Following the 18th National Congress of the Communist Party of China, the new leadership is formulating its economic priorities and policies. The Central Economic Work Conference, an annual policymaking forum, will convene in the coming days. The leadership change provides the conference with an opportunity to take a broad look at the economic challenges facing China and to rethink the policies needed to address them.

A sluggish global economy will continue to provide a challenging backdrop, and efforts need to be stepped up where reforms have slowed. Observers remain skeptical about how quickly some announced policies will be implemented. This is particularly true of plans to reform State monopolies and relax migration controls. These are essential to spur economic efficiency as labor costs rise and the competitiveness of the economy declines.

In the past year, government policymaking has focused on how to implement the reforms set out in the 12th Five-Year Plan (2011-15). Tax policies have been introduced to develop a modern service industry. A plan has been prepared to restructure the country's industrial base. The government has also raised the income tax threshold and plans to increase minimum wage levels to improve living standards and boost consumption.