Globe editors have posted this research report with permission of CIBC World Markets Inc. This should not be construed as an endorsement of the report’s recommendations. For more on The Globe’s disclaimers please read here. The following is excerpted from the report:
The third Plenum of the CCP’s Central Committee concluded early last week and was followed on Friday (Nov. 15) with the release of a detailed 60-point reform plan. The plan could impact Canadian investors via its longer term growth effects and sector-specific implications. The broad thrust revolves around a "decisive" role for markets in the economy, including a shift to market-based prices in some key sectors like energy.
Important elements include:
- Allowing private investment in more "non-strategic" areas of the economy to heighten offshore investor interest;
- Limited reforms of state-owned companies, including a requirement that companies hand over 30 per cent of profits to the government vs. 15 per cent at present, with some funds channeled to improved social services;
- China will also promote private capital to set up small and medium-sized banks, and also to participate in state-owned investment projects;
- Relaxation of the one-child policy and changes in the "hukou" system, allowing greater access to services between the rural and urban population;
- Regarding financial markets, China continues to aim toward reforming the deposit rate system and yuan convertibility, although achievement of the latter objective may still be years away.
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