People attend the latest Global Times Leader RoundTable on Thursday in Yinchuan, capital of Ningxia Hui Autonomous Region. Photo: Hou Zhigang

The just-concluded Third Plenary Session of the 18th Communist Party of China Central Committee has unveiled a comprehensive reform blueprint to fuel the country's further development. 

On Thursday, two days after the close of the plenum, the Global Times held the latest edition of its Global Times Leader RoundTable in Yinchuan, capital of Northwest China's Ningxia Hui Autonomous Region, discussing China's prospects and how western regions can seize development opportunities.

Different focus required

"The core of the reform is handling the relationship between the government and the market, and allowing the market to play a decisive role in allocating resources," Wang Heshan, vice chairman of Ningxia Hui Autonomous Region, said in a speech before the discussion.

Markus Rodlauer, deputy director of the IMF's Asia and Pacific Department, noted that time is running out for China's current economic model, which relies on rapid growth, and reforms are critical to ensure that China's success continues.

Rodlauer said that to rebalance China's economy, the country needs to shift from investment to consumption, further open up to private investment, and boost the services sector.

The Third Plenum has offered indicators about these aspects, but detailed policies still need to be rolled out by local governments, he said.

Hu Xijin, editor-in-chief of the Global Times, said reforms need innovation. For instance, local government leaders should find new ways to boost economic growth, rather than simply relying on infrastructure projects or launching economic development zones.

"Reforms cannot be carried out overnight," said Xu Sitao, chief representative for China with The Economist Group. But he felt that reform in the finance sector should not be hesitant.

Xu said that China's development over the past 30 years was focused on rapid growth, but its future development will place a greater emphasis on fairness.

When China's policymakers mull new measures, they should first consider whether the policy can ensure sustainable growth, said Atul Dalakoti, country head for China at Indian telecom operator Reliance.

For Joseph Chen, CEO of Joseph Investment Co, a significant aspect of the plenum has been a renewed focus on the role of laws.

"The communiqué [released after] the Third Plenum mentioned 'building China into a country under the rule of law,' which is different from 'administrating the country according to the law' in previous communiqués, as the former focuses on law, while the later focuses on human activity," Chen said.

With an improved legal environment, private enterprises' personal assets can be better protected by the law, he noted.

SOE reform debated

Further reform of State-owned enterprises (SOEs) was also a hot topic during the two-hour discussion.

Chen said that judging by the communiqué, SOE reform may be a lower priority than had been expected, as it said the "State-owned economy plays a leading role in the national economy."

Wei Jianguo, secretary-general of the China Center for International Economic Exchanges (CCIEE), was more optimistic. He said the Third Plenum mentioned "three equities" (equity of rights, opportunities and rules), which could improve opportunities for private firms and entrepreneurs.

The goal of SOE reform is to make the firms more like enterprises than government institutions, said Howard Xia, general manager of Vodafone China. He recalled his experiences in cooperating with China Mobile as a strategic investor a decade ago, saying the State-owned telecom operator's market-oriented reforms had not been pursued for long enough, and the firm had become more bureaucratic afterwards.

Reforming SOEs does not mean privatization, but encouraging competition, limiting SOEs' business scope and scale, as well as preventing them from dominating markets, said Simon Cox, Asia Economics Editor of The Economist.

Hu from the Global Times partly disagreed with Cox.

"It's not realistic to suppress the development of SOEs or limit SOEs' market share," he said. "But China will continue to support the development of SOEs as well as other companies, and allow them to compete in a fair environment." 

Although the communiqué did not go into much detail about SOE reforms, Hu noted, it did highlight the market's decisive role in resource allocation.

Western opportunities

The latest Global Times Leader RoundTable marked the first time that it was held in a western city. Although China's growth has been slowing down, Hu said Northwest China will become a new growth engine.

Western regions have achieved significant growth since China launched its western development strategy more than a decade ago, Vice Chairman Wang said.

Wang highlighted the advantages of investing in Ningxia, including its stable political environment, preferential finance, tax and land policies, and well-established industries such as coal, wine and halal cuisine (food that follows Islamic dietary requirements).

According to Wei from CCIEE, as a region where many Hui people concentrated, Ningxia has natural advantages in doing business with Arab economies. But other countries and regions, including South Korea and New Zealand, are also interested in Ningxia's rich natural resources, such as the alfalfa forage crop, Wei noted.

Peter M.K. Wong, chairman of M K Corporation Ltd, who has more than 20 years of experience of investing in China's western regions, said that Ningxia has great potential as an investment destination. Not only does it enjoy preferential policies from the central government, but it also has its own geographic advantages, being part of the New Eurasian Land Bridge and an important part of the Silk Road economic belt, Wong noted. 

In the past five years, as the global economy experienced a downturn, the tourism sector was one of the few fields that saw continued growth. As a region with abundant historical and cultural resources, Ningxia can develop its tourism industry further, which could also attract businessmen to seek opportunities there, Wong said.

What supports the tourism industry is not shining buildings but its local culture, said Cyprian Brady, a former Irish senator.

Ningxia is a region with a small population (6.47 million by the end of 2012), so it is not suitable for the region to develop labor-intensive industries, said Peng Yali, head of research with KPMG Global China Practice. Instead, it should focus on tourism and its halal industries, said Peng.