Several Takes on the Third Plenum Decision
I’m giving some of my personal takes for today's episode based on the third plenum decision. For the English transcripts, please check out the translation of Xinhua. Jiang Jiang also published his quick takes yesterday, which I highly recommend checking out.
Here are my takes based on the decision’s sequence:
About “Building a High-Standard Socialist Market Economy”
I’ve noticed that some “China Watchers” are talking about losing the “Two Unwavering“ after seeing the communique on the 18th. Yet, in the full “decision“ pages, it reaffirmed that:
“unswervingly encouraging, supporting, and guiding the development of the non-public sector. We will ensure that economic entities under all forms of ownership have equal access to factors of production in accordance with the law, compete in the market on an equal footing, and are protected by the law as equals, thus enabling them to complement each other and develop side by side.“
毫不动摇鼓励、支持、引导非公有制经济发展，保证各种所有制经济依法平等使用生产要素、公平参与市场竞争、同等受到法律保护，促进各种所有制经济优势互补、共同发展。
About SOE(State Owned Enterprises)
We will establish a system to assess SOEs’ performance in fulfilling their strategic missions, refine the category-based SOE evaluation system, and introduce value-added accounting in the state-owned sector.
The traditional appraisal system can no longer meet the country's assessment requirements for different types of state-owned enterprises (SOEs). We may see a greater emphasis on assessing their fulfillment of strategic missions for public welfare SOEs. For SOEs participating in market competition, the assessment may emphasize their core competitiveness: performance and profitability.
About Promoting High-Quality Economic Development
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.
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。
My friend Jiang Jiang noticed that we need to pay attention to the “Move Faster” here. In the Chinese version, the term used is "抓紧" (zhuājǐn) conveys a greater sense of urgency than the simple translation of "move faster." Since this is the only instance in the entire decision document where "抓紧" appears, it reflects how urgent China wants to build a more resilient industrial supply chain. This also reflects how China views its international environment.
About Improving Macroeconomic Governance
Fiscal Reform:
It’s the first time an official document talks about
We will also look into approaches for better adapting these systems to new forms of business.
“研究同新业态相适应的税收制度”
In new forms of business, such as internet platforms, the distribution of tax sources is unbalanced, and there is a divergence between tax revenue and tax sources. Platform enterprises have gathered a large number of transaction activities, and the digital economy, especially platform enterprises, is highly concentrated in certain cities and regions. So, it is necessary to make new definitions of the tax base and tax sources to maintain the state's ability to extract revenue.
About Improving Macroeconomic Governance（central-local gov relations）
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.
Currently, China is facing an imbalance between tax revenue and expenditure responsibilities. The proportion of central government expenditure is low, and local governments bear excessive authority and spending responsibilities, which is one of the major reasons behind local government debt. The decision aims to expand the scope of local tax management authority.
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.
Many observers suggest that this may transform the consumption tax from a central tax to a tax shared between the central and local governments while postponing the collection stage to a later point, which also helps the local level expand tax income.
Promoting Integrated Urban-Rural Development
We will implement the systems for allowing people to obtain household registration and access basic public services in their place of permanent residence. We will push to see that eligible people who have moved to cities from rural areas enjoy the same rights as registered local residents with regard to social insurance, housing support, and access to compulsory education for their children living with them. The process of granting permanent urban residency to these people will also be accelerated.
This paragraph attracted my attention the most. There’s no “classified discussion“ in the decision document this time. This differs from the 18th Third Plenum, which specifically discusses how different cities should manage their household registration. It marks further loosening of the traditional Hukou system and helps increase equal social security coverage between urban and rural areas.
Pursuing High-Standard Opening Up
I put most of my attention on the “further reforming the management systems for inward and outward investment” part.
We will expand the catalog of encouraged industries for foreign investment, appropriately shorten the negative list for foreign investment, remove all market access restrictions in the manufacturing sector, and promote wider opening with regard to telecommunications, the internet, education, culture, medical services, and other sectors in a well-conceived way.
I'm still not sure how the opening up on these areas works, but it is definitely worth paying attention to further details, especially the internet & cultural area.
After China issued more and more visa-free policies to travelers worldwide, many of them found difficulties adapting to the QR code payment system. I think that’s why this part appears in the doc:
We will improve relevant measures to make it more convenient for people from outside the mainland to live, receive medical services, and make payments on the mainland.