern infrastructure construction, and improve the resilience and safety of industrial and supply chains, which are inherent requirements for high-quality development.
Note: New quality productive forces. You know it.
第三，健全宏观经济治理体系。《决定》强调要构建国家战略制定和实施机制，健全国家经济社会发展规划制度体系，深化财税体制、金融体制改革，增强宏观政策取向一致性。要构建跨行政区合作发展新机制。针对地方政府和基层财政困难，提出要完善中央和地方财政关系，增加地方自主财力，拓展地方税源，提升市县财力同事权相匹配程度，适当加强中央事权，提高中央财政支出比例，不得违规要求地方安排配套资金。要研究同新业态相适应的税收制度。经过四十多年快速发展，我国社会财富不断积累，《决定》要求探索实行国家宏观资产负债表管理，优化各类存量结构调整。
Third, we will improve macroeconomic governance. The Resolution emphasizes the need to establish a mechanism for formulating and implementing national strategies, and to improve the system of national economic and social development planning. We will deepen the reform of the fiscal and taxation systems, and work to enhance the consistency of macro policy orientation. We need to establish a new mechanism for cross-administrative cooperation and development. In response to the financial difficulties faced by local and grassroots governments, we will improve the fiscal relationship between the central and local governments, increase local independent financial resources, expand local tax sources, better match the financial resources of cities and counties with their financial powers, appropriately strengthen the financial powers of the central government, increase the proportion of central government expenditure, and refrain from illegally requiring local governments to allocate matching funds. We need to study a tax system compatible with new forms of business. After more than 40 years of rapid development and the continuous accumulation of social wealth in China, the Resolution requires exploring the management of the national macro balance sheet and optimizing various stock structure adjustments.
Note: I’ve also elaborated on this part in my article yesterday. The current fiscal discord between central and local governments has grown increasingly louder. Over the past decade, the central government has taken roughly 45% of the revenues, but accounted for less than 20% of the spending. In light of the loss of business tax in 2016 and a virtual end to land sales due to the recent property gloom, the local governments are in desperate need of raising incomes or cutting expenditure. Since 2016, China has launched a series of reforms that were meant to delineate the central-local fiscal responsibilities, but it didn’t really reverse the trend. We now expect more effective measures to let the central government shoulder more burden of the spending.
第四，完善城乡融合发展体制机制。习近平总书记强调，做好乡村振兴这篇大文章，必须走城乡融合发展之路。围绕推进以人为本的新型城镇化，《决定》提出推行由常住地登记户口提供基本公共服务制度，加快农业转移人口市民化。为持续巩固拓展脱贫攻坚成果、推进强农惠农富农，《决定》提出完善覆盖农村人口的常态化防止返贫致贫机制，建立农村低收入人口和欠发达地区分层分类帮扶制度，统筹建立粮食产销区省际横向利益补偿机制，完善乡村振兴投入机制，培育乡村新产业新业态。
Fourth, we will promote integrated urban-rural development. General Secretary Xi Jinping stressed that for the rural vitalization strategy to be implemented successfully, we must pursue integration between urban and rural development. To promote the people-oriented new urbanization, the Resolution proposes to provide basic public services by usual place of residence, and accelerate the citizenization of agricultural migrants. In order to continue to consolidate and expand the achievements of poverty alleviation and strengthen agriculture, benefit farmers, and enrich rural areas, the Resolution proposes to build a long-term mechanism for stable poverty elimination covering the rural population, establish a stratified and classified assistance system for rural low-income population and less-developed areas, coordinate the establishment of a cross-provincial mechanism for subsidizing grain production and sales areas, improve the investment mechanism for rural revitalization, and cultivate new rural industries and new forms of business.
Note: China is moving in the direction of weaning off the hukou system. So far, it has abolished the household registration restrictions for those who want to settle in cities with three million residents or less. But the “new urbanization” has pivoted medium, small and county-level cities in terms of rural-urban migration. It is doubtful whether China will abrogate the restrictions for permanent residence in first-tier cities like Beijing and Shanghai.
第五，推进高水平对外开放。《决定》要求主动对接国际高标准经贸规则，稳步扩大制度型开放，建设更高水平开放型经济新体制。要扩大对最不发达国家单边开放，扩大自主开放，有序扩大商品市场、服务市场、资本市场、劳务市场等对外开放，完善境外人员入境居住、医疗、支付等生活便利制度，统筹推进重大标志性工程和“小而美”民生项目，高质量共建“一带一路”，让中国大市场成为世界大机遇。
Fifth, we will pursue a high-standard opening up. The Resolution calls for expanding institutional opening-up in alignment with high-standard international trade rules, and building a new system for a higher-level open economy. We will expand unilateral opening up to the least developed countries. We will expand independent opening up. We will open up more markets for goods, services, capital and labor in an orderly manner. We will improve the system to make life easier for foreigners entering China, including residency, medical care and payment providers. We will continue to promote the signature projects and “small yet smart” programs, turning our enormous market into enormous opportunities for the world.
Note: While the reform paves the way for further opening up, the opening up also pushes for the next step of reform. This logic has been repeatedly applied over the past decades. A notable example was China’s WTO accession in 2001, when China had to make institutional and legal changes to meet the required criterion. Beijing has now reiterated the importance of joining the CPTPP on multiple occasions, and it is again seen as a positive stimulus for the building of a “high-standard socialist market economy.”
第六，健全保障和改善民生制度体系。《决定》坚持老百姓关心什么、期盼什么，改革就抓住什么、推进什么。强调要健全高质量充分就业促进机制，健全灵活就业人员、农民工、新就业形态人员社保制度，促进优质医疗资源扩容下沉，推动建设生育友好型社会，完善发展养老事业和养老产业政策机制。这些举措的落实见效，必将进一步增强人民群众的获得感、幸福感、安全感。
Sixth, we will ensure and improve the people's wellbeing. The Resolution insists that the reform will focus on what the people care about and what they expect. It emphasizes the need to improve the mechanism for promoting high-quality full employment, improve the social security system for people with flexible employment, migrant workers, and new employment forms, promote the expansion and sinking of high-quality medical resources, promote the building of a childbearing friendly society, and improve the policy mechanism for the development of elderly care services and elderly care industries. The implementation of these measures will further enhance people’s sense of fulfillment, happiness, and security.
第七，深化生态文明体制改革。中国式现代化是人与自然和谐共生的现代化。《决定》强调加快完善落实绿水青山就是金山银山理念的体制机制，健全生态产品价值实现机制，加快规划建设新型能源体系，构建碳排放统计核算体系、产品碳标识认证制度、产品碳足迹管理体系，更好推动绿色低碳循环发展。总之，《决定》对经济和民生领域改革的部署力度大、举措实、含金量高，一定要抓好落地见效。谢谢！
Seventh, we will deepen reform in ecological conservation. Chinese modernization is the modernization of harmony between humanity and nature. The Resolution emphasizes improving the green mechanism that upholds “lucid waters and lush mountains are invaluable assets,” improving the mechanism for realizing the value of ecological products, accelerating the planning and construction of a new energy system, building a carbon emission statistical accounting system, product carbon identification and certification system, and product carbon footprint management system, so as to better promote green, low-carbon and circular development. In a nutshell, we must carry out the economic and livelihood reforms laid out in the Resolution. Thank you!
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