The Resolution of the Central Committee of the Communist Party of China (CPC) on Further Deepening Reform Comprehensively to Advance Chinese Modernisation and The Explanation of the Resolution were made public on Sunday. Below are my ten quick takeaways from the highly significant resolution.
The resolution (Chinese, English PDF) was adopted at the third plenary session of the 20th CPC Central Committee on Thursday. The explanation (Chinese, English PDF) was made by Xi Jinping, general secretary of the CPC Central Committee, at the third plenary session.
Below is my ten quick takeaways of the resolution. I will first post the section of the original text I wish to comment on, and then provide my comments below it. Please note that the comments reflect my personal perspective and not that of any organisations.
1.Importance and necessity
进一步全面深化改革的重要性和必要性。改革开放是党和人民事业大踏步赶上时代的重要法宝。党的十一届三中全会是划时代的，开启了改革开放和社会主义现代化建设新时期。党的十八届三中全会也是划时代的，开启了新时代全面深化改革、系统整体设计推进改革新征程，开创了我国改革开放全新局面。
Reform and opening up have been crucial to the cause of the Party and the people, enabling us to catch up with the times in great strides. The third plenary session of the 11th CPC Central Committee was a landmark event that ushered in a new period: one of reform, opening up, and socialist modernisation. The third plenary session of the 18th CPC Central Committee was also of epoch-making significance. It marked the start of a new journey of comprehensively deepening reform in the new era with systematic and holistic plans, thus paving the way for a brand new stage in China’s reform and opening up endeavours.
The designation of the third plenary session of the 11th CPC Central Committee in 1978 and the third plenary session of the 18th CPC Central Committee, presided over by Xi Jinping in 2013, as “epoch-making” reaffirms their historical significance. Deng Xiaoping’s pivotal role in the 1978 session and the ensuing reform and opening-up is well-documented. This evaluation of the two plenums is consistent with the Xinhua News Agency feature article “Profile: Xi Jinping the Reformer,” which describes Xi as “another outstanding reformer in the country following Deng Xiaoping.”
2.New quality productive forces
健全因地制宜发展新质生产力体制机制。推动技术革命性突破、生产要素创新性配置、产业深度转型升级，推动劳动者、劳动资料、劳动对象优化组合和更新跃升，催生新产业、新模式、新动能，发展以高技术、高效能、高质量为特征的生产力。加强关键共性技术、前沿引领技术、现代工程技术、颠覆性技术创新，加强新领域新赛道制度供给，建立未来产业投入增长机制，完善推动新一代信息技术、人工智能、航空航天、新能源、新材料、高端装备、生物医药、量子科技等战略性产业发展政策和治理体系，引导新兴产业健康有序发展。以国家标准提升引领传统产业优化升级，支持企业用数智技术、绿色技术改造提升传统产业。强化环保、安全等制度约束。
(8) Improving the institutions and mechanisms for fostering new quality productive forces in line with local conditions.
We will work to facilitate revolutionary breakthroughs in technology, innovative allocation of production factors, in-depth industrial transformation and upgrading, and the optimal combination of labourers, means of labour, and subjects of labour as well as their renewal and upgrading. All this will give rise to new industries, new business models, and new growth drivers and promote the development of productive forces that are characterised by high technology, high performance, and high quality. A stronger push will be made to pursue innovation in key generic technologies, cutting-edge technologies, modern engineering technologies, and disruptive technologies, and institutional supply will be boosted in new areas and arenas. We will establish a mechanism for ensuring funding increases for industries of the future, improve the policy and governance systems for promoting the development of strategic industries such as next-generation information technology, artificial intelligence, aviation and aerospace, new energy, new materials, high-end equipment, biomedicine, and quantum technology, and steer emerging industries toward sound and orderly development. National standards will be elevated to guide the upgrading of traditional industries, and enterprises will also be encouraged to apply digital, intelligent, and green technologies to transform and upgrade these sectors. We will impose tighter institutional constraints for environmental protection and safety.
New quality productive forces (新质生产力) had been predicted by many China watchers, based on articles and official documents released before this plenary session, to be one of the themes of this third plenary session. The resolution which was made public today explained the reform plan on new quality productive forces in one of its 60 subsections, mentioning specific industrial sectors such as artificial intelligence, aviation and aerospace, new energy, new materials, high-end equipment, biomedicine, and quantum technology. I believe this list is quite representative, although new quality productive forces is not limited to these areas.
