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2006 – A Year of Reforms in China
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The year 2006 marked the first year of implementation of the Chinese government's 11th Five-Year Plan for National Economic and Social Development (2006-2010), and witnessed the institution of several major systematic reforms, particularly in relation to the overall interests of the nation. Significant progress was made in the fields of economics, politics, society and culture. Bringing some of the more influential changes to the fore, the latest issue of China Reform magazine published a list of China's top 10 reforms in 2006.

1. From October 8 to 11, the Central Committee of the Communist Party of China (CPC) conducted its 6th Plenary Session. The four-day plenum held in Beijing focused on issues of social affairs, including the building of a harmonious socialist society, and adopted the "Resolutions of the CPC Central Committee on Major Issues Regarding the Building of a Harmonious Socialist Society."

Communiqué of the Sixth Plenum of the 16th CPC Central Committee
Social Harmony Highlighted at CPC Central Committee Plenum
Future of Chinese Society to Dominate CPC Plenum Agenda
CPC Opening Session Discusses Social Harmony

2. On March 6, while exchanging views with deputies from east China's Shanghai Municipality attending the Fourth Session of the 10th National People's Congress (NPC), President Hu Jintao stressed that the Chinese government would unswervingly adhere to the orientation of reform and constantly improve the quality of the opening-up drive. Echoing his views, Premier Wen Jiabao on March 14 said, while meeting with the press at the Great Hall of the People, that the central government needed to consistently and resolutely press ahead with reform and opening-up, and needed to continue to adhere to the road of building socialism with Chinese characteristics. "Although in our way ahead there will be difficulties, we must not stop. Back-pedaling offers no way out," Wen added.

China to Push Forward Reform, Opening-up
Top Leaders Call for Pushing Forward Reform
Premier Wen Delivers Gov't Work Report
NPC & CPPCC Sessions

3. The 11th Five-Year Plan adopted by the NPC and the Chinese People's Political Consultative Conference (CPPCC) in March highlights an enduring emphasis on the importance of reform work and gives priority to the reform of the governmental administrative management system, a point that was reiterated at the national conference on economic system reform work in Shanghai on March 23.

Administrative Reform in Focus
NPC Endorses Five-Year Economic and Social Plans
Advisory Body Endorses Development Plan

4. On May 26, the Political Bureau of the CPC Central Committee held a meeting to discuss reforms to the income distribution system, including standardizing distribution orders and establishing a rational and fair income distribution system. The meeting stressed increasing incomes of poorer people, expanding the moderate-income population, effectively taxing high-income earners, banning illegal income, and establishing a basic living guarantee system for the low-income group, in a bid to gradually narrow the exponentially widening gap between rich and poor.

China Strives to Balance Income Distribution
China to Reform Income Distribution System for Social Equality
Earnings in 'Monopoly Sectors' Above Average

5. The State Council announced on June 6 that the Binhai New Area in north China's Tianjin Municipality was officially designated an experimental zone for comprehensive reform with a short-term emphasis on financial and related services. Vice Premier Zeng Peiyan said that the development of the Binhai New Area is of strategic importance to China's overall economic and social development, and its expansion would promote the growth of Beijing and Tianjin municipalities, Hebei Province and areas around the Bohai Sea. This made Binhai the third such development area after Guangdong Province's Shenzhen and Shanghai's Pudong.

Tianjin's New Area Plan Approved
A City of Bold Reforms
Binhai Area Promises Big Growth
Binhai New Area Sees Drastic Surge in Foreign Funds Inflow

6. In September, a medical system reform group, composed of 11 related ministries and commissions, was established to coordinate and plan overall reform in this area. The group, with the National Development and Reform Commission (NDRC) as standing committee, is co-headed by NDRC Minister Ma Kai and Minister of Health Gao Qiang. The group's predecessor, the State Council Leading Group Office for Medical System Reform was dissolved in 1998.

Team to Tackle Healthcare Woes
Holistic Medical Reforms
Medicare Insurance to Cover 300 Mln Urban Residents
New Medicare System for Farmers

7. On September 24, the Political Bureau of the CPC Central Committee sacked Chen Liangyu, secretary of the CPC Shanghai Municipal Committee, for his involvement in a social security fund scandal. Chen was also suspended from his posts as member of the Political Bureau of the CPC Central Committee and member of the CPC Central Committee. In related developments, Qiu Xiaohua was removed as director of the National Bureau of Statistics (NBS) by the State Council on October 12, and Shanghai tycoon Zhang Rongkun was arrested, for their alleged involvement in the same social security fund scandal. As a result, measures to reform and standardize social security fund management were issued and implemented.

Shanghai Party Chief Sacked
NBS Chief Removed
Former NBS Chief Under Investigation
Shanghai Tycoon Arrested for Social Security Fund Scandal
Pension Fund Fraud Suspect Dismissed

8. There was also much activity on the banking front, with the Bank of China and the Industrial and Commercial Bank of China listing overseas in the middle of the year. The end of 2006 also marked the end of the transition period of China's accession to the World Trade Organization (WTO). In accordance with its commitments, the State Council introduced new foreign-funded bank management regulations, which solidify the government's undertaking to opening renminbi business to foreign banks, and provide unified supervision and management standards applicable to both Chinese and foreign banks registered in China.

BOC Listed in HK
ICBC Debuts in Hong Kong Bourse
New Regulations on Foreign-funded Banks
Draft Regulations on Foreign-funded Banks Approved
Competition Sharpens as China Opens Banking Sector
Renminbi Services from Foreign-funded Banks

9. On June 7, the State Council discussed and approved in principle a draft of the Anti-monopoly Law. The approval was made at an executive meeting of the State Council presided over by Premier Wen Jiabao. Drafting of the law began in 1994 and a first draft was completed in 2003. The draft law contains articles regulating, for example, monopoly agreements, the abuse of dominant market status and large-scale consolidations. The draft is likely to be submitted to the Standing Committee of the NPC for a second discussion in the first half of 2007. Further, the State Council is expected to establish an anti-monopoly committee.

State Council Approves Draft of Anti-monopoly Law
Important Step Forward for Anti-Monopoly
China's Legislature Deliberates Draft Anti-monopoly Law
Anti-monopoly Draft Provokes Debate

10. Significant reforms were implemented to overhaul the country's collectively owned forests in order to facilitate forestry development and enhance benefits to farmers. The aim of key changes was to transfer more operational rights from local governments and local forestry administrations to farmers, with the result that farmers would become forestry operators, signing long-term operating contracts with the government. Meanwhile, ownership of the forests will remain with the government. Trial reforms were conducted in Fujian, Jiangxi, Liaoning and Zhejiang provinces, covering about 15.3 million hectares of forest. These sweeping reforms are also known as "The Third Land Revolution of China." The first took place in 1948 when Chinese farmers overthrew local despots and redistributed the land. The second was in 1978 when the country implemented the system of contracted responsibility linking remuneration to output.

China to Promote Reform of Collectively-owned Forests
Forestry Industry Booming
World Bank Lends to Support Forestry Development in China

(China.org.cn by Li Jingrong, January 12, 2007)

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