Silver spot price bounces off 4-week lows on PRC’s further tilt to market economy
Beijing-China (Nov 13) The spot price of silver has so far today been endeavouring to rebound from the four-week low of 20.655 set yesterday. Precious metals bulls have received with alacrity the full communique from the Third Plenary Session of the Central Committee of the Chinese Communist Party, which outlines the reform agenda in the PRC over the next decade. The People’s Republic plays a central role in commodity markets, accounting for much of the increase in global demand over the last decade.
The official statement indicates that the political leadership wants China to move further toward a market-based economy. At the very core of the ‘master plan’ is the recognition that the role of government in the economy should change and reforms should accelerate.
The goal of the plenum was reputedly to set a course for China to achieve decisive results by 2020 rather than introducing radical changes immediately. Thus, the lack of detail on specific proposals suggests the meeting was not “a major game changer in the short run”, according to analysts at Danske Bank.
Experts believe though that there could be more to come beyond a vaguely-worded document which, amongst other things, didn’t indicate priority areas in which reforms would be pushed along quickly. Citibank head of research Minggao Shen writes: “The information available for now suggests that an actionable plan will only be rolled out gradually going forward, and that the party has determined to simultaneously achieve reform and a growth target (doubling the 2010 GDP in real terms) by 2020, which likely rules out the possibility of a short-term pain scenario.”