健全相关规则和政策，加快形成同新质生产力更相适应的生产关系，促进各类先进生产要素向发展新质生产力集聚，大幅提升全要素生产率。鼓励和规范发展天使投资、风险投资、私募股权投资，更好发挥政府投资基金作用，发展耐心资本。
Relevant rules and policies will be improved to accelerate the formation of relations of production that are more compatible with new quality productive forces, and to channel various types of advanced production factors toward the development of new quality productive forces. These steps will help realise a significant increase in total factor productivity. We will encourage and regulate the development of angel investment, venture capital, and private equity investment, better leverage the role of government investment funds, and work to promote the development of patient capital.
On April 30, the Politburo met to discuss the dates for the third plenum session this year. During that meeting, “venture capital” was specifically mentioned as something to be supported, and the term “patient capital“ made its very first debut in a top-level official document. For a deeper understanding of patient capital in China and the latest policy initiatives aimed at stimulating venture capital development, I recommend reading a piece on this issue from Baiguan.
3.Self-reliant industrial and supply chain
健全提升产业链供应链韧性和安全水平制度。抓紧打造自主可控的产业链供应链，健全强化集成电路、工业母机、医疗装备、仪器仪表、基础软件、工业软件、先进材料等重点产业链发展体制机制，全链条推进技术攻关、成果应用。
(12) Improving the systems for enhancing the resilience and security of industrial and supply chains
We will move faster to build industrial and supply chains that are self-supporting and risk-controllable, improve the institutions and mechanisms for bolstering key industrial chains such as integrated circuits, industrial machine tools, medical equipment, instruments, basic software, industrial software, and advanced materials, and strive to secure more technological breakthroughs that can be applied across entire industrial and supply chains.
Note that when referring to build industrial and supply chains that are self-supporting and risk-controllable, the Chinese term used is “抓紧”. This is the only instance where “抓紧” appears in the text. “抓紧” means to prioritise or act promptly on something, emphasising the urgency and importance of addressing it without delay. When compared with another commonly used term in Chinese official documents, “加快”, which translates to “speed up” or “accelerate”, “抓紧” carries a more immediate sense of urgency in its literal meaning.
I did not see the use of “抓紧” in the report of the 20th Party Congress or China’s 14th Five-Year Plan, which probably indicates the central government’s assessment of the current international situation and underlines the urgency they attribute to establishing a self-reliant industrial and supply chain.
4.High-risk, high-reward basic research
加强有组织的基础研究，提高科技支出用于基础研究比重，完善竞争性支持和稳定支持相结合的基础研究投入机制，鼓励有条件的地方、企业、社会组织、个人支持基础研究，支持基础研究选题多样化，鼓励开展高风险、高价值基础研究。
Regions, enterprises, social organisations, and individuals with the resources to support basic research will be encouraged to do so. We will also support researchers in diversifying their subjects for study and encourage high-risk, high-reward basic research.
China has always emphasised the importance of basic research. However, effectively integrating basic research with practical applications has consistently been a challenge. The mention of supporting researchers in diversifying their subjects for study and encouraging high-risk, high-reward research was not noted in the reports of the 20th National Congress nor the 14th Five-Year Plan. This statement, I believe, also reflects the decision-makers’ deep understanding of the significance of basic research and the uncertainty of its outcomes. I view this direction as positive, further clarifying the need to boldly engage in high-risk basic research.
5. National strategic planning system and policy coordination mechanisms
完善国家战略规划体系和政策统筹协调机制。构建国家战略制定和实施机制，加强国家重大战略深度融合，增强国家战略宏观引导、统筹协调功能。健全国家经济社会发展规划制度体系，强化规划衔接落实机制，发挥国家发展规划战略导向作用，强化国土空间规划基础作用，增强专项规划和区域规划实施支撑作用。健全专家参与公共决策制度。
(16) Improving the national strategic planning system and policy coordination mechanisms
We will develop mechanisms for formulating and executing national strategies and make a stronger push to fully integrate all major strategies, so that they can provide better macro guidance and overall coordination. The systems for national economic and social development planning will be improved. This will see us enhancing the mechanisms for the alignment and implementation of plans, better harnessing the strategic guiding role of national development plans, bolstering the basic role of territorial space plans, and reinforcing the supporting role of subject-specific plans and regional plans. We will also improve the system by which experts participate in decision-making on public issues.
