Heavy reading! CITIC Securities: the new four beams and eight pillars of reform

 Heavy reading! CITIC Securities: the new four beams and eight pillars of reform

This document is in line with the Third Plenary Session of the 18th CPC Central Committee and is the four beams and eight pillars of reform in the new era.

The Third Plenary Session of the 18th CPC Central Committee held in November 2013 deliberated and passed the decision of the CPC Central Committee on several major issues of comprehensively deepening reform, indicating the direction for the follow-up reform. The Fourth Plenary Session of the 19th CPC Central Committee held in October 2019 deliberated and passed the decision of the CPC Central Committee on several major issues concerning upholding and improving the socialist system with Chinese characteristics, promoting the modernization of the national governance system and governance capacity, and further clarified the direction of reform on the basis of the third plenary session of the 18th CPC Central Committee. On April 9, 2020, opinions on building a more perfect market-oriented allocation system and mechanism of factors was issued, further refining the reform of factor marketization. On May 18, 2020, opinions on accelerating the improvement of the socialist market economy system in the new era was issued. This document is the inheritance and development of a series of previous reforms and plays a leading role.

In addition to the reform in key areas such as state-owned enterprises, finance and taxation, and finance, this document also highlights the reform idea of promoting the free flow of human resources, land, data and other elements, and once again clarifies the reform direction of improving property rights, fair competition, and high-level opening up

The reform of state-owned enterprises was accelerated, with structural adjustment, incentive mechanism and monopoly industry reform as the main focus. First of all, in the future, it is expected to further realize progress and retreat in the industrial distribution of state-owned enterprises. As an important starting point, the pilot scope of the two types of companies is expected to further expand. In the future, it may promote the maintenance and appreciation of state-owned capital through managing capital. Secondly, the mixed reform is the bulls nose of reform. This time, it is proposed to explore preferred shares in fully competitive industries and optimize the allocation of state-owned assets through asset securitization, which will help to strengthen the function of state-owned capital returns. At the same time, in the future, it may moderately promote multiple medium and long-term incentive mechanisms, including employee stock ownership, so as to improve the operating efficiency of pilot enterprises. Finally, the reform of natural monopoly industry will be promoted steadily in the future. In addition to the fields of electric power, oil and gas, further reforms will be carried out in the future or in the fields of promoting the diversification and moderate competition of market subjects of railway transportation business, realizing the separate operation of general postal service business and competitive business and improving the tobacco monopoly system and building a new mechanism of moderate competition u3002

The reform of Finance and taxation may focus on the division of the financial rights and powers of the central and local governments, and the governments debt financing may be more standardized. After the reform of tax sharing system, the local financial power is relatively less and the administrative power is relatively more. The implicit debt of local government is also related to this problem. This document continues to emphasize optimizing the division of government power and financial power. On the one hand, it increases the central power, including intellectual property protection, endowment insurance, cross regional ecological environment protection, on the other hand, it increases local financial power, including studying the backward transfer of consumption tax collection link of some items, steadily promoting real estate tax legislation, and then cultivating and strengthening local tax Tax source . After the financial rights and powers of the central and local governments are further clarified, the financing mode of local governments may be more standardized. It is necessary to not only build the government debt financing mechanism in accordance with the law, strengthen supervision and accountability, but also clean up and standardize the local financing platform companies, and divest the government financing functions.

Continue to implement the general idea of the previous financial supply side structural reform, and reiterate the reform ideas of capital market, banking system and interest rate and exchange rate system. In the aspect of capital market, the proposal of twelve articles of deep reform indicates that the reform of capital market has entered a new cycle, and the central government has paid more attention to the capital market than ever before. The reform of the capital market will continue to accelerate, and it is expected that in the near future, the following can be expected: the action plan to improve the quality of listed companies will be issued to the outside world; the registration system of the growth enterprise market will accelerate the implementation; the systems of reducing holdings and delisting, especially the active delisting, may be optimized; the information disclosure and investor protection system based on the new securities law may be improved; long-term capital access channels such as pension will be improved Or it will further expand; the two-way opening process of capital market may continue to advance. In terms of banking system, in addition to building a multi-level, wide coverage and differentiated banking system, the document requires to adapt to the real economic structure and financing needs, and provide credit support or continuous upgrading for small and micro private enterprises and the new economy in the future. In terms of interest rate and exchange rate system, the document emphasizes further deepening the market-oriented formation mechanism of interest rate and exchange rate.

