Aiming to combine reform with growth

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Also, the government plans further progress on administrative reform and delegation of power to lower levels of government, reducing red tape, and making the formation and operations of businesses easier.

On the other hand, the approach is more gradual and cautious in areas where reform is more difficult, such as in the case of fiscal reform, rural land reform, and SOE-related reforms. In the fiscal area, the plans and intentions on changing the fiscal relations between local and central governments, as well as on tax policy, remain particularly cautiously and gradual.

Having said that, the report has more concrete language than previous top level documents on the complicated area of improving the quality of urbanization and Hukou reform. The government commits to "progressively grant urban residency to rural migrant workers and their families who are both willing and able to stay in cities and towns where they have had jobs or done businesses for a long time" and "steadily extend basic public services to fully cover the permanent population of cities and towns so that the rural people who live in them can contribute to the development of modern urban life and enjoy it together with the urban people." In this vein, the government has set itself three tasks involving 100 million people, on granting urban residency to migrants, rebuilding rundown urban areas, and guiding further urbanization in the central and western regions.

In all, the government plans to start a fairly comprehensive set of reforms, although the approach to changes in economic policy remains cautious and gradual.

The author is chief China economist at Royal Bank of Scotland Group Plc in Hong Kong.