A debate about the way forward for political and economic reforms is in the spotlight at the annual session of China's Parliament, with the government coming under renewed pressure to take on state-run companies and interest groups that have been seen as wielding increasing influence over vast swathes of the economy.

A varied and unexpected coalition of economic scholars, workers' groups, entrepreneurs and influential state media has called for reigniting what many here have described as a stalled reforms process, starting with curbing the influence of the state sector and stimulating both competition and innovation.

Their demands have been given a lift by the top political advisory body, the Chinese People's Political Consultative Conference (CPPCC), which began its session here on Saturday and adopted a proposal for economic reforms as its first policy document for discussions that will begin on Sunday.

The proposal was submitted by three political groups — the Democratic National Construction Association, the Peasants and Workers Party and the All-China Federation of Industry and Commerce — that are part of the CPPCC and function under the Communist Party of China's (CPC) leadership.

It hit out at “excessive state monopolies” for creating economic problems, marked by over-capacity of production in some sectors and stifled access to capital for private enterprise.

In recent months, thousands of companies in the southern manufacturing heartland have had to close down because of credit problems, most notably in Zhejiang province.

The proposal called for “speeding up the reform of monopoly industries” and expanding financing channels for small and medium companies, as well as restricting speculation in the housing and financial markets. Blaming recent distortions in both markets on increasing capital flows from state-run companies, it called for sweeping reforms of the financial system.

Analysts said it was unlikely that all its recommendations would be heard by the National People's Congress, the top legislative body, considering how past calls for reforms had failed in the face of the strong influence wielded by state-owned companies.

“This question has been discussed for many years,” Mao Yushi, a leading Chinese economist and chairman of the Unirule Institute of Economics told The Hindu. “The problem is there are just too many interest groups in every field of the economy, so we cannot find the best way to address this complicated issue.”

The call for reform did, however, receive unlikely backing on Saturday from the official People's Daily newspaper, which in an editorial said the CPPCC should “exert concerted efforts” to deepen reform in 2012. The Party-run Global Times echoed this message, declaring that “the public expects to see continuous signals of reform”. “China is in need of ideological liberation and needs a great number of reformers,” it said. “They should dare to break with convention and to make breakthroughs that were deemed forbidden.”

Ahead of the Parliament session, officials have also acknowledged the prevalence of widespread problems at the grassroots-level that needed addressing, citing the tens of thousands of protests against local officials reported last year by many studies.

Last month, Premier Wen Jiabao warned that “arbitrary seizure of farmers' fields” was causing “mass incidents”, a problem that was underscored in stark terms in the Guangdong village of Wukan in December when protests over land acquisition snowballed into an unprecedented rebellion and farmers driving every local official out of the village.

Just as the CPPCC began its session, Wukan's villagers on Saturday voted for new leaders, holding their first open and free election in decades. China allows direct elections only at the village-level.

But in many cases, such as in Wukan, electoral contests had been controlled by local party officials and their associates, who chose village committees that would then back their decisions to sell farmland.

The reform debate this year has, however, been largely restricted to the economic realm, with political reform being viewed as too sensitive an issue in a year that will see a once-in-decade leadership transition.

Zhao Qizheng, the CPPCC spokesman, acknowledged that the Wukan case had underscored the need “to improve implementation of community-level democracy”. But “economic structural reform”, he said, “is relatively easier to implement than political structural reform”. Any political reforms, he stressed, would place priority on “stability” and would only be carried out “under the leadership of the CPC”.

More In: International | News