The Communist Party of China concluded the 3rd Plenum of the 18th Party Congress on November 12th, 2013, after four days. The Plenum set the agenda for the government in the next decade. The concluding document contains reform efforts targeting the following fourteen areas:

1. Deutsche Asset
& Wealth Management
CIO Flash
China: 3rd Plenum of 18th Party Congress
18 November 2013

2. China: A Reform Agenda for the Next Decade
Government agenda until 2020
Chinese government: President Xi Jinping
Main results
— With vast corruption scandals, huge environmental problems,
increasing difficulty of finding a job for ordinary people, and
decreasing economic growth, the Communist Party of China
(CPC) does need arguments attesting its superiority in governing
the country.
— The short-term campaigns “anti-corruption”, “critics-and-selfcritics” and “learning from Lei Feng – all known under Mao
already” aim to raise the ethical perception of the CPC.
— The announced reforms in social and economic areas should set
the medium-term basis for the CPC supremacy.
— Xi has the ambition to build up an overall strong China which is
still governed by the CPC when he leaves his office in ten years.
The Communist Party of China concluded the 3rd Plenum of the 18th
Party Congress on November 12th, 2013, after four days.
The final “Decision” of the 3rd Plenum
— Xinhua New Agency recently published the “Decision of the Central
Committee on Several Important Aspects of the Deepening
Reforms” (unofficial translation) of the 3rd Plenum of the 18th Party
Congress.
Officials decided on the formation of a “National Security Council” and a
“Deepening Reform Committee”.
The Plenum set the agenda for the government in the next decade. The
concluding document contains reform efforts targeting the following
fourteen areas:
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— In our opinion the “Decision” is comprehensive as the
announced reforms are not limited to the economic area.
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— We welcome the reforms in non-economic areas, such as
social, judicial, and political, as economic growth in China is
constrained not solely by economic factors but also by social
and political factors.
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Property reform and relationship between public & private sector
Market as the “decisive” allocator of resources
Transformation of gov’t function and change of administration role
Fiscal system based on transparency, efficiency and unity of
responsibility and financing
Unification of rural and urban structure (land transfer and household
registration system)
Liberalization of international factor movements
Political representation system of the people
Change of judicial system
Control and balance of political power (anti-corruption)
Enhancement of „soft-power“ (cultural influence) and cultural development
Income distribution policy
Social and state security
Environment protection and natural resource allocation
Buildup of a modern military power
Underpins our economic outlook of short-term moderation, yet long-term stable growth of ~ 7.5 %*
Deutsche Asset
& Wealth Management
CIO Flash
18 November 2013
* DeAWM’s GDP growth forecast for 2014/2015
2

3. China: A Reform Agenda for the Next Decade
Main reform topics
Reform agenda titled: “Decision of the Central Committee on Several Important Aspects of the Deepening Reforms”
Social area:
 Reform of the education system including the abolishment of
differences between schools and relaxation of university entrance
examinations
 Implementation of a minimum wage system
 New pension system based on a public basic and a private pillar
 Unified healthcare system for rural and urban areas
 Gradual increase of retirement age
 Private hospitals
 Two-Child-policy for parents from single child families
 Engagement of social organization for the prevention of social
conflicts
Environment and resources:
 Introduction of a fee based system for use of natural resources
 Consideration of environmental costs for any new project
Political area:
 New measures on government transparency
 Introduction of check and balance system of power
 Introduction of a new control system of power for all levels of
government
 New regulations for the prevention of conflicts of interests and
governing the activities of retired officials
 Abolishment of labour camps
Deutsche Asset
& Wealth Management
CIO Flash
18 November 2013
Economic area:
 Equality of public and private ownership
 Abolishment of all red tape and the discrimination regulations
toward private companies
 Permission for private companies to purchase shares in public
companies and set up small banks or financial companies
 Unified market for land use/transfer in urban and rural areas
 Introduction of a transparent budget system for all municipalities
 Reset of the local-central tax sharing system and increase of the
local government’s share in direct taxes
 Opening of bond market to local governments
 Abolishment of the household registration system, starting in small
cities and advancing to medium sized cities
 Permission for overseas investments for private persons and
companies
Defense and military:
 Introduction of the unified commando system
 Reduction of non-military personnel and restructuring of different
military units
 Reform of the military purchase system
Cultural area:
 Permission for private companies to engage in previously
restricted publishing and theatres sector thereby introducing
competition
3

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Deutsche Asset
& Wealth Management
CIO Flash
18 November 2013