Chinese Policies

The third plenary session of the 18th Central Committee of the Chinese Communist Party considered and announced a number of important social and economic reforms, with the relaxation of China’s one child policy garnering much media coverage.

However, almost hidden from view was an equally important policy reform, a reform that suggests the course for China’s ongoing growth and consequently has an impact on our future prosperity.

That policy change was the relaxation of the enforcement of China’s household registration system, known as ‘hukou’, a system that had barred rural residents from equal access to benefits such as healthcare and education when they move to cities.

This clearly signals that, consistent with previous statements made by Chinese Permier Li Keqiang and his predecessor Wen Jiabao, the Chinese Government has it in mind to continue growing the economy through increased urbanization.

It is also entirely consistent with the comments reported on in a previous ICG Insight, from Executive Vice Chairman of the China Mining Association, Wang Jiahua, when recently speaking at the Melbourne Mining Club.

According to Mr Wang, “By 2030 a further 200 million agrarian Chinese are expected to move to the cities.”

The relaxation of Hukou, when added to by the inevitable population growth increase resulting from the relaxing of the one child policy, is clear evidence that the Chinese authorities are not planning to slow growth any time soon.

The continuing benefit to the Australian economy of that growth is obvious – Australia’s economic lucky streak could go on for some time, despite the wails of the doomsayers.

Now all our policy makers have to do is make sure they don’t drop the ball on the opportunity.

Here’s hoping.