Reforms on the cards at the NCCPC
• Financial regulatory reform
Financial stability tops the policy agenda in China. President Xi has reinforced the message of combating “financial irregularities” at the National Financial Work Conference, such as the rise of shadow banking and cross-sectoral financial arbitrage.
The establishment of the Financial Stability and Development Commission at the State Council level will launch a series of reforms.
• SOE reform
The official guideline on state-owned enterprise (SoE) reform had been finalised in 2015 but progress has been slow.
Contrary to expectations for a market-oriented reform, the guideline places more emphasis on the government’s and party’s control over SoEs despite outlines for a upgrade to a modern enterprise management system and transforming the SOEs’ supervisory body.
However, there are signs of acceleration on SoE reforms this year. Several rounds of SoE M&As have been announced with private sector participation. We expect the momentum to continue after the 19th NCCPC.
• Land and property sector reforms
Confirming ‘housing is for living not speculation’ in 2016, the government’s stance has become clear, i.e. maintaining reasonable property price range and providing adequate housing supply to locals.
As inventory levels have reached a multiple-year low, the chances of a massive collapse of the sector are decreased. The government can mull many longer-term solutions such as land reforms to address the housing needs.