Will China's Third Plenum be an economic turning point?

Will 2013 be another 1978 or at least another 1993 for China?

Those were the two significant overhauls of economic policy which occurred during previous Third Plenums.

The Third Plenum refers to the third time that the new leaders of China lead a plenary session of the Central Committee.

The current one is being billed as being as just as significant as the one in December 1978 that marked the start of market-oriented reforms in China over three decades ago under Deng Xiaoping.

That's unlikely, but expectations are high that the new Chinese leaders will launch reforms that are as notable as those from 1993, which dismantled a large part of the state-owned sector. State-owned enterprises fell from over 10 million to fewer than 300,000 in the mid-1990s.

The 383 plan

The Third Plenum is typically when significant reforms are announced. It's usually about a year into the term of China's new president and premier, so they have secured their positions sufficiently to unveil their plans for their decade in power.

This plenum, taking place from 9-12 November, will likely draw on a "383 plan", circulated by Chinese government think tanks, which aims to transform the Chinese economy by 2020.

The 383 plan involves firstly a trio of reforms to open up the market, transform government, and reform enterprises to boost innovation.

Then, the eight key areas to tackle include: cutting administrative approvals, promoting competition, land reform, opening up banking including the liberalisation of interest rates and the exchange rate, reforming the fiscal system including setting up basic social security, reforming state-owned enterprises, promoting innovation including green technology, and opening up the services sector.

Within these, the plan identifies three major breakthroughs to be achieved: lower market barriers to attract investors and boost competition, setting up a basic social security package, and allowing collectively-owned land to be traded.

This is a tall order, but these three aims figure prominently among the reforms that are needed for China to grow in a more sustainable and stable fashion.

First, increasing competition can raise productivity, which is what is needed for China to grow. But, that does require reforming the remaining state-owned enterprises which have entrenched themselves in significant sectors of the economy, such as banking and telecommunications.

Land reform

Second, social security for its people will help to re-balance China's economy through supporting the poorest and also the growing middle class. It's what's needed as China seeks to rely more on domestic demand and thus the consumption of its own people to grow its economy.

Land reform will be a key part of that as well. The 383 plan refers to giving equal rights to rural and urban residents to trade collectively-owned land.

It means that land is still owned by the state or local government, but those who have long leaseholds on the land will be able to trade and thus reap the benefits of land values that right now accrue largely to the government.

Land confiscation is the source of significant complaints across rural China. And, it seems, although it's been much debated, privatisation of land looks to be off the table.

Also, although one of the reforms is to liberalise interest rates and the exchange rate, opening up the capital account - that is, allowing more short-term capital to flow across borders - it isn't a priority.

This has been another bone of contention. Greater opening of China's financial markets is likely to happen, but how much and how far remains to be seen.

The initial progress in Shanghai's Free Trade Zone - touted by the Chinese premier Li Keqiang as the experimental zone for such reforms - has been less than stellar so far.

There are also numerous concerns such as the amount of debt in China's economy, corruption, and reforming the rule of law, all of which need attention. So, it's a long list of reforms that are needed.

If none of these reforms seem as radical as turning away from central planning or dismantling state-owned enterprises, it should be remembered that those were once-in-a-blue-moon moments.

But, sometimes a lot of reforms rather than an eye-catching one or two can have a bigger and longer-lasting impact.

What is clear is that the path to be taken by the world's second largest economy will be closely watched as it will have implications for the rest of the world seeking stability and growth in its largest economies.