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Beijing has officially announced the Communist Party’s Central Committee proposal for the nation’s 15th five-year plan, including language that signals strategic support for the private sector and an acceleration of China’s transformation into a financial power, easing market concerns about their positions in the economy over the next five years. These messages were not mentioned in the communique published last week at the end of the fourth plenum of the Communist Party. “The state should implement the Private Economy Promotion Law to ensure, through legal and institutional means, equal access to production factors, fair participation in market competition, and effective protection of legitimate rights and interests, so as to develop and expand the private economy,” the proposal said. It vowed to “fully stimulate” the vitality of all types of business entities and encourage the joint development of various forms of ownership. The proposal also called for a more “sound and standardised” mechanism for law enforcement involving companies, cautioning against unlawful cross-regional enforcement and profit-driven enforcement. The recommendation could be seen as part of Beijing’s efforts in recent years to court private business owners and boost confidence in the private sector amid an economic slowdown. It also pushed for increased private capital access in key infrastructure projects, under the guidance of public funds. “The state should enhance the guiding and leveraging role of government investment funds, stimulate the vitality of private investment and increase its share … strengthen the market-driven momentum for effective investment growth,” the proposal said. It also called for continued efforts to promote the yuan’s internationalisation, including the building of “a self-reliant and controllable cross-border yuan payment system”, plus more access to foreign funding in domestic projects. China should strengthen and modernise its financial system by enhancing regulations and coordination between central and local regulatory authorities, the proposal said while also calling for the acceleration of Shanghai’s development as an international financial centre. And the proposal stressed the need to “enhance the inclusiveness and adaptability of capital market institutions, improve the coordination between investment and financing functions, actively develop direct financing through equities and bonds, and steadily advance the development of futures, derivatives and asset securitisation”. Compared with the language used for the last five-year plan, the current proposal placed greater emphasis on preventing risks in the financial system, calling for “a risk-prevention and resolution system”. The focus on regulation is also more highlighted, relative to five years ago, as the new proposal vowed to “comprehensively strengthen” financial regulations. On accelerating the building of a strong financial nation, the proposal called for the development of science and technology finance, green finance, inclusive finance, pension finance and digital finance.
