On Tuesday, a communiqué was published by the Chinese authorities at the end of the third plenum. As expected, it highlighted some general guidelines for the reform path in China over the coming years. A decision document will likely be published next week with additional information. The statement mentions among other issues a larger role of the market to determine key prices, the need to clarify the role of the government, rural reform, environmental protection and more openness for the economy. The new elements are related to the emphasis made to property rights, highlighting that the majority of farmers should participate equally in the processes of modernization and the urban rural dual structure should be disbanded. This paves the way for “new” urbanisation. The statement issued mentions that a central committee will form a leading group for deepening structural reforms. We think that in the coming year, there will be more clarity on the polices and their implementation. This implies that China will have time to consolidate its growth next year (our forecast 8%), without feeling the weight of reforms on growth. We expect that in 2015 we will begin to see how these reforms filter through the economy, which partly explains our forecast of 7% growth.
