Commentary: What path will economy take (4)

In an article in the CPC's Qiushi magazine, Li notes that (i) boosting domestic demand is the most important part of economic restructuring; (ii) urbanization is the key for boosting domestic demand and improving rural development and living standards; (iii) urbanization needs to be guided by sound policies, ensuring that migrants are included and gradually get equal rights to basic urban public services like social security, healthcare and education; and (iv) the services sector has a key role to play in boosting domestic demand and readjusting the industrial structure.

He also said the government should "deepen the institutional reform of income distribution". Speeches later this year by Li and other leaders focused on how specific policies such as social housing construction, expanding medical insurance and encouraging more urbanization are important levers for boosting domestic demand and as such an important part of the overall reform.

Looking at the starting positions and challenges, people expecting a rapid implementation of outstanding reforms are likely to be disappointed. Nonetheless, the new leadership may possibly outline a more ambitious and comprehensive approach to economic restructuring and rebalancing.

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

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