CHINA PUBLIC AFFAIRS UPDATE 1

NOVEMBER 2013

CHINA PUBLIC AFFAIRS UPDATE

CHINA’S MOMENTOUS WEEK OF REFORM

When former Chinese Leader Deng Xiaoping

successfully launched his reforms over 35

years ago, the era that followed could be seen

as “China Reform 1.0”.

The new era that follows from this week’s 3rd

Plenum and progressed by Xi Jinping and Li

Keqiang can very much be seen as “China

Reform 2.0”. As a result, China has now

entered a new political and economic era.

The 3rd Plenary Session of the 18th CPC

Central Committee concluded with a release

of its official statement, with the new

The overarching narrative and message is: “China

must deepen reform comprehensively at a new

Xi and the new leadership set the direction and tone

for China’s future which requires the implementation

of “decisive results” on the reform of the key areas

and segments to be achieved by 2020.

THE THIRD PLENARY SESSION OF THE 18TH CPC CENTRAL COMMITTEE

Chinese leadership headed by Xi Jinping giving an overall perspective of addressing a broad range of questions on

China’s future which had been highly anticipated by both the Chinese people and the world.

Key Takeaways from the 3rd Plenum

The most important development is the consolidation

and centralization of power which is intended to enable

and achieve deeper reform. It would lead to interesting

dynamic: centralized power on one hand; and intended

more open and market-driven economy on the other.

historical starting point”.

CHINA PUBLIC AFFAIRS UPDATE 2

Two new Chinese “super powers”

A key outcome from the 3rd Plenum has been the establishment of two

key bodies

National Security Committee

The new National Security Committee will address the security and

stability issues that China faces, and more importantly will address

the broader strategic challenges it must overcome as it moves to its

position as a leading world power including its global geo-political,

economic and military presence.

The State Council will focus more on economic affairs, while

for Comprehensive and Deeper Reform

This is the most influential and concrete outcome of the 3rd Plenary

session and is an important step of Xi Jinping’s strategic objectives

of centralizing power and fighting against the “obstacles” that are

seen to impede China’s future progress.

Key decision-making powers on core economic reforms will

increasingly fall within the responsibility of the new Central

Leading Group, which will enjoy greater power than the State

Council in pushing through comprehensive and deep

cross-sector reforms.

The State Council will focus more on reform implementation

following the path set down by the Central Leading Group.

The powers of National Development and Reform Commission

(NDRC), which has been the super ministry responsible for

macro-economic policies and reform agenda, will largely be

diluted and handed over to the Central Leading Group.

Economic Reform

As a result of the 3rd Plenum, we will see

continued deepening market-oriented

reform and elevation of the role of

non-public sectors both within China and

externally. While the Chinese economy

has been progressively moving towards a

more market-based economy since 1992,

the CPC, by upgrading the market role

from “basic” to “decisive”, sets a strong

and firm direction to allow market forces

in play and to move China towards a

more open economy.

While state-owned enterprises will

remain a key pillar of the Chinese

economy, the CPC at the 3rd Plenum

acknowledged for the first time in history

that non-public and private businesses

are equally important to China’s

economy. This reflects the leadership’s

overall intention to adjust the

relationship between the public and

private sectors.

decisions on national security, national defense and diplomacy

will fall within the domain of the new Committee.

Central Leading Group

CHINA PUBLIC AFFAIRS UPDATE 3

For more information, please contact:

Cindy Tian

Overall the investment and operational environment in China is moving to a positive direction. The proposed

comprehensive and deeper reform process will see a continued path towards sustained economic growth, more

open market activity, lowering of the threshold for inbound investment, a step up in the development of free

trade zones, opening up of inland, coastal and border areas, and a reduction of the government’s interference in

businesses.

However this rosy picture will not happen overnight, and will only benefit those who understand and align with

China’s new priorities. Changes to foreign policy and international relations should be closely observed and may

Qu Hong

Finally – what’s the impact on Multinational Companies?

About Daniel J. Edelman China Group

Daniel J. Edelman China Group is comprised of four distinct brands that can work together as a single team or on their own:

Edelman Public Relations (Worldwide) China, Edelman Digital, Pegasus Communications and Zeno, with more than 280 staff

in five offices across China. DJE China Group was honored by Campaign Asia-Pacific as “Greater China PR Agency of the Year”

in 2012 and recognized by 17PR as “Best Employer” in 2013. For more information, please visit our web site:

www.edelmangroup.cn, or follow us on SinaWeibo: www.weibo.com/djechinagroup

Tel: +86 10 5828 6505 /Email: cindy.tian@edelman.com

Tel: +86 10 5828 6556/Email: hong.qu@edelman.com

impact foreign companies as they seek to do or expand business in China.

The Communiqué of the 3rd Plenum announced broad economic and political reform direction, leaving in-depth

policy details to be revealed in the following weeks and months.

Edelman’s Public Affairs team will continue to update you on significant changes and developments.