China's leaders in closed-door meeting to establish direction of economy

Yu Zhengsheng, a senior leader, has pledged that the meeting will set out 'unprecedented' reforms. Photograph: Wang Ye/ Wang Ye/Xinhua Press/Corbis

It has been billed as the great unveiling of unprecedented reforms. But the Chinese public will not know what the future holds until their leaders' closed-door meeting concludes on Tuesday. In truth, they may not really find out for years, say experts.

The conclave which begins in a Beijing hotel on Saturday – the third gathering of the Communist party's top brass since Xi Jinping took power almost a year ago – will establish the direction for the world's second largest economy.

Yu Zhengsheng, a senior leader, has pledged that the meeting of the central committee will set out "unprecedented" reforms. State news agency Xinhua said it would "unleash China's new round of reform, which is expected to steer the country into an historic turning point".

Such talk has encouraged speculation about substantial economic and financial reforms and even comparisons with the third plenum of 1978 – when Deng Xiaoping closed the door on Maoism and set China on its current course. Ever since, third plenums have been regarded as particularly significant. Another of the meetings, in 1993, ushered in major reforms to state owned enterprises (SOEs).

On Tuesday, Xinhua will issue a dispatch as the meeting closes, giving the first indication of the leadership's plans.

"What's going to come out is a political communique that does not have significant details about how they are going to implement it," said Damien Ma, a fellow at the Paulson Institute.

Rather, it is designed to set out a clear direction and create some momentum, wrote Barry Naughton of the University of California, San Diego on the Asia Society's China File website.

Few doubt the need for drastic changes. While China's economic boom has lifted hundreds of millions out of poverty, few believe the current course of development is sustainable. Growth is slowing, inequality has soared and issues such as pollution and corruption have led to increasing resentment.

Reformers hope that the plenum will signal progress not only on financial liberalisation, but also on land reform, changes to the household registration system that limits the welfare rights of rural migrants living in cities, and possibly the curbing of powerful SOEs.

The problem is that implementation will be challenged by those who have prospered in the current system, noted Feng Chongyi, an expert on Chinese politics at the University of Technology, Sydney.

"The Chinese know that the current system is 'power-elite capitalism' or 'party-state capitalism'. They talk about good things, but good reforms will be disturbed to serve the interests of that narrow interest group," he warned.

"Financial reforms are relatively easy ... [issues like curbing SOEs] are very difficult even within the party," said Tao Ran, director of the Centre for Economics and Governance at Renmin University.

But Ma noted: "You have to combine the communique with what is expected [in terms of] a more comprehensive plan on tackling corruption. I think its an open secret that those are intimately linked."

The clean-up campaign "is a way to get rid of what everyone talks about: these vague, abstract 'vested interests'", he said.

He suggested that references to 1978 were germane because it suggested using pilot schemes to incubate reforms, as in the eighties.

The recent low-key launch of the Shanghai free-trade zone makes some sceptical about how much energy the leadership will put behind such initiatives. While it was initially lauded as a major development, details remain unclear and premier Li Keqiang did not attend the opening ceremony.

Kerry Brown, executive director of the China Studies Centre at the University of Sydney, noted that while 1978 is now universally recognised as a turning point, many of the early changes were incremental and began at the grassroots.

"The problem with this kind of plenum is that it's not seen as being historically important until years after it has happened," he argued.

Cheng Li and Ryan McElveen of the Brookings Institution wrote this weekthat pessimism was sensible but argued that the leadership had a real sense of urgency and a collective understanding of the need for "big, bold and broad" reforms to gain public support.

"Will President Xi and his team prove the pessimists wrong at the Third Plenum? They must – their political relevance depends on it," they warned.