Economists Express Doubts After China Reform Plan

    By Carlos Tejada

    BEIJING--China's leaders endorsed a broad policy platform that called for a "decisive" role for markets and greater rights for its vast rural population, even as it reasserted Beijing's grip on the world's No. 2 economy.

    The lengthy communique released at the end of a four-day meeting of Communist Party leaders contained vague language that some economists said raised questions about whether they have the political will to push ahead with reforms to reduce traditional state dominance to reinvigorate a slowing economy.

    The meeting that ended on Tuesday is intended to lay out a blueprint for economic reform in coming months and years. It is the first policy blueprint offered by Xi Jinping, who took the top position in the party a year ago.

    The communique didn't offer full details of the plan adopted by Mr. Xi, Premier Li Keqiang and other top leaders. The meeting itself was intended to rally a consensus among top leaders in the party, government and military and many others in a nation where decisions are made largely by consensus.

    A fuller policy document will be released in coming days. But the communique provides a glimpse into the leadership's top priorities as it hammers out new policies, and, as such, economists said it sends conflicting signals.

    "This was an opportunity for the party to lay out a clear vision for where the country is heading," said Mark Williams, an economist with Capital Economics. "If they had been able to do that successfully I think it would have had a big impact on the behavior of officials, but I don't think they have been given a clear steer."

    Left unmentioned were many of the specifics economists had looked for: loosening Beijing's control of interest rates and flow of capital in and out of the economy and efforts to reform a household-registration system that denies social services to rural migrant workers who come to urban areas. It did, however, call for more general financial and fiscal reform.

    "The key issue is handling the relationship between the government and the market, allowing the market to play a decisive role in allocating resources," the communique said.

    On rural reforms, the communique didn't outright endorse giving farmers the title and rights to sell the land that they farm but which is collectively owned. It did call for giving them greater property rights and equal access to public services, which disproportionately go to urban residents under the current system. Economists said giving rural resident greater property rights could help make farm production more efficient and free farmers to sell their land and move into cities.

    The document also sent mixed messages on the issue of China's state-owned enterprises, which dominate industries ranging from energy to infrastructure to telecommunications and which economists criticize as holding back private entrepreneurship. It acknowledged that both state enterprises and private companies "are important foundations for our country's economic and social development." It called for fair competition, freedom of choice for consumers and the elimination of barriers to competition.

    At the same time, it said that reforms must "bring out the leading role of the public-owned economy," suggesting a continued prominent role for China's massive state-owned enterprises.

    "They do emphasize the role of the market but draw a clear line around things that are important to them," said Andrew Polk, economist at The Conference Board, adding the domination of state-owned enterprises "is not going away soon."

    Typical of such documents, the communique was replete with nods to party orthodoxy, mentioning Marx and Lenin, while giving a nod to Mr. Xi's signature slogan, the "China dream." It also emphasized the need to "maintain the party's leading role."

    In one of the few signs of change away from the economy, the document called for ensuring the independence of the judiciary and prosecutors--a catchphrase that state media has said means minimizing interference by low level officials while still allowing senior party leaders purview.

    The communique called for the creation of a reform policy committee comprised of Chinese leaders to ensure that the goals they set are implemented. Citigroup economist Ding Shuang said that reflected a lack of specifics. "Overall it's a very general plan that touches upon a broad range of issues," Mr. Ding said. "The fact they set up a reform-policy committee, I think it's because the detailed policy measures haven't been decided yet."

    Chinese leaders hope to remake the economy so it relies less on exports abroad and investment in heavy industry at home. That formula drove growth that averaged about 10% a year for 30 years--a world record. But it also produced wasteful investment in real-estate projects and in heavily polluting industries. It has also made China increasingly dependent on the vagaries of global markets, as slumps in exports to places like the U.S. and Europe took a toll at home.

    China's top policy makers want to turn China into a consumer society that more closely resembles the U.S. and Western Europe, where the service and high-technology sectors play a bigger role and where innovation is encouraged.

    Making such a transition is bound to reduce the rate of growth, at least in the short term, because it is far easier to withdraw support from older industries than it is to encourage the creation of new ones. But Chinese officials figure they have little choice. Growth has already been slowing despite a huge run-up in lending--a situation that has sometimes led to financial crises elsewhere in the world.

    -Liyan Qi, William Kazer and Richard Silk contributed to this article.

    Write to Carlos Tejada at