Chinese leaders launch meeting amid reform hopes

BEIJING (AP) Reform advocates are looking to China's leaders to launch a new era of change by giving entrepreneurs a bigger role in the state-dominated economy and farmers more control over land at a policymaking conference that began its second day's deliberations Sunday.

The Communist Party has yet to give details of the agenda of the four-day meeting that began Saturday. But the official Xinhua News Agency, which only reported the closed-door gathering had begun, said it would consider "major issues concerning comprehensively deepening reforms."

Chinese leaders are under pressure to overhaul a model based on trade and investment that has run out of steam after delivering three decades of rapid growth. Advisers including the World Bank say they need to give entrepreneurs who create China's new jobs and wealth a bigger role in an economy controlled by inefficient state companies.

"The medium-term outlook for the economy depends on whether or not the government can step out of the way," said Mark Williams, chief Asia economist for Capital Economics.

The weekend gathering of the 205-member Central Committee is its third annual plenum or full meeting of the party's 18th congress. Such meetings at this point in the party's five-year political cycle are seen as a launching pad for changes in economic direction after Deng Xiaoping used a third plenum in 1978 to unveil his reforms.

The plenum offers a platform for President Xi Jinping, who became party leader last year, to make clear his own economic vision. The party is not expected to release any details until the meeting ends Tuesday.

Chinese leaders have talked for two years about the need for a new growth model. But major reforms were put off until Xi and other leaders consolidated their political positions following a once-a-decade handover of power.

Pressure for change has mounted as economic growth tumbled to a two-decade low of 7.5 percent in second quarter of this year. Beijing propped up growth with a mini-stimulus of higher spending on railway construction and other public works but Premier Li Keqiang, the top economic official, has said the leadership wants to focus on longer-term reforms.

The leadership has issued a flurry of piecemeal changes including easing controls on bank lending and announcing a free-trade zone in Shanghai. But Beijing has yet to tackle fundamental changes such as curbing the dominance of state companies that the previous generation of leaders spent the past decade building up.

Xi, Li and other have raised hopes and the political stakes with comments in official media promising an economic transformation.

This round of reforms will be "broad, with major strength, and will be unprecedented," the official Xinhua News Agency quoted the party's No. 4 leader, Yu Zhengsheng, as saying last month.

The government still dominates China's economy three decades after Deng's market-style reforms set its boom in motion. The state owns all land and controls industries including banking, energy and telecommunications.

"Smaller, more efficient firms are starved of credit. They don't get the same breaks in terms of cheap land, cheap energy that the better-connected state firms get," said Williams. "The result is that the economy is less efficient than it would be otherwise."

Any change that might erode the privileges of politically favored companies is likely to face resistance from their allies in the party.

Land reform also is politically fraught. Allowing farmers to own land could help to raise rural incomes by giving them an asset they could mortgage or sell to invest in better seeds and technology. But changes would be sensitive because they might affect local governments that rely on the sale of land use rights for revenue.

Because of that, analysts say this weekend's meeting likely will be just the start of long and complex negotiations.

A roadmap for reform issued by a Cabinet think tank, the Development Research Center, proposes changes including opening state-controlled industries such as railways, oil and electric power to private competitors.

The think tank represents the most free-market-oriented strain of official thinking. There is no indication how many of its recommendations might be adopted by the ruling party.