Third Plenum , 18th session

[danb]

Hello, Noticed some articles on the internet about China's Third Plenum. 18 th session. Not exactly sure what the numbers are about but I guess what is important is what the meeting is all about. China top party members are getting together to discuss potential reforms. Here is a link to the list of the reforms that they are may be discussing:

 

http://www.bbc.co.uk/news/world-asia-china-24770802

 

What I find interesting is some of the articles where the news outlets discusses some of particulars about the reforms. There were articles that talked about about the land reforms and property prices and another about some issues about the migrant workers. What I found interesting was some the particulars that was being given. One articles was talking about a housing complex in Beijing. The price of each home was 2.3 millions dollars, not 2.3 million yuans but US Dollars. Boy, some body has a lot of extra money. Is there a property bubble?

Also talked about the migrant workers and some of their problems. Another article talked about some rural properties issues. I guess the farmer can work the land, but he can not sell that land. The local government can sell the land. And that is what some of the local governments are doing. Some of the farmers that are working the land don't feel like that they are getting a fair deal.

The farmer can't borrow money from the bank using the land as collateral. Makes me wonder where they get money from. Also the article said that the bank does not have control over the interest rates. The central government has control over the interest rates.

Another aspect that was discussed was why many Chinese use real estate as a vehicle to invest their extra money. I guess many of the Chinese people don't trust the stock market or the banks. Not sure how true the information is but it still offer possible insight to some of the things going on in China. As China moves forward they have issues that need to be addressed. It can't be an easy task. Danny

[Randy W]

That's an excellent summary of the overall issues facing China today. Yes, rural land is owned by a collective, and must remain within that collective. That is, until the local government decides to convert the land for some other use. They are then required (by law) to pay the collective a "fair" market value for the land, and are able to sell the usage rights for the land to a developer for another "fair" market value. So if Walt Disney were to spin around in is grave and decide to put up another Disneyworld on the spot, the local government would buy farmland from the farmers, and then turn around and sell the usage rights for the groundwork for the new Magic Kingdom at THAT fair market value - the local government pockets the difference.

 

The whole issue with land grabs by the local government is what is considered as "fair market value", not only for the land itself, but in that it takes away the livelihood of the farmers. What once provided generations with a livelihood becomes a pocketful of change which may not go very far when the farmers are relocated to the cities.

 

Another area for potential reform is in the convertability of the RMB. Chinese people are not allowed to convert their money to foreign currencies. Thus, the only investments open to them are the stock market, real estate, any interest-bearing investment, or a retail endeavor. Too many are opting for the real estate.

[credzba]

That's an excellent summary of the overall issues facing China today. Yes, rural land is owned by a collective, and must remain within that collective. That is, until the local government decides to convert the land for some other use. They are then required (by law) to pay the collective a "fair" market value for the land, and are able to sell the usage rights for the land to a developer for another "fair" market value. So if Walt Disney were to spin around in is grave and decide to put up another Disneyworld on the spot, the local government would buy farmland from the farmers, and then turn around and sell the usage rights for the groundwork for the new Magic Kingdom at THAT fair market value - the local government pockets the difference.

 

The whole farm issue reminds me of Mao's giant leap forward where he had them melt down all the farm tools, and then millions starved.

Will the destruction of the farms result in some similar tragedy ?

[Randy W]

 

 

That's an excellent summary of the overall issues facing China today. Yes, rural land is owned by a collective, and must remain within that collective. That is, until the local government decides to convert the land for some other use. They are then required (by law) to pay the collective a "fair" market value for the land, and are able to sell the usage rights for the land to a developer for another "fair" market value. So if Walt Disney were to spin around in is grave and decide to put up another Disneyworld on the spot, the local government would buy farmland from the farmers, and then turn around and sell the usage rights for the groundwork for the new Magic Kingdom at THAT fair market value - the local government pockets the difference.

 

The whole farm issue reminds me of Mao's giant leap forward where he had them melt down all the farm tools, and then millions starved.

Will the destruction of the farms result in some similar tragedy ?

 

 

Unlikely, since all land is owned and controlled by the government. There's a process they must follow to convert the land from agricultural to housing or commercial usage.

