China leaders promise bigger role for free market

China's leaders promised Tuesday a bigger role for the free market in the country's state-dominated economy as they try to overhaul a worn-out growth model.

In a brief statement issued following a four-day meeting aimed at producing a reform blueprint for the coming decade, Communist Party leaders said state ownership will remain a pillar of the economy. But they gave an unusually strong endorsement to Chinese private businesses, saying they also are ``important components'' of the economy.

Chinese leaders are under pressure to replace a growth model based on exports and investment that delivered three decades of rapid growth but has run out of steam. Reform advocates say they have to give entrepreneurs a bigger role in the economy, but any moves to curb the privileges of big, politically favored state companies are likely to face resistance.

Monday's statement said the party will set up a group to ``deepen reforms'' and gave no indication when more changes might be approved. That suggested party leaders, as many observers expected, agreed on gradual and noncontroversial changes while putting off potential battles over explosive issues such as the status of state-owned industries.

The Xinhua News Agency said the status of the market would be elevated from the ``core role'' it has played over the past two decades to a ``decisive role'' in allocating resources.

Communist leaders have been trying to make the economy more efficient and productive by gradually injecting more market forces into areas such as bank lending. Regulators eliminated controls on interest rates charges on commercial loans in July in a move that ultimately will lower costs for more competitive borrowers with stronger credit records.

The statement carried by Xinhua gave no indication whether party leaders agreed on any change in the status of government companies that control vast swathes of the economy including banking, energy and telecommunications.

Xinhua said party leaders also called for ensuring people's livelihood and social stability. That would include both more spending on welfare programs to ease political tensions and more intensive monitoring and policing to defuse ethnic unrest or potential political dissent.

The statement said economic reform will be ``the key of overall deepening of reform.''

It called for improving the relationship between government and the market. That refers to efforts to make the economy more efficient and productive by having the government act as a regulator of free-market competition while withdrawing from making commercial decisions.

"The core is to handle the relationship between government and market, and let the market play the decisive role in allocating resources, and to better play the governmental role,'' it said.

(AP)