Chinese experts have channels to provide policy advice to decision-makers, and I’ve always been curious about the influence of these channels. This aligns with what I recently learned from relevant departments: the authorities are refining the advisory mechanism. Therefore, I believe that while the content experts publicly disclose may not fully align with their internal advisory communications, it still holds significant referential value. This is also why many newsletters on China translate content from Chinese experts for international audience, to provide insight into these perspectives.
6. Place more fiscal resources at the disposal of local governments
建立权责清晰、财力协调、区域均衡的中央和地方财政关系。增加地方自主财力，拓展地方税源，适当扩大地方税收管理权限。完善财政转移支付体系，清理规范专项转移支付，增加一般性转移支付，提升市县财力同事权相匹配程度。建立促进高质量发展转移支付激励约束机制。推进消费税征收环节后移并稳步下划地方，完善增值税留抵退税政策和抵扣链条，优化共享税分享比例。
We will establish a fiscal relationship between the central and local governments that features well-defined powers and responsibilities and the appropriate allocation of resources, with an optimum balance between regions. To place more fiscal resources at the disposal of local governments, we will expand the sources of tax revenue at the local level and grant greater authority for tax management to local governments as appropriate. To improve the system of transfer payments, we will overhaul special transfer payments and increase the scale of general transfer payments. These will help ensure that the fiscal resources of prefecture- and county-level governments are commensurate with their powers. We will establish incentive and constraint mechanisms through transfer payments to promote high-quality development. We will take steps to move excise tax collection further down the production-to-consumption chain, with the power of collection steadily being passed to local governments. We will improve the value-added tax credit refund policy and free up the channels for making tax deductions. The ratio for taxes shared between the central and local governments will be optimised.
Looking back now, it’s clear that David Daokui Li’s comments at the CCG luncheon about increasing local tax revenue and the proposal to allocate consumption tax to local governments were probably not unfounded.
The third area of reform I very much look for is determining the incentives of local governments from production to consumption, possibly by leaving some of the tax collected from local enterprises to regions and cities where cars, motorcycles, bicycles, and electronic products are sold. If your region is able to generate a smooth consumption, fine, the VAT and the tax associated with the consumption should go to you. We should change the incentive. I think this is coming now.
Li is Professor and Director of the Academy of Chinese Economic Thought and Practice (ACCEPT) at Tsinghua University. From the Explanation of the Resolution by Xi Jinping, it was evident that as early as May, this proposal had already been shown internally to certain individuals.
2024年5月7日，决定稿下发党内一定范围征求意见，征求党内老同志意见，专门听取各民主党派中央、全国工商联负责人和无党派人士代表意见，听取相关企业和专家学者意见。
On May 7, 2024, the text of the resolution was issued to select Party members, including retired senior Party officials, for consultation. Opinions were also sought from the central committees of other political parties, from leaders of the All-China Federation of Industry and Commerce, from prominent figures without party affiliation, and from relevant enterprises, scholars, and experts.
It’s uncertain whether Li Daokui, who can be regarded as prominent figures without party affiliation and, of course, an expert, had seen it by then. But some local governments are indeed facing financial pressures. Appropriately granting more tax revenue powers to local authorities can help alleviate their financial strains.
7.Taiwan
发挥“一国两制”制度优势，巩固提升香港国际金融、航运、贸易中心地位，支持香港、澳门打造国际高端人才集聚高地，健全香港、澳门在国家对外开放中更好发挥作用机制。深化粤港澳大湾区合作，强化规则衔接、机制对接。完善促进两岸经济文化交流合作制度和政策，深化两岸融合发展。
Harnessing the institutional strengths of the One Country, Two Systems policy, we will work to consolidate and enhance Hong Kong’s status as an international financial, shipping, and trade centre, support Hong Kong and Macao in building themselves into international hubs for high-caliber talent, and improve relevant mechanisms to see the two regions playing a greater role in China’s opening to the outside world. We will encourage cooperation between Guangdong, Hong Kong, and Macao in the Greater Bay Area by promoting closer alignment of rules and mechanisms. We will improve relevant institutions and policies to promote economic and cultural exchanges and cooperation across the Taiwan Strait and advance integrated cross-Strait development.
