On November 5, the document "The Decision of the CPC Central Committee on Several Major Issues Concerning the Upholding and Improving the Socialist System with Chinese Characteristics and Promoting the Modernization of the Country's Governance System and Capacity" has been released in its entirety. ANBOUND's researchers have compiled a list of important economic decisions that will serve as important guides to China's future economic development.

In terms of developing a diversified ownership of the economy, China must insist to consolidate and develop the public sector economy as well as to promote, support and guide the economic development of the non-public sector. China will explore various ways to realize public ownership in the economy, as well as develop a mixed-ownership economy with the goal of optimizing the distribution and structure of the state-owned economy, and thence enhance its competitiveness, innovation, control, influence, and ability to withstand risks. There is also the need to deepen the reform of state-owned enterprises and improve its modern enterprise system with Chinese characteristics by developing a regulatory system for state-owned assets that focuses on managing capital, and giving full utilization to the role of state-owned capital to invest in and operating companies. Further, China should improve the legal environment for supporting the development of private and foreign-invested enterprises, as well as improve the system for supporting the development of small and medium-sized enterprises. It will also focus on promoting the healthy development of the non-public sector. Next, China will press on to create a market environment in which all ownership entities have equal access to resources in accordance with the law, participate in competition in an open, fair and just manner, and are all equally protected by the law. Lastly, the deepening of the reform in rural collective property rights system and develop the rural collective economy will also be undertaken.

ANBOUND's researchers wish to stress that the Fourth Plenary Session highlighted capital reform in state-owned enterprises as a priority. As early as July 2012, ANBOUND had put forward a systematic design for the reform of state-owned enterprises to manage capital in the "ANBOUND conception of deepening the reform of state-owned enterprises". In 2013, the Third Plenary Session of the 18th Central Committee of the Communist Party of China (CPC) established the principles of regulatory capital and major state-owned enterprises reform. However, over the past six years, the reform of regulatory capital has not gone smoothly. The central government's renewed emphasis on capital reform may mean that in the new situation, it is the state capital, rather than specific forms of state-owned enterprises, that the central government wants to focus on intensifying capital reform efforts.

In terms of improving the socialist market economic system, it is necessary to build a high-standard market system, improve the system of competition, fully implement the negative list system of market access, and reform the production licensing system. China will strengthen the foundation of competition policies, implement a fair competition review system, as well as strengthen and improve enforcement of anti-monopoly and anti-unfair competition laws. As part of such efforts, it will be necessary for China to strive for the improvement of the property rights protection system based on the principle of fairness, as well as establishing a system of punitive damages for intellectual property infringement, and strengthening the trade secrets protection mechanism of enterprises' trade secrets protection. In addition, China is to promote the development of a market system for factors of production, and ensure that the pricing for factors of production are determined by the market, and ensure its efficient and fair allocation. The country will strengthen the protection of the rights and interests of consumers and explore the establishment of a class action litigation system. Moving along, it will also strengthen the development of the basic system in the capital market and improve the modern financial system to become highly adaptable, competitive and inclusive. Finally, building a new mechanism for coordinated development among regions will be something that is indispensable.

ANBOUND believes that the relevant decisions of the Fourth Plenary Session on the market economy system show that the essence of the socialist market economy system is in fact the market economy system, and China's economic reform is still oriented towards the market economy. In the future, China will focus on transforming the past market system of "production-based society" to "consumption-oriented" market mechanism.

Where opening to the outside world is concerned, China will open its doors wider to the outside world in a wider range of areas and at a deeper level than before. Specifically, this is to further open access to the outside world in manufacturing, services and agriculture industries. In doing so, it will also protect the legitimate rights and interests of foreign investors, promote fair competition among domestic and foreign-invested enterprises, diversify foreign trade, and steadily promote the internationalization of the RMB. Next, it will improve the national treatment of foreign investment and the management of the negative list system, and promote institutional openness in terms of rules, regulations, management, and standards. Thirdly, there will be improvements in policies and service systems for promoting outbound investment, in order to accelerate the development of pilot free trade zones and free trade ports that are open to the outside world. Next, it will promote the establishment of an international macroeconomic policy coordination mechanism. Finally, China will improve the national security review, anti-monopoly review, management of the national technology safety list, and the list of unreliable entities for foreign investment.

According to ANBOUND's interpretation, the Fourth Plenary Session stressed the strategy of strengthening comprehensive and high-level opening up efforts as well as ensuring the "system-based opening" which includes the rules, regulations, management, standards and other aspects were in line with international standards.

In terms of optimizing the government's responsibility system, China will need to improve the government's functions of economic regulation, market regulation, social management, public services, and ecological and environmental protection. The country will also list out and clearly define the government powers and responsibilities and it will clarify the relationship between the government and the market, as well as between the government and society. Furthermore, the macro-regulation system will be strengthened through the improvement of the national development plan as its strategic orientation, as well as fiscal and monetary policies as its measures. This is all in addition to the combined efforts of employment, industrial, investment, consumption, and regional policies. China will also improve the national major development strategy and the planning system of medium and long-term economic and social developments. Next, it will be essential for the country to improve the budget system with scientific standards, transparency, and strong constraints. Also, the country will build a modern central bank system to improve the mechanism for monetary easing, as well as to improve the system that determines the benchmark interest rates and market-based interest rates. Lastly, China will establish and improve systems and rules of the use of Internet, big data, artificial intelligence and other technologies that will be applied in administrative management.

ANBOUND points out that in the decision to optimize the government's responsibility system, the central government touched on the consistency of the strategic medium- and long-term planning as well as policy coordination. It stressed the important role of fiscal policy and monetary policy in maintaining the stability of macroeconomic factors as well as the importance of the reformation of interest rates. The central government is expected to increase the pace of reform affecting these areas soon.

In giving full play to both central and local initiatives, China needs to straighten out the relationship between the powers and responsibilities of the central and local governments, strengthen the central government's macro-management of affairs, and uphold the unity of the state's legal system, government orders as well as its market forces. Under this aspect, China will appropriately strengthen the central government's authority on intellectual property rights protection, old-age insurance, and trans-regional ecological and environmental protection, and reduce as well as standardize the joint authority of the central and local governments. Further, China will give local governments more autonomy and support them in carrying out creative work. In accordance with the principle of consistency in power and responsibility, the country will standardize the vertical management system and the local hierarchical management system. Furthermore, it will also improve the division of administrative and financial powers between the central and local governments, and establish a balanced fiscal relationship between the central and local governments in order to bring about a situation with clearly defined powers and responsibilities, coordinated financial resources, and balanced financial resources among regions. The follow through effect would be that the country will be able to form a stable system in which governments at all levels have appropriate administrative powers, spending responsibilities, and financial resources.

According to ANBOUND, the relevant decisions on the mechanism of central and local governments indicates that the pace of fiscal reform will be accelerated, the central government will also take back some of the power to reduce the local burden, and the decentralization of local governments will increase. However, under the pressure of the economic downturn and fiscal reduction, it proves a difficult problem for both the central and local governments to strike a balance between the government's authority, spending responsibilities and financial resources.

Final analysis conclusion:

The recently concluded Fourth Plenary Session of the 19th Central Committee of the Communist Party of China provided important institutional guidance for China's economic development in the future, and stressed the development direction of the market economy as well as China's comprehensive opening to the outside world. The challenge for the future is how best to implement reforms and maintain a steady economic growth against the backdrop of a deteriorating internal and external economic environments.