While the end of the infamous Laogai labor camp system and the relaxation of the one-child policy are making all the headlines, China might be bracing for two other reforms that will deeply and positively affect the livelihoods of hundreds of millions of its citizens.
This is not to underestimate the importance of the suppression of prison camps, with its tremendous implications for human rights and the rule of law in China, as well as for the approximately 200,000-300,000 inmates populating the camps at any given time, nor to underscore the relevance of easing the one child policy, so that urban couples in which just one espouse is a single child himself/herself (as opposed to both) will now be able to have two children: this certainly is a much-needed change of course, but one that will not dramatically effect fertility rates unless complementary policies to enhance work-life balance are devised and implemented.
Enter two additional decisions taken at the Third Plenary Session of the 18th CPC Central Committee, confirmed on November 15 by the Xinhua News Agency. First, the reform affecting China's gigantic SOEs: by 2020, they will have to pay 30% of their profits directly to the government, with the proceedings being redirected to "improving the people's livelihoods". How much do SOEs pay now? Anywhere between 0 and 15% of their benefits. We are talking about huge amounts of money: China's SOEs had pocketed almost 300 billion dollars in profits (1.77 trillion yuan) through the first 9 months of 2013.
This particular reform, surprisingly overlooked in many reports published by major newspapers, will not only benefit the state's coffers, but also level the playing field for private companies to flourish. Just ask any entrepreneur what it would mean not to pay any taxes (while the competition duly pays) and have nearly unrestricted access to credit: that's basically how SOEs operated in China, and this reform, coupled with plans to allow the creation of small-to-medium sized private capital banks, promises to bring sweeping changes to the Chinese market.
The second reform that must be duly highlighted is the removal of all restrictions to legally reside in towns and smaller cities, a crucial first step towards the eventual scrapping of the Hukou system, that binds every single Chinese to his/her birthplace. The vastness and implications of the floating population in Chinese cities can and should overwhelm most observers: 236 million people, or 1/6 of the total population of the country, including more than half of those labor-age born after 1980, left their places of origin to seek employment or education elsewhere, and now lack access to even the most basic public services.
Changing the anachronistic and deeply unfair Mao-era Hukou system is crucial for the accelerated urbanization process China is currently undergoing to be successful. This initial step, coupled with increased government revenue in form of taxes from SOE benefits, can mean that a stronger, more comprehensive social safety net –covering universal free education, healthcare and basic pensions– is eventually created and implemented nationwide. This would, in turn, allow an emerging middle class to allocate less of their disposable income to saving for the future and increase their consumption, thus fueling the increase in internal consumption that is urgently and sorely needed to balance China's economy and guarantee its amazing economic growth continues.
Nevertheless, all that glitters is not gold. Coupled with the already revealed announcement that a security committee, headed by President Xi himself, would be created (highlighting why Xi and not Putin is the most powerful man on Earth), the CPC reiterated its resolve to "strengthen public opinion guidance and crack down on Internet crimes". In other words, more censorship, both for separatists and restive ethnic minorities (a.k.a. "terrorists") and for dissidents. Luckily enough for them, they will no longer be sent to labor camps and might even benefit from a further promise to explore the establishment of a judicial system that is properly separate from the local administration...
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