Political announcements signal a greater role for the market in China

President Xi Jinping's comments at the conclusion of the third plenum of the party’s 18th Central Committee signalled greater interest in protecting the private sector - but many risks still remain.

A "deepening" role for the market was proclaimed by China’s ruling elite as it concluded the third plenum of the party’s 18th Central Committee. While the final statement predictably lacked specificity, it reinforced the reformist agenda of President Xi Jinping and signalled a gradual diminution of state control of all aspects of the economy in favour market influenced prices.

The importance of the plenum was always about the message it would send about momentum in the reform agenda and the ability of the new leadership to overcome resistance to reform. Beginning with an anti-corruption campaign that effectively discredited political opponents, most notably Bo Xilai, and generated popular support, the government has progressed reforms in foreign direct investment policy and interest rate deregulation. It has also had the confidence to permit an economic slowdown. The board pronouncements from the plenum indicate that this momentum will be sustained.

The report signals the development of a more balanced policy towards the public and private sectors; the maintenance of government to commitment to state owned enterprises combined with the development of "fair, open and transparent" market rules for the economy.

Exceeding expectations, the texts from the plenum show the government understands that systemic reform is a pre-requisite for making China’s economic system more sustainable. Judicial structural reform is called for along with changes to the Party’s internal oversight processes, thereby enhancing the role of central Party authorities. Enhancing the power of the judiciary’s at local levels could provide the government with a more effective mechanism to address corruption and force local implementation of policy directives, which would be positive for reform in the medium to long term.

Impediments posed by the two-tier land ownership system and the concept of equal land rights were also raised. At present, farmers moving to urban areas are unable to sell their land, in contrast to urban dwellers who are able to buy and sell property. It is anticipated that the distinction between urban and rural land will be abolished, a significant reform, that will take China a step further towards an economy driven by market forces.

While businesses can take many positives from pledges, albeit ambiguous, to protect the private economy, the crucial issues of interest rates, the floating of the renminbi or banking sector reform, were not publicly mentioned. This shouldn’t be interpreted as a sign that no action will be taken; rather that the government is leaving itself significant room for manoeuvre to implement policy reform in accordance with political and economic necessity.

While the pledge of greater protection for the private sector is a positive announcement from the leaders of the world’s second largest economy, many risks remain inherent in transacting business in country that lacks an independent judiciary and vibrant civil society.

Chinese President Xi Jinping in Beijing. Photograph: Getty Images.

JLT Head of Credit & Political Risk Advisory

Newsgroup Newspapers Ltd/Published with permission
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Everything that is wonderful about The Sun’s HMS Global Britain Brexit boat

And all who sail in her.

Just when you’d suffered a storm called Doris, spotted a sad Ukip man striding around the Potteries in top-to-toe tweed, watched 60 hours of drama about the Queen being a Queen and thought Britain couldn’t get any more Brexity, The Sun on Sunday has launched a boat called HMS Global Britain.


Photo: Newsgroup Newspapers Ltd/Photos published with permission from The Sun

Taking its name from one of Theresa May’s more optimistic characterisations of the UK post-Europe (it’s better than “Red, white and blue Brexit”, your mole grants), this poor abused vessel is being used by the weekend tabloid to host a gaggle of Brexiteers captained by Michael Gove – and a six-foot placard bearing the terms of Article 50.

Destination? Bloody Brussels, of course!

“Cheering MPs boarded HMS Global Britain at Westminster before waving off our message on a 200-mile voyage to the heart of the EU,” explains the paper. “Our crew started the journey at Westminster Pier to drive home the clear message: ‘It’s full steam ahead for Brexit.’”

Your mole finds this a wonderful spectacle. Here are the best bits:

Captain Michael Gove’s rise to power

The pinnacle of success in Brexit Britain is to go from being a potential Prime Minister to breaking a bottle of champagne against the side of a boat with a fake name for a publicity stunt about the policy you would have been enacting if you’d made it to Downing Street. Forget the experts! This is taking back control!


 

“God bless her, and all who sail in her,” he barks, smashing the bottle as a nation shudders.

The fake name

Though apparently photoshopped out of some of the stills, HMS Global Britain’s real name is clear in The Sun’s footage of the launch. It is actually called The Edwardian, its name painted proudly in neat, white lettering on its hull. Sullied by the plasticky motorway pub sign reading “HMS Global Britain” hanging limply from its deck railings. Poor The Edwardian. Living in London and working a job that involves a lot of travel, it probably voted Remain. It probably joined the Lib Dems following the Article 50 vote. It doesn’t want this shit.

The poses

All the poses in this picture are excellent. Tory MP Julian Brazier’s dead-eyed wave, the Demon Headmaster on his holidays. Former education minister Tim Loughton wearing an admiral’s hat and toting a telescope, like he dreamed of as a little boy. Tory MP Andrea Jenkyns’ Tim Henman fist of regret. Labour MP Kate Hoey’s cheeky grin belied by her desperately grasping, steadying hand. Former Culture Secretary John Whittingdale’s jolly black power salute. And failed Prime Ministerial candidate Michael Gove – a child needing a wee who has proudly found the perfect receptacle.

The metaphor

In a way, this is the perfect representation of Brexit. Ramshackle, contrived authenticity, unclear purpose, and universally white. But your mole isn’t sure this was the message intended by its sailors… the idea of a Global Britain may well be sunk.

I'm a mole, innit.