 

But there's also a great incentive for the local governments to make that conversion. They've already migrated a population greater than that of the United States from rural to urban, with plans for the mass migration to continue for years to come. The problems are the loss of their livelihood, along with finding a suitable occupation in the cities.

Edited November 11, 2013 by Randy W (see edit history)

[Randy W]

Looks like there's a lot on it from the Global Times

 

China opens key party session, reform tops agenda

 

http://www.globaltimes.cn/Portals/0/attachment/2011/fde8284a-8fa1-41dc-a08e-7dfb5f83ce8b.jpeg

[Randy W]

. . . and a little from the Wall Street Journal

 

Are Chinese Leaders Ready to Take on Vested Interests?

http://blogs.wsj.com/chinarealtime/2013/11/11/are-chinese-leaders-ready-to-take-on-vested-interests/

 

“It is now more difficult to deal with vested interests than it is to touch the soul,” Mr. Li said, drawing nervous laughter from a room packed with journalists and a number of officials.

 

. . .

 

Among the central questions facing Premier Li, President Xi Jinping and the rest of the leadership: Are they willing to dismantle entrenched interests that some economists and many other Chinese say are standing in the way of economic overhaul?

 

China’s hardly alone in having vested interests. Yet, given that the Communist Party controls large swaths of the economy as well as the government, the patronage networks that sustain interest groups are deeply embedded and the rewards can be rich. Many believe this connected web is at the heart of China’s endemic struggle with corruption and inefficiency in state-led sectors.

 

[Mick]

Earlier in the thread, Credzba mentioned The Great Leap Forward and the melting down of all the iron and steel and the impact that had on agriculture. Also, at this same time, Mao, enamored with Joseph Stalin, ordered the farmers to plant seeds deeper, just as Stalin did back in the late 1920s. In Russia, this resulted in the famine of 1928 in which hundreds of thousands died of hunger and associated illness. In China the crops failed resulting in the Great Famine of the early 60s. Millions died all over China, but areas like Anhui were hit the hardest. There are photos in a museum in Hefei, where Li and I met and lived during my first year in China, that show stacks and stacks of skulls in the center of the city. Li's parents lived through this horror and still speak of people eating the bark off trees. Had it not been for the big river (Chang Jiang) and its local tributaries, even more would have died. In the south, there were reports of cannibalism. Stalin and Mao were great revolutionaries, but agricultural experts they were not.

 

It will be interesting to see what direction "rural land reform" takes as the central government seeks ways to keep folks down on the farm, rather than migrating to the cities.

[Randy W]

Earlier in the thread, Credzba mentioned The Great Leap Forward and the melting down of all the iron and steel and the impact that had on agriculture. Also, at this same time, Mao, enamored with Joseph Stalin, ordered the farmers to plant seeds deeper, just as Stalin did back in the late 1920s. In Russia, this resulted in the famine of 1928 in which hundreds of thousands died of hunger and associated illness. In China the crops failed resulting in the Great Famine of the early 60s. Millions died all over China, but areas like Anhui were hit the hardest. There are photos in a museum in Hefei, where Li and I met and lived during my first year in China, that show stacks and stacks of skulls in the center of the city. Li's parents lived through this horror and still speak of people eating the bark off trees. Had it not been for the big river (Chang Jiang) and its local tributaries, even more would have died. In the south, there were reports of cannibalism. Stalin and Mao were great revolutionaries, but agricultural experts they were not.

 

It will be interesting to see what direction "rural land reform" takes as the central government seeks ways to keep folks down on the farm, rather than migrating to the cities.

 

The problem is getting them to move and providing for their well being. I'm not sure what happens to agricultural production through all this, but the encouraged trend is in favor of urban migration.

