China details new policy; investors seem to like it
HONG KONG — If the initial summary of China’s highly anticipated economic policy plan disappointed analysts last week, the far more detailed plan that was released by the Chinese authorities late Friday more than made up for it. The reaction among investors and analysts to the document of more than 21,000 characters — roughly the equivalent of 17,000 words in English — that laid out the Communist Party’s decisions on how to overhaul the Chinese economy was overwhelmingly positive.
“The breadth of the reform plan has certainly exceeded most expectations,” said Wang Tao, chief China economist at UBS.
China economists at Goldman Sachs said the document “showed high reform conviction and lifted reform expectations and targets.” And Yao Wei, an economist in Société Générale’s office here, said: “The new leaders really delivered and promised a number of concrete changes. China’s reform boat has finally set sail.”
The stock markets echoed the sentiment: On Monday, the Shanghai composite index closed 2.9 percent higher, while the Hang Seng Index in Hong Kong, where many mainland companies are listed, climbed 2.7 percent. On Friday, both had risen 1.7 percent in anticipation of more details about the meetings.
In part, the cheer stemmed from the fact that the initial communiqué from the closed-door meeting of top policymakers released last Tuesday — about 5,000 characters shorter than the final “decisions” document — was vaguely worded, replete with platitudes, short of detail and almost bound to disappoint.
The longer outline released three days later “swept away the haze of disappointing ambiguity” of that initial communiqué, said Zhu Haibin, chief China economist at JPMorgan.
It addresses a wide range of issues — including changes to the longstanding one-child policy, land rights, price liberalization and the role of the markets in the largely state-dominated economy.