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China's, Third Plenum of the 18th Party Congress key decisions
 

China's, Third Plenum of the 18th Party Congress key decisions

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The Communist Party of China concluded the 3rd Plenum of the 18th Party Congress on November 12th, 2013, after four days. The Plenum set the agenda for the government in the next decade. The ...

The Communist Party of China concluded the 3rd Plenum of the 18th Party Congress on November 12th, 2013, after four days. The Plenum set the agenda for the government in the next decade. The concluding document contains reform efforts targeting the following fourteen areas:

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    China's, Third Plenum of the 18th Party Congress key decisions China's, Third Plenum of the 18th Party Congress key decisions Presentation Transcript

    • Deutsche Asset & Wealth Management CIO Flash China: 3rd Plenum of 18th Party Congress 18 November 2013
    • China: A Reform Agenda for the Next Decade Government agenda until 2020 Chinese government: President Xi Jinping Main results — With vast corruption scandals, huge environmental problems, increasing difficulty of finding a job for ordinary people, and decreasing economic growth, the Communist Party of China (CPC) does need arguments attesting its superiority in governing the country. — The short-term campaigns “anti-corruption”, “critics-and-selfcritics” and “learning from Lei Feng – all known under Mao already” aim to raise the ethical perception of the CPC. — The announced reforms in social and economic areas should set the medium-term basis for the CPC supremacy. — Xi has the ambition to build up an overall strong China which is still governed by the CPC when he leaves his office in ten years. The Communist Party of China concluded the 3rd Plenum of the 18th Party Congress on November 12th, 2013, after four days. The final “Decision” of the 3rd Plenum — Xinhua New Agency recently published the “Decision of the Central Committee on Several Important Aspects of the Deepening Reforms” (unofficial translation) of the 3rd Plenum of the 18th Party Congress. Officials decided on the formation of a “National Security Council” and a “Deepening Reform Committee”. The Plenum set the agenda for the government in the next decade. The concluding document contains reform efforts targeting the following fourteen areas:      — In our opinion the “Decision” is comprehensive as the announced reforms are not limited to the economic area.     — We welcome the reforms in non-economic areas, such as social, judicial, and political, as economic growth in China is constrained not solely by economic factors but also by social and political factors.      Property reform and relationship between public & private sector Market as the “decisive” allocator of resources Transformation of gov’t function and change of administration role Fiscal system based on transparency, efficiency and unity of responsibility and financing Unification of rural and urban structure (land transfer and household registration system) Liberalization of international factor movements Political representation system of the people Change of judicial system Control and balance of political power (anti-corruption) Enhancement of „soft-power“ (cultural influence) and cultural development Income distribution policy Social and state security Environment protection and natural resource allocation Buildup of a modern military power Underpins our economic outlook of short-term moderation, yet long-term stable growth of ~ 7.5 %* Deutsche Asset & Wealth Management CIO Flash 18 November 2013 * DeAWM’s GDP growth forecast for 2014/2015 2
    • China: A Reform Agenda for the Next Decade Main reform topics Reform agenda titled: “Decision of the Central Committee on Several Important Aspects of the Deepening Reforms” Social area:  Reform of the education system including the abolishment of differences between schools and relaxation of university entrance examinations  Implementation of a minimum wage system  New pension system based on a public basic and a private pillar  Unified healthcare system for rural and urban areas  Gradual increase of retirement age  Private hospitals  Two-Child-policy for parents from single child families  Engagement of social organization for the prevention of social conflicts Environment and resources:  Introduction of a fee based system for use of natural resources  Consideration of environmental costs for any new project Political area:  New measures on government transparency  Introduction of check and balance system of power  Introduction of a new control system of power for all levels of government  New regulations for the prevention of conflicts of interests and governing the activities of retired officials  Abolishment of labour camps Deutsche Asset & Wealth Management CIO Flash 18 November 2013 Economic area:  Equality of public and private ownership  Abolishment of all red tape and the discrimination regulations toward private companies  Permission for private companies to purchase shares in public companies and set up small banks or financial companies  Unified market for land use/transfer in urban and rural areas  Introduction of a transparent budget system for all municipalities  Reset of the local-central tax sharing system and increase of the local government’s share in direct taxes  Opening of bond market to local governments  Abolishment of the household registration system, starting in small cities and advancing to medium sized cities  Permission for overseas investments for private persons and companies Defense and military:  Introduction of the unified commando system  Reduction of non-military personnel and restructuring of different military units  Reform of the military purchase system Cultural area:  Permission for private companies to engage in previously restricted publishing and theatres sector thereby introducing competition 3
    • Disclaimer Deutsche Asset & Wealth Management represents the asset management and wealth management activities conducted by Deutsche Bank AG or any of its subsidiaries. Clients will be provided Deutsche Asset & Wealth Management products or services by one or more legal entities that will be identified to clients pursuant to the contracts, agreements, offering materials or other documentation relevant to such products or services. This document has been prepared without consideration of the investment needs, objectives or financial circumstances of any investor. Before making an investment decision, investors need to consider, with or without the assistance of an investment adviser, whether the investments and strategies described or provided by Deutsche Bank, are appropriate, in light of their particular investment needs, ob-jectives and financial circumstances. Furthermore, this document is for information/discussion purposes only and does not constitute an offer, recommendation or solicitation to conclude a transaction and should not be treated as giving investment advice. Deutsche Bank does not give tax or legal advice. Investors should seek advice from their own tax experts and lawyers, in considering investments and strategies suggested by Deutsche Bank. Investments with Deutsche Bank are not guaranteed, unless specified. Although information in this document has been obtained from sources believed to be reliable, we do not guarantee its accuracy, com-pleteness or fairness, and it should not be relied upon as such. All opinions and estimates herein, including forecast returns, reflect our judgment on the date of this report and are subject to change without notice and involve a number of assumptions which may not prove valid. Investments are subject to various risks, including market fluctuations, regulatory change, possible delays in repayment and loss of in-come and principal invested. The value of investments can fall as well as rise and you may not recover the amount originally invested at any point in time. Furthermore, substantial fluctuations of the value of the investment are possible even over short periods of time. This publication contains forward looking statements. Forward looking statements include, but are not limited to assumptions, esti-mates, projections, opinions, models and hypothetical performance analysis. The forward looking statements expressed constitute the author’s judgment as of the date of this material. Forward looking statements involve significant elements of subjective judgments and analyses and changes thereto and/or consideration of different or additional factors could have a material impact on the results indica-ted. Therefore, actual results may vary, perhaps materially, from the results contained herein. No representation or warranty is made by Deutsche Bank as to the reasonableness or completeness of such forward looking statements or to any other financial information contained herein. This document may not be reproduced or circulated without our written authority. The manner of circulation and distribution of this document may be restricted by law or regulation in certain countries. This document is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would subject Deutsche Bank to any regis-tration or licensing requirement within such jurisdiction not currently met within such jurisdiction. Persons into whose possession this document may come are required to inform themselves of, and to observe, such restrictions. Past performance is no guarantee of fu-ture results; nothing contained herein shall constitute any representation or warranty as to future performance. Further information is available upon investor‘s request. This document contains information not intended solely for the recipients. The information has been considered in investment decisi-ons of our asset management division. All third party data (such as MSCI, S&P & Bloomberg) are copyrighted by and proprietary to the provider. © 2013 Deutsche Bank AG. All rights reserved. R-32727-1 (11/13) Deutsche Asset & Wealth Management CIO Flash 18 November 2013