Edelman China Public Affairs update

1. CHINA PUBLIC AFFAIRS UPDATE
NOVEMBER 2013
THE THIRD PLENARY SESSION
OF THE 18TH CPC CENTRAL COMMITTEE
CHINA’S MOMENTOUS WEEK OF REFORM
When former Chinese Leader Deng Xiaoping
successfully launched his reforms over 35
years ago, the era that followed could be seen
as “China Reform 1.0”.
The new era that follows from this week’s 3rd
Plenum and progressed by Xi Jinping and Li
Keqiang can very much be seen as “China
Reform 2.0”. As a result, China has now
entered a new political and economic era.
The 3rd Plenary Session of the 18th CPC
Central Committee concluded with a release
of its official statement, with the new
Chinese leadership headed by Xi Jinping giving an overall perspective of addressing a broad range of questions on
China’s future which had been highly anticipated by both the Chinese people and the world.
Key Takeaways from the 3rd Plenum
The most important development is the consolidation
and centralization of power which is intended to enable
and achieve deeper reform. It would lead to interesting
dynamic: centralized power on one hand; and intended
more open and market-driven economy on the other.
CHINA PUBLIC AFFAIRS UPDATE
The overarching narrative and message is: “China
must deepen reform comprehensively at a new
historical starting point”.
Xi and the new leadership set the direction and tone
for China’s future which requires the implementation
of “decisive results” on the reform of the key areas
and segments to be achieved by 2020.
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2. Two new Chinese “super powers”
Economic Reform
A key outcome from the 3rd Plenum has been the establishment of two
key bodies
As a result of the 3rd Plenum, we will see
continued deepening market-oriented
reform and elevation of the role of
non-public sectors both within China and
externally. While the Chinese economy
has been progressively moving towards a
more market-based economy since 1992,
the CPC, by upgrading the market role
from “basic” to “decisive”, sets a strong
and firm direction to allow market forces
in play and to move China towards a
more open economy.
National Security Committee
The new National Security Committee will address the security and
stability issues that China faces, and more importantly will address
the broader strategic challenges it must overcome as it moves to its
position as a leading world power including its global geo-political,
economic and military presence.
The State Council will focus more on economic affairs, while
decisions on national security, national defense and diplomacy
will fall within the domain of the new Committee.
Central Leading Group
for Comprehensive and Deeper Reform
This is the most influential and concrete outcome of the 3rd Plenary
session and is an important step of Xi Jinping’s strategic objectives
of centralizing power and fighting against the “obstacles” that are
seen to impede China’s future progress.

Key decision-making powers on core economic reforms will
increasingly fall within the responsibility of the new Central
Leading Group, which will enjoy greater power than the State
Council in pushing through comprehensive and deep
cross-sector reforms.

The State Council will focus more on reform implementation
following the path set down by the Central Leading Group.

While state-owned enterprises will
remain a key pillar of the Chinese
economy, the CPC at the 3rd Plenum
acknowledged for the first time in history
that non-public and private businesses
are equally important to China’s
economy. This reflects the leadership’s
overall intention to adjust the
relationship between the public and
private sectors.
The powers of National Development and Reform Commission
(NDRC), which has been the super ministry responsible for
macro-economic policies and reform agenda, will largely be
diluted and handed over to the Central Leading Group.
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3. Finally – what’s the impact on Multinational Companies?
Overall the investment and operational environment in China is moving to a positive direction. The proposed
comprehensive and deeper reform process will see a continued path towards sustained economic growth, more
open market activity, lowering of the threshold for inbound investment, a step up in the development of free
trade zones, opening up of inland, coastal and border areas, and a reduction of the government’s interference in
businesses.
However this rosy picture will not happen overnight, and will only benefit those who understand and align with
China’s new priorities. Changes to foreign policy and international relations should be closely observed and may
impact foreign companies as they seek to do or expand business in China.
The Communiqué of the 3rd Plenum announced broad economic and political reform direction, leaving in-depth
policy details to be revealed in the following weeks and months.
Edelman’s Public Affairs team will continue to update you on significant changes and developments.
About Daniel J. Edelman China Group
Daniel J. Edelman China Group is comprised of four distinct brands that can work together as a single team or on their own:
Edelman Public Relations (Worldwide) China, Edelman Digital, Pegasus Communications and Zeno, with more than 280 staff
in five offices across China. DJE China Group was honored by Campaign Asia-Pacific as “Greater China PR Agency of the Year”
in 2012 and recognized by 17PR as “Best Employer” in 2013. For more information, please visit our web site:
www.edelmangroup.cn, or follow us on SinaWeibo: www.weibo.com/djechinagroup
For more information, please contact:
Cindy Tian
Tel: +86 10 5828 6505 /Email: cindy.tian@edelman.com
Qu Hong
Tel: +86 10 5828 6556/Email: hong.qu@edelman.com
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