10 Things You Need to Know About Third Plenums

4. Sometimes it is a bit of a letdown.

While the 1978 meeting is celebrated as engendering real change, the Third Plenum of 2003 is seen by many as a fizzle. That plenum, the first under the leadership of Hu Jintao and Wen Jiabao, focused policy on"rebalancing" the economy and on rural development.

The two subsequent five-year terms should not be written off as a lost decade, in our view. There were significant improvements in rural areas during the 2003-13 period, social insurance infrastructure was rebuilt, growth spread inland and a real middle class emerged. However, in contrast to the Jiang Zemin-Zhu Rongji period from 1989-2003, no big institutional reform was achieved.

Instead, China's growth in the 2000s was generated by the state enterprise, urban housing and WTO reforms of the 1990s. Many of the imbalances identified in the 2003 document worsened. And then there was the 4 trillion yuan stimulus package of 2008-10, which was allowed to continue for too long and compounded many of the economy's underlying problems.

The reasons why the 2003 Third Plenum failed to engender real change are still being debated. But the likely lessons for the current leadership are that detailed plans are needed to support broad

policy goals, executive bodies such as members of the State Council have to be on board and strong, coordinated party leadership of the agenda is vital.

5. We expect the 2013 Third Plenum to herald significant change.

Which of these two precedents will the November 2013 Third Plenum follow more closely? While we do not expect it to achieve the tectonic shift seen in 1978, we are confident that it will not be the disappointment of 2003. There are several reasons for our confidence:

• Party Secretary Xi and Premier Li appear to agree on economic policy, both seeing the current growth model as unsustainable.

• We believe Xi carries enough weight in the party to push through painful changes. This may not have been true of his predecessor.

• Extensive thought and research have gone into this agenda, with the State Council's Development Research Center playing a critical role.

• Reformers head some of the most significant ministries, for example Zhou Xiaochuan at the People's Bank of China, Lou Jiwei at the Ministry of Finance, and Liu He at the National Development and Reform Commission. This should help reduce opposition, though there may be resistance at lower ranks within ministries.

• Local governments are likely to welcome some aspects of the agenda. Many provinces, for instance, are envious of Shanghai's new regulation-light Free Trade Zone, even if the details of how it will operate are still unknown.

6. We expect broad principles, not detail, in the document.

The Third Plenum is not the place to discuss details, such as the level of the property tax Beijing will implement, how much money should be set aside for urban residency (hukou) reform or which state enterprises will be privatized over the next five years. Such detail will have been discussed in the preparatory stages, and ministries may already have their plans. The People's Bank of China, for instance, already has State Council approval for interest rate reform. The key to the plenum is laying out clear principles that inform and provide air cover for the policy detail that follows.

This lack of detail may disappoint those expecting breakthroughs they can sink their teeth into. Instead, we expect one or two catchphrases from the document to be highlighted and widely discussed as guidelines for change. One early reported theme is "comprehensive reform." Analysts will pore over the document to assess how much the market is prioritized over the state. Once the party leadership has spoken, government leaders will be expected to deliver.