In the news: China's Fifth Plenum begins, the IMF hints at including the RMB and MOFCOM loosens restrictions on Western Digital-Hitachi

China's Fifth Plenum maps out economy

The top 300 leaders of the Chinese Communist Party are meeting for four days this week to approve an economic blueprint for the next Five Year Plan (2016-2020). Steering the nation onto a different growth path – away from exports and more toward consumption and innovation – and scaling back the role of the state lie at the top of the agenda. President Xi Jinping's “One Belt, One Road” plan for infrastructure projects is also a big focus. While China has pledged to give the markets a more decisive role, the importance of state-owned enterprises (SOEs) will by no means diminish. There will be some private investment opportunities in the smaller, less influential SOEs, but the giants in key sectors such as telecom, banking, energy and construction will continue to dominate and consolidate as they help spearhead President Xi's growth policies. We have already seen this in the merger of the two largest train makers CSR and China CNR last year, as well as the more recent union of network carriers China Mobile, China Telecom and China Unicom. But, as with the plenums every year, the question is whether these reforms can be implemented effectively. After all, the fourth meeting vowed to give market forces greater sway but with the massive intervention seen during the stock and currency turmoil over the past few months, it is painfully clear that the authorities are maintaining an iron grip for now.

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