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China Focus: A New Year stocktake of China's reform campaign

Xinhua, February 24, 2016 Adjust font size:

Nie Zhonghua, a villager in Guizhou Province, does not know what the Central Leading Group for Deepening Overall Reform is, but he surely has benefited from its measures.

Last year, he went from being 200,000 yuan (30,000 U.S. dollars) in debt to earning an annual income of over 100,000 yuan. Thanks to the national poverty relief program, he received technical support from vegetable cooperatives and loans from a local bank to build a greenhouse.

Nie is just one of millions of Chinese who have experienced steady progress in economic and industrial reform steered by the Central Leading Group for Deepening Overall Reform in its just over two years in existence.

As China settles into a third year of the campaign to ratchet up reform, millions more may be about to benefit like Nie.

While chairing the reform leading group's 21st meeting on Tuesday, President Xi Jinping ordered officials to implement all the group's measures and address lingering problems getting in their way.

"Those that fail to do so will be held accountable," according to a statement released after the meeting.

FRUITFUL YEARS BEHIND

Over the course of 21 meetings convened by the leading group since December 2013, it has introduced hundreds of measures on economic issues, including urbanization, poverty alleviation, innovation and removing barriers to let the market play a decisive role in resource allocation.

From cutting red tape and devolution to fiscal and taxation tweaks, from overhauling state-owned enterprises to rural land reform, the group has rolled out reform measures of unprecedented strength.

The government has also come up with several major economic strategies, including the Belt and Road Initiative, and a plan for the coordinated development of the Beijing-Tianjin-Hebei region. It has encouraged entrepreneurship, promoted technological upgrades and reduced overcapacity.

These moves have fostered new growth engines and kept the Chinese economy above water. A more innovation-friendly system is taking shape with an average of 12,000 new companies established in China daily last year, up from 10,000 in 2014 and 6,900 before the reform.

Courier service revenue has surged along with e-commerce, tourism and entertainment consumption. Bullet trains are speeding along new high-speed lines, drivers are opting for new-energy vehicles in greater numbers, and Chinese manufacturers are learning to produce smart electronic devices.

"The Chinese leadership has formed a new reform model featuring clear top-level design and a determination to overcome vested interests," said Prof. Zheng Yongnian, director of the National University of Singapore's East Asia Institute.

CHALLENGING YEARS AHEAD

Aside from the bright spots, the pressure on the economy can hardly be ignored. Drops in GDP growth, industrial product prices, factories' profitability and fiscal revenue all suggest China's reform campaign is going to have to be a long-lasting process.

"For the year ahead and beyond, the key to pushing the reform campaign is to form and implement a new mechanism of development," said Xu Yaotong, a professor with the Chinese Academy of Governance.

Leaders have vowed to address China's problems through supply-side structural adjustments focusing on better provision of high-quality goods and services, lower costs for businesses, and stronger consumption.

Wu Jinglian, one of China's most respected economists, said a more market-oriented mechanism would be needed to implement the supply-side overhaul. "China will need to stick to its adoption of market principles and adherence to the rule of law to create a better environment for innovation, which will be key to rejuvenate the supply side," Wu said.

Those measures, along with efforts to reduce corporate burdens, improve financial efficiency and stimulate innovation, will help China increase productivity and overcome difficulties, said Xu Hongcai, an economist at the China Center for International Economic Exchanges.

"Reform remains China's biggest bonus," he said. Endi