Action to determine fate of China 'reform' agenda: Analysts

BEIJING - The Chinese Communist Party's latest "reform" message juggles numerous contradictions with suggestions of significant change, but meaningful action will be needed before history can judge it as transformative, analysts say.

Ending a four-day Central Committee meeting, the party released a communique via state media promising to establish a special "leadership group" on change - but while its makeup will be a key indicator of the party's direction, no details were provided.

The meeting, known as the Third Plenum, is closely watched because the party has used previous gatherings - most notably in 1978 when it embarked on fundamental economic reforms - to signal seismic changes.

Sometimes, mere semantic alterations can indicate such shifts.

As expected, the party went big on generalities, calling for "comprehensively deepening reform" and letting the market "play a decisive role in allocating resources", compared with previous terminology that often described its part as "basic".

At the same time it reiterated the "core role" of the ruling party as well as dollops of old-style Marxist jargon pushing the role of the state-owned economy.

It set a deadline of 2020, but only for the achievement of "decisive results in the reform of key areas".

"It looks like on the direction of reform maybe there is strong agreement, but how to push ahead, maybe not," Wang Qinwei, China economist at Capital Economics in London, told AFP.

Wang said the document appeared to exude "a degree of compromise" and included potential obstacles to change.

Kenneth Lieberthal, a China expert and senior fellow at the Brookings Institution in Washington, noted that the communique emphasised balance. Assertions were made and then quickly cancelled out lines later.

"In that sense it's kind of like a US president's State of the Union address," he told AFP. "Every key constituency gets a sentence and the fact that they don't really add up is not important because everybody has a sentence they can point to."

While details were thin throughout the lengthy statement - widely seen as only a summary with a far longer document expected in coming days - some analysts saw promising morsels.

"We can find some useful implications such as judiciary reforms and some land reforms from the communique, but the communique may not make this Third Plenum a watershed event," Bank of America Merrill Lynch economists Lu Ting and Zhi Xiaojia wrote in a report.

They dismissed the rhetoric on the role of the market as a "not so meaningful semantic change".

"For us Chinese native speakers with years of intensive training in Chinese, we found it very difficult to tell the real difference," they said.

Key omissions, they noted, were any mention of reforms to China's one-child policy or to its hukou residency system, which denies people who have migrated from the countryside to the cities equal access to benefits.

Nevertheless, some saw the document as largely positive, saying it suggested a level of sophistication that is required to move ahead.

Authorities would need to centralise much of the power to make decisions in order to push forward economic reforms, ANZ bank economists Liu Li-Gang and Zhou Hao wrote in a report.

"Practically, they will also give the markets an important role so that all types of resources can be better allocated for greater efficiency," they added. "This shows that the new leadership does understand China's political realities and reform challenges."

The plenum came a year after China embarked on a once-a-decade leadership change, with Xi Jinping taking over as party chief in November and then as state president in March this year.

Andy Xie, a Shanghai-based independent economist formerly with Morgan Stanley, said that reining in corrosive government corruption, a campaign Xi has already launched, would have more immediate impact than long-term institutional changes.

"The only way to diminish the distortions in the economy is to tie the hands of the government officials," Xie said, adding: "That is why the anti-corruption campaign is central to any economic reform."

Ultimately, it will be action in the future that determines how the meeting's pronouncements are judged, analysts said.

"We think that the plenum that just concluded has the potential to mark a new beginning of positive changes," Hong Kong-based Societe Generale economist Yao Wei wrote in a report.

"Now having said what needs to be said, the new leaders should do what needs to be done. The real test has just started."