This part seems to be the only one directly pertaining to Taiwan. Including it under the “One Country, Two Systems” policy framework suggests that China’s fundamental strategy for a peaceful resolution of the Taiwan issue remains consistent. Furthermore, the mention of advancing integrated cross-Strait development aligns with the direction established by last year’s initiative to develop Fujian as a zone for integrated development with Taiwan.
8.Raise the statutory retirement age
积极应对人口老龄化，完善发展养老事业和养老产业政策机制。发展银发经济，创造适合老年人的多样化、个性化就业岗位。按照自愿、弹性原则，稳妥有序推进渐进式延迟法定退休年龄改革。
To actively respond to population aging, we will refine the policies and mechanisms for developing elderly care programs and industries. We will develop the silver economy and support the creation of diverse jobs tailored to elderly people. In line with the principle of voluntary participation with appropriate flexibility, we will advance reform to gradually raise the statutory retirement age in a prudent and orderly manner.
Delaying retirement is a sensitive topic, touching on everyone’s interests. Considering the current employment challenges faced by young people in China, adopting a more flexible and voluntary approach to delaying retirement aligns more closely with public opinion and the actual situation. I have discussed this topic on the “Got China” program about a month ago.
9. Strictly control the total number of community-level inspections
深入推进党风廉政建设和反腐败斗争。健全政治监督具体化、精准化、常态化机制。锲而不舍落实中央八项规定精神，健全防治形式主义、官僚主义制度机制。持续精简规范会议文件和各类创建示范、评比达标、节庆展会论坛活动，严格控制面向基层的督查、检查、考核总量，提高调研质量，下大气力解决过频过繁问题。
(59) Intensifying efforts to improve conduct, build integrity, and combat corruption
Mechanisms for conducting concrete, targeted, and regular political oversight will be improved. We will steadfastly implement the central Party leadership’s eight-point decision on improving conduct and refine our systems and mechanisms for preventing and tackling pointless formalities and bureaucratism. We will continue to streamline and standardise meetings and documents, as well as all types of demonstration initiatives, evaluations, standards inspections, festival celebrations, expositions and exhibitions, and forums; strictly control the total number of community-level inspections, examinations, and evaluations; and raise the quality of research and studies. Great effort will be made to address the excessive frequency of all these activities.
The Chinese term “下大气力” “great effort will be made or exert great efforts” appears uniquely here and signifies a stronger commitment compared to other commonly used term in Chinese official documents such as “加强 strengthen” or “努力 strive.” This suggests that the issues requiring significant effort to address are particularly challenging and not easily resolved. It highlights that the problem of overly frequent of community-level inspections, examinations, and evaluations might be quite prominent.
I recall Premier Li Qiang once remarked, “I have worked in local governments for a long time. My experience is that when you sit in the office, you see lots of problems. But when you reach out to the people, you see all kinds of solutions.” This illustrates that community-level inspections are a prevalent and effective approach within the Chinese system for identifying and addressing issues. This part from the resolution indicates that the CPC leadership is increasingly prioritising the enhancement of the quality of community-level inspections, recognising at the higher levels that quality supersedes quantity.
10.The establishment of a bankruptcy system for individual persons
健全企业破产机制，探索建立个人破产制度，推进企业注销配套改革，完善企业退出制度。健全社会信用体系和监管制度。
We will refine the enterprise bankruptcy mechanism, explore the establishment of a bankruptcy system for individual persons, move ahead with integrated reforms concerning the deregistration of enterprises, and improve the market exit system. We will also improve the social credit system and related oversight institutions.
China is currently facing a significant economic transformation, and establishing a bankruptcy system for individual persons would be beneficial in reducing judicial costs, preventing financial risks, maintaining financial stability, enhancing the overall innovative vitality of society, and improving the business environment. There are abundant comparative law legislative examples to draw from, and other related laws in China have already laid some groundwork for establishing a bankruptcy system for individual persons.
Republished from Beijing Scroll, July 21, 2024
Jiang Jiang
Jiang Jiang (JJ) is a journalist with Xinhua News Agency based in Beijing. He has served as a Xinhua correspondent in Islamabad, Pakistan, from 2022 to 2023. Jiang Jiang is the founder of “Ginger River Review” (GRR), a personal newsletter that focuses on China’s policies. He also hosts “Inside the China Room”, a podcast about China. Jiang Jiang holds an MBA from the University of Virginia Darden School of Business.