 

http://www.nytimes.com/video/world/asia/100000002279849/in-china-a-staggering-migration.html

[danb]

I had heard that China had a great famine during the 60"s. I didn't know what the root of it was. So was it cause by planting the seeds too deeply? Interesting but I had never heard that one before. I do know that food is considered a very important aspect of China culture and life, past and even present. I wonder what China will do if too many people migrate to the urban centers. Who will the produce the food to feed China? If the rice and wheat production greatly decrease in China then I would think that the China could greatly influence the prices of those produces on the world market. Danb

[Guest ExChinaExpat]

Earlier in the thread, Credzba mentioned The Great Leap Forward and the melting down of all the iron and steel and the impact that had on agriculture. Also, at this same time, Mao, enamored with Joseph Stalin, ordered the farmers to plant seeds deeper, just as Stalin did back in the late 1920s. In Russia, this resulted in the famine of 1928 in which hundreds of thousands died of hunger and associated illness. In China the crops failed resulting in the Great Famine of the early 60s. Millions died all over China, but areas like Anhui were hit the hardest. There are photos in a museum in Hefei, where Li and I met and lived during my first year in China, that show stacks and stacks of skulls in the center of the city. Li's parents lived through this horror and still speak of people eating the bark off trees. Had it not been for the big river (Chang Jiang) and its local tributaries, even more would have died. In the south, there were reports of cannibalism. Stalin and Mao were great revolutionaries, but agricultural experts they were not.

 

It will be interesting to see what direction "rural land reform" takes as the central government seeks ways to keep folks down on the farm, rather than migrating to the cities.

 

I watched a talk show about the third plenum on CCTV a little while ago and there were three Chinese special contributors and an American/Chinese economic experts. The Chinese man who did most of the talking droned on and on how one problem prevented this change or that change. The Chinese moderator even stepped in and asked, "So, apart from that what can be done to help things now?" The Chinese economist was perplexed and didn't know how to answer. At that moment, the American stepped in and said, "There is no need to change eight things at once. How about change one thing now so you can at least get started." He went on to say that China has long delayed making any changes during this time and always talks themselves into a corner.

 

The main problem is corruption. Local city governments make crazy amounts of money from land deals whereby the people never really own the land. They always talk about changing this, but are never willing to withhold the pickle from the fat-cats in the local governments.

[Randy W]

I had heard that China had a great famine during the 60"s. I didn't know what the root of it was. So was it cause by planting the seeds too deeply? Interesting but I had never heard that one before. I do know that food is considered a very important aspect of China culture and life, past and even present. I wonder what China will do if too many people migrate to the urban centers. Who will the produce the food to feed China? If the rice and wheat production greatly decrease in China then I would think that the China could greatly influence the prices of those produces on the world market. Danb

 

This article in Wikipedia seems to be an excellent discussion of agricultural issues in China, although it doesn't seem to explain what will happen in the long term as more farmers move to the cities, although it seems to indicate that environmental conditions may be responsible for a decline in production.

 

 

Agriculture in China

 

Since 1994, the government has instituted a number of policy changes aimed at limiting grain importation and increasing economic stability. Among these policy changes was the artificial increase of grain prices above market levels. This has led to increased grain production, while placing the heavy burden of maintaining these prices on the government. In 1995, the "Governor’s Grain Bag Responsibility System" was instituted, holding provincial governors responsible for balancing grain supply and demand and stabilizing grain prices in their provinces. Later, in 1997, the "Four Separations and One Perfection" program was implemented to relieve some of the monetary burdens placed on the government by its grain policy.

 

As China continues to industrialize, vast swaths of agricultural land is being converted into industrial land. Farmers displaced by such urban expansion often become migrant labor for factories, but other farmers feel disenfranchised and cheated by the encroachment of industry and the growing disparity between urban and rural wealth and income

 

The section on inefficiencies in the agricultural market is pertinent.

[Allon]

I had heard that China had a great famine during the 60"s. I didn't know what the root of it was. So was it cause by planting the seeds too deeply? Interesting but I had never heard that one before. I do know that food is considered a very important aspect of China culture and life, past and even present. I wonder what China will do if too many people migrate to the urban centers. Who will the produce the food to feed China? If the rice and wheat production greatly decrease in China then I would think that the China could greatly influence the prices of those produces on the world market. Danb

 

There were actually two famines in the 60's, one occurred just prior to the start of the 60's (1958) called the Great Famine (as part of the Great Leap Forward) and the other started in 1966 with the Cultural Revolution. Many don't count the latter as a famine, more a revolution but farmers were again itnterfered with their job: making food.

