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15 Nov, 2013 14:57

Economic overhaul: China opens doors to more private competition

In the biggest economic turnaround in two decades China’s leaders have pledged more private competition in dominant state industries. The new economic plan aims at rejuvenating a slowing economy and also eases limits on foreign investment in e-commerce.
Economic overhaul: China opens doors to more private competition

The changes promised in a Friday report issued after a closely watched Communist Party conference compares with the effort at market-style reforms in 1978 that launched China's economic boom, the Associated Press says citing the state media.

The lengthy policy document - officially named "a decision on major issues concerning comprehensive and far-reaching reforms" - was approved by the Third Plenary Session of the 18th CPC Central Committee, a four-day key meeting which ended on Tuesday.

The ruling party said private competitors should have lower barriers in the markets currently controlled by state companies, though they reaffirmed that the state – owned industries will remain at the core of the economy.

“We must promote orderly opening to the outside,” the report said.

The new plan envisages more freedom to create privately owned banks, as well as use the market forces to allocate resources. Both measures are hoped to help domestic private companies that create most of China's jobs and wealth but struggle to get financing.

Foreign companies would enjoy fewer limitations in investment in many of China’s industries including e–commerce

China has recently been struggling to make a major turnaround from an export – oriented economy to one driven by domestic demand. The existing paradigm that delivered three decades of rapid growth has run out of steam, with the economic growth standing at 7.8 percent in 3Q, marginally higher than the two – decades low of 7.5 percent produced in 2Q 2013. 

In a move possibly aimed at responding to the rapidly aging Chinese population, the report said the ruling party also will ease the country's “one child” birth policy. It said the party will allow couples in which one partner is an only child to have two children.

Beijing says the thirty year-old birth policy, which is widely disliked by many Chinese couples, has helped the country by slowing population growth and conserving resources. But as the average age of the country's population of 1.3 billion people rises, Chinese leaders worry there will not be enough workers to support a growing group of retirees.