China Public Affairs Update: The Third Plenary Session of the 18th Central Committee
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China Public Affairs Update: The Third Plenary Session of the 18th Central Committee

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Edelman China Public Affairs update

Edelman China Public Affairs update

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China Public Affairs Update: The Third Plenary Session of the 18th Central Committee China Public Affairs Update: The Third Plenary Session of the 18th Central Committee Document Transcript

  • CHINA PUBLIC AFFAIRS UPDATE NOVEMBER 2013 THE THIRD PLENARY SESSION OF THE 18TH CPC CENTRAL COMMITTEE CHINA’S MOMENTOUS WEEK OF REFORM When former Chinese Leader Deng Xiaoping successfully launched his reforms over 35 years ago, the era that followed could be seen as “China Reform 1.0”. The new era that follows from this week’s 3rd Plenum and progressed by Xi Jinping and Li Keqiang can very much be seen as “China Reform 2.0”. As a result, China has now entered a new political and economic era. The 3rd Plenary Session of the 18th CPC Central Committee concluded with a release of its official statement, with the new Chinese leadership headed by Xi Jinping giving an overall perspective of addressing a broad range of questions on China’s future which had been highly anticipated by both the Chinese people and the world. Key Takeaways from the 3rd Plenum The most important development is the consolidation and centralization of power which is intended to enable and achieve deeper reform. It would lead to interesting dynamic: centralized power on one hand; and intended more open and market-driven economy on the other. CHINA PUBLIC AFFAIRS UPDATE The overarching narrative and message is: “China must deepen reform comprehensively at a new historical starting point”. Xi and the new leadership set the direction and tone for China’s future which requires the implementation of “decisive results” on the reform of the key areas and segments to be achieved by 2020. 1
  • Two new Chinese “super powers” Economic Reform A key outcome from the 3rd Plenum has been the establishment of two key bodies As a result of the 3rd Plenum, we will see continued deepening market-oriented reform and elevation of the role of non-public sectors both within China and externally. While the Chinese economy has been progressively moving towards a more market-based economy since 1992, the CPC, by upgrading the market role from “basic” to “decisive”, sets a strong and firm direction to allow market forces in play and to move China towards a more open economy. National Security Committee The new National Security Committee will address the security and stability issues that China faces, and more importantly will address the broader strategic challenges it must overcome as it moves to its position as a leading world power including its global geo-political, economic and military presence. The State Council will focus more on economic affairs, while decisions on national security, national defense and diplomacy will fall within the domain of the new Committee. Central Leading Group for Comprehensive and Deeper Reform This is the most influential and concrete outcome of the 3rd Plenary session and is an important step of Xi Jinping’s strategic objectives of centralizing power and fighting against the “obstacles” that are seen to impede China’s future progress.  Key decision-making powers on core economic reforms will increasingly fall within the responsibility of the new Central Leading Group, which will enjoy greater power than the State Council in pushing through comprehensive and deep cross-sector reforms.  The State Council will focus more on reform implementation following the path set down by the Central Leading Group.  While state-owned enterprises will remain a key pillar of the Chinese economy, the CPC at the 3rd Plenum acknowledged for the first time in history that non-public and private businesses are equally important to China’s economy. This reflects the leadership’s overall intention to adjust the relationship between the public and private sectors. The powers of National Development and Reform Commission (NDRC), which has been the super ministry responsible for macro-economic policies and reform agenda, will largely be diluted and handed over to the Central Leading Group. CHINA PUBLIC AFFAIRS UPDATE 2
  • Finally – what’s the impact on Multinational Companies? Overall the investment and operational environment in China is moving to a positive direction. The proposed comprehensive and deeper reform process will see a continued path towards sustained economic growth, more open market activity, lowering of the threshold for inbound investment, a step up in the development of free trade zones, opening up of inland, coastal and border areas, and a reduction of the government’s interference in businesses. However this rosy picture will not happen overnight, and will only benefit those who understand and align with China’s new priorities. Changes to foreign policy and international relations should be closely observed and may impact foreign companies as they seek to do or expand business in China. The Communiqué of the 3rd Plenum announced broad economic and political reform direction, leaving in-depth policy details to be revealed in the following weeks and months. Edelman’s Public Affairs team will continue to update you on significant changes and developments. About Daniel J. Edelman China Group Daniel J. Edelman China Group is comprised of four distinct brands that can work together as a single team or on their own: Edelman Public Relations (Worldwide) China, Edelman Digital, Pegasus Communications and Zeno, with more than 280 staff in five offices across China. DJE China Group was honored by Campaign Asia-Pacific as “Greater China PR Agency of the Year” in 2012 and recognized by 17PR as “Best Employer” in 2013. For more information, please visit our web site: www.edelmangroup.cn, or follow us on SinaWeibo: www.weibo.com/djechinagroup For more information, please contact: Cindy Tian Tel: +86 10 5828 6505 /Email: cindy.tian@edelman.com Qu Hong Tel: +86 10 5828 6556/Email: hong.qu@edelman.com CHINA PUBLIC AFFAIRS UPDATE 3