 

The Great Famine resulted on millions (est. 30 million by some and 45 million by others) being killed by starvation. People in my wife's family hate corn because that was all there was to eat. Eating only corn results in pellagra when the body cannot get protein and other nutrients corn does not provide. It's an ugly death. I have read where families would put their sick members on the side of the street when they were near death so they would be picked up by the cleanup crews, when they came. Mao wanted the country to move ahead and beat the UK and the US in steel production. So to meet his quota of steel, people had all the wok's, hoes, shovels, etc. converted to steel, and a poor quality steel at that. In the process, farmers had no tools to make food. They also had a quota of whaet to produce and often boosted the figures to give Mao the impression he was succeeding when actually he was starving his own people to death.

 

He was once told by his advisors that so-and-so million Chinese had died as a result of the Leap Forward. He said that China could afford them.

 

Of course, the Revolution is one of the most fascinating pieces of history in China. It was a war between the Red Guard factions that just started out to be one of Mao's purges. Aside from death by combat, many died from starvation. There goes another 30 million.

 

Oh well....

[Randy W]

The numbers - 3rd Plenum of the 18th Congress

 

http://en.wikipedia.org/wiki/Communist_Party_of_China

 

http://www.businessinsider.com/qa-what-is-chinas-3rd-plenum-2013-11

Business Insider: What is the 3rd Plenum?

 

Bill Bishop: A Plenum is a meeting of the Communist Party’s Central Committee. This Central Committee has 205 full and 167 alternate members, chosen at the First Plenum of the 18th Party Congress in November 2012. Each Party Congress lasts for 5 years, and with the exception of the first year there is usually one Plenum held per year. The Politburo, comprised of 25 members, meets more regularly, and the Standing Committee, made up of 7 members, meets even more frequently. Xi Jinping is the General Secretary of the Party and also holds the top posts in the State (President) and Military (Chairman of the Central Military Commission)

Third Plenums are seen as important because the First Plenum introduces the new leadership, the Second Plenum tends to be personnel- and Party construction-focused, while the third one is usually seen as the first plenary session at which the new leadership has basically consolidated power and can introduce a broader economic and political blueprint.

 

 

"Each Party Congress lasts for 5 years" - Wikipedia has a list of the 18 Congresses which have occurred since the founding of the Party in 1921 - http://en.wikipedia.org/wiki/National_Congress_of_the_Communist_Party_of_China

 

the main purpose of the Congress is to announce the party policies and vision for the direction of China in the following few years.

The National CPC Congress should not be confused with the National People's Congress which is the legislature of the People's Republic of China.

[Guest ExChinaExpat]

 

The numbers - 3rd Plenum of the 18th Congress

 

http://en.wikipedia.org/wiki/Communist_Party_of_China

 

http://www.businessinsider.com/qa-what-is-chinas-3rd-plenum-2013-11

 

 

I don't think most China experts think much if anything will change now or later. A quote from the Business Insider link you provided states:

 

BI: Anything else you think our readers should know?

BB: Some of the most important reforms in China are not mandated from Beijing, either in Third Plenums or other meetings, but happen at the local levels and then are adopted in other areas around the country. So while the Plenum Report will be important, it will be far from the end of what reforms may occur in the country over the next few years.

Edited November 13, 2013 by GuangDongExpat (see edit history)

[Randy W]

from Xinhua

Commentary: China on new starting point of reform after key meeting

 

This time around, the country is standing at a new starting point of development. Facing challenges from inside and outside of the country, the Party decided to give a bigger role to the market as it seeks comprehensive reform.

 

The general objective of the reforms is to improve and develop socialism with Chinese characteristics and push on with modernization of the country's governing system and capabilities, said the communique.

Government administration is from top to bottom, while governance focuses on bottom to top and the integration of all levels. The decision shows that reform will help the public to participate more.

 

In the meantime, the country will set up a central leading team for reform. The team will be in charge of designing reform on an overall basis, arranging and coordinating reform, pushing forward reform as a whole, and supervising the implementation of reform plans.

 

from the Wall Street Journal

 

Asia stocks fall as China meeting disappoints

Stocks in China in particular reacted badly to Tuesday’s conclusion of the Third Plenum - a four day meeting that will set the course for the world’s second-largest economy for the coming ten years. The communique that followed the meeting called for fewer investment restrictions and greater rights for farmers, but was lacking in specific details.

 

There may be more to come than is readily apparent, "Chinese characteristics" being what they are - then again, maybe not.