Major changes could be coming to China, after officials released plans to reform economic and social policies. China’s president, Xi Jinping, unveiled reform plans after a four-day conclave of Communist Party leaders in hopes that the economic changes will increase economic growth, which has slowed since the world-wide recession. Along with the economic reforms, plans were made to relax the one child policy and close labor camps, both infamous in the international community. The reforms, if implemented, could have wide-ranging impacts on society and business in China, improving human rights and opening new sectors of the economy to private companies.
One of the biggest surprises from Friday’s announcement was the fact that plans are in place to restructure China’s state-owned enterprises. Many economists have pointed to these enterprises as reasons for the country’s slow economic growth rate, since the state run monopolies are known to be inefficient. President Xi said that he hopes to end some of these monopolies, which could trigger the economic gains and investment Chinese leaders are looking for. A problem for Xi could be the resistance of some to the ending of the state monopolies, and Xi even admitted that the positive effects from any reforms would probably not take hold until 2020. This signals the fact that change will take time and that the plans announced on Friday still are only in the initial stages.
Although the reforms may take time, their impact cannot be understated. Along with opening of the state run monopolies, President Xi said that he wants to end government involvement in the pricing of resources, such as water and natural gas, and let the market determine the prices. Xi also plans to loosen regulations on banking and foreign investment, giving the private sector a much larger role in the world’s second largest economy. These vast reforms would significantly change the complexion of the economy, leading some to say that these reforms are the most important economic changes in over two decades. The question is, how effective will President Xi be at fully implementing his plans in a timely manner. If Xi can pull them off, China’s society and economy could look completely different in the years to come, impacting not only China, but also economies around the world.