HONG KONG/BEIJING (REUTERS) - Investors rewarded Beijing on Monday for a bold and wide-ranging reform plan, boosting stocks led by consumer goods shares seen as direct beneficiaries of the promised easing of China's long-standing one-child policy and efforts to boost consumption.
The initial outline published at the end of a four-day conclave of China's top leadership disappointed markets with its lack of detail and its ambiguity. But a more elaborate account released on Friday won praise for its ambition and scope.
Leaked documents already sparked buying of mainland stocks and markets on Friday and that rally picked up on Monday.
"The full-version report addressed many uncertainties and questions ... and the comprehensiveness and depth of reform measures exceeded market expectations," said Haibin Zhu, chief China economist with JPMorgan.
China's CSI300 index of leading Shanghai and Shenzhen A-share listings rose 1.25 per cent by 0200 GMT (10 am Singapore time) after it clocked its biggest percentage gain in two months on Friday, while the Shanghai Composite gained 1.1 per cent.
Hong-Kong's index of mainland China stocks climbed more than 3 per cent to reach a six-month high.
The easing of the one-child policy boosted shares of stroller maker and distributor Goodbaby International by more than 7 per cent. Dairy products maker Mengniu Dairy was up nearly 6 per cent.
Non-banking financial stocks also rose, while the overall market gains were tempered by sinking property stocks, both in response to a record rise in house prices, which raised expectations that the government might seek to cool the market, and plans to accelerate the introduction of a property tax.
Besides pledges to give markets a decisive role in key areas of the economy, such as pricing of resources and the financial system, the plan also included steps to boost China's urban population.
Beijing sees helping hundreds of millions of rural dwellers migrate to the cities as key for more sustained development for the world's second-largest economy; its advance up the value chain and wealth creation.
Analysts and commentators suggested the plans are the most significant since Deng Xiaoping's reforms in the late 1970s and the early 1980s that opened up the country to the outside world and set it on course to become the world's factory floor.
"The government will withdraw from its intervention in the market," said Ding Yifan, deputy head of the Institute of World Development, a government-linked think tank, in describing the new approach in an interview with official news agency Xinhua.
He said that while state-owned enterprises would remain the backbