May 28, 2013

FORTUNE — Those who have been waiting for China’s new leadership to unveil their economic reform program finally got some good news last week. The new premier, Li Keqiang, vowed to reduce the government’s influence on China’s economy in a speech to senior Communist Party officials.

More importantly, the State Council, the country’s cabinet, endorsed a set of reform objectives drafted by the National Development and Reform Commission (NDRC), the economic super-agency in charge of planning and regulation.

Judging by the NDRC’s reform objectives for 2013, it is easy to get the impression that China’s new leaders have a bold and ambitious agenda. The document covers a wide range of initiatives. The most important are deregulation through a significant reduction of the government’s power to approve investments; fiscal reform, with a focus on changing a current turnover tax into a value-added tax and expanding the experiment of levying a property tax; financial reform through liberalization of interest and exchange rates and gradual progress toward capital account convertibility; promotion of private investment in financial, energy, telecom, and rail transportation sectors, all of which have remained monopolies of the state; reform of the prices of electricity, natural gas, and water in order to promote efficiency and conservation; strengthening social safety nets and improving food safety; gradual reform of the urban household registration system to permit more migrants to settle in cities.

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The breadth of the agenda has led some observers of China to call it radical. However, it would be premature to celebrate the revival of Chinese economic reform.

Although the proposed reforms in the NDRC document seem bold, they are not new. The individual pieces of the reform have been put forward by various Chinese bureaucracies and leaders before. Obviously, it does make a considerable difference if an important agency like NDRC groups all of them in one eye-catching document. Another reason to be cautious is that the NDRC document contains vague and general announcements of principles and aspirations but lacks specifics. On its own, it tells us little about how these reforms are going to be carried out. The business community should wait for more detailed policies.

The most glaring omission in the NDRC directive is the curtailment of the state-owned enterprises (SOEs). It does not contain any measures that will lead to the privatization, break-up, or the loss of monopoly protection and subsidies of Chinese state-controlled businesses. This raises a giant red flag. Many of the proposed reforms (such as financial reform and promotion of private investment in sectors currently dominated by SOEs) will hurt powerful SOEs. If the government does not reduce the power and privileges of SOEs, they will easily use them to thwart any reforms that will increase competition and hurt monopoly profits.

Skepticism aside, the latest pro-reform rhetoric does provide us with a limited preview of the real political battle over economic restructuring that will be fought in Beijing this fall. Inside the Chinese political hierarchy, the NDRC is, at best, a medium-size player. It does not have the last word on policy. That is perhaps why the release of the NDRC reform directive failed to excite Chinese financial markets last week.

For the business community, the signal event to watch is the Communist Party Central Committee’s third plenum scheduled for the fall. According to tradition, the new leadership will likely unveil its comprehensive economic program at this important gathering. The blueprint, far more detailed than the NDRC directive, will reflect the consensus of the party leadership. It will be endorsed by the Central Committee and will most likely be introduced with all seven members of the Politburo Standing Committee in attendance. Only this ritual will convey the seriousness and commitment of the top leadership to painful but necessary reforms.

In the past, the new leadership would set up task forces to formulate detailed policies. The word on the street in Beijing is that several inter-agency groups are indeed busy working to develop specific reform proposals that will be considered by the top leaders in the summer.

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Given the opposition to genuine reform from politically powerful groups, such as local governments, the bureaucracy, and the SOEs, any effort to reduce their privileges will meet strong resistance. The good news is that new Chinese leaders are aware that their own political fortune depends on their ability to deliver the necessary reforms and maintain growth. The bad news is that they are representatives of these interest groups and will unlikely enjoy a free hand in setting China’s future economic course.

We should remain hopeful that Chinese President Xi Jinping and Li Keqiang will prove the skeptics wrong with a bold and credible reform program in the fall. But we should hold off on the champagne for now.

Minxin Pei is the Tom and Margot Pritzker ’72 Professor of Government and a non-resident senior fellow of the German Marshall Fund of the United States.

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