China: Rural ruction

The third plenum of the 17th Central Committee of the Chinese Communist Party takes place on October 9, lasting for four days. After the Olympics, a successful space launch and a week of celebrations to mark China’s national day, the country’s political leadership will turn its attention to longer-term problems. The scale of the solutions they propose -- and the compatibility of those policies with an outwardly Communist party’s principles -– are at issue.

The main item on the agenda will be the reorganisation and redevelopment of rural areas, with some form of land reform expected so as to protect small landowners better from appropriation of their land. Officially speaking, all land is owned by the state and the seizure of land is a common grievance. Proposals that may be floated next week may include ownership of land by villages, forcing developers to negotiate directly with those who work the land, and perhaps encouraging production in a sector where yields, while recovering, have disappointed. Pollution, and a widen rural-urban income gap will also be on rural party bosses’ minds.

Regions are keen to extract resources to cope with bursting asset bubbles in the stock and real estate markets, and will be exercised by attempts to streamline (occasionally profitable) regional bureaucracy. With their paramount interest in stability, the Chinese leadership might be expected to strengthen financial support as asked -- already the People’s Bank of China has selectively relaxed reserve requirements for smaller banks, hoping to boost regional economies -- but after recent consumer safety scandals, bureaucratic reform might still get the nod.