Taking the reform of land and household registration as a breakthrough, the direction of factor liberalization of linking people, land and money to promote the strategic development of urban agglomerations and regions is further clarified. In terms of land elements, on the one hand, we should promote the unification of urban and rural construction land market by accelerating the entry of rural collective operating construction land into the market and deepening the pilot reform of rural residential land; on the other hand, we should realize the low efficiency land redevelopment by means of the reform and restructuring of state-owned enterprises and institutions, the disposal of land assets, and the rational conversion of land use. In terms of human resources, in addition to further liberalizing the restrictions on household registration, it is more clear to explore and implement the system of household transfer and mutual recognition of residence permits in urban agglomerations; in addition, it is also encouraged to open channels for cross ownership and cross-border flow of talents. We believe that the reform of people, land and other elements will boost the high-quality development of urban agglomerations and metropolitan areas, and build a new mechanism for regional coordinated development. The regional strategies of Beijing Tianjin Hebei coordinated development, Yangtze River economic belt development, Yangtze River Delta regional integration development, Guangdong Hong Kong Macao Bay area construction, Yellow River basin ecological protection and high-quality development are expected to be further improved.

Data and other new elements will be further explored and improved, and technological system innovation is expected to continue to accelerate. On the one hand, after the opinions on building a more perfect market-oriented allocation system and mechanism of factors first clarified the data elements, in this document, the relevant expression of data elements is more systematic, the data standards are improved and the construction of digital government is put forward at the practical level, and it is expected that the construction of new infrastructure such as IDC will develop rapidly in the future; on the other hand, considering China and the United States in the field of science and technology Under the new round of scientific and technological revolution, the scientific and technological system needs to be innovated in an all-round way. We think the relevant highlights of the document are as follows: first, prepare a new round of medium and long-term science and technology development plan (expected to be 2021-2035); second, re emphasize the new national system; third, diversified investment in major science and technology infrastructure operation, and emphasize the importance of social capital; fourth, encourage enterprises, especially private enterprises, as the main body to promote the development of industry, University and research system, and improve property rights The fifth is to encourage talents, pilot give scientific research personnel the ownership or long-term use right of scientific and technological achievements, or produce system integration effect with mixed reform.

It is the first time to put forward the comprehensive implementation of fair competition review system, the industrial policy continues to change to the direction of inclusive, while adhering to the high level of opening up to promote reform, and the business environment is expected to continue to improve. Competition neutrality is an important part of Sino US frictions and trade agreements. In terms of reform, the document system proposed relevant landing directions, such as establishing a green channel to reflect and report violations of fair competition, establishing and improving the third-party review and evaluation mechanism, etc. Accordingly, the document also proposes that industrial policy will continue to transform to inclusive and functional, and strengthen the basic position of competition policy. In addition, as an important area of reform since the 18th National Congress, a series of measures to optimize business environment, such as deregulation service reform, negative list system and construction of social credit system, have also been strengthened. In the aspect of opening up, it also emphasizes to continue to copy the experience of free trade zone, eliminate non-tariff trade barriers, and improve the unreliable list system for foreign investors. In a word, improving the system of property right, market access and fair competition will be the key to the construction of high standard market system.

This document outlines the following reforms, which are expected to be carried out in an orderly manner.

The document issued this time outlines the follow-up reform, guides the direction of development, and boosts the expectation of reform in the short term. However, it is still necessary to observe the implementation of supporting rules of relevant ministries and commissions. At present, most of the contents have been mentioned in high-level statements or documents in recent years, and subsequent reforms are expected to be carried out orderly.

The risk of macro-economic growth downward is not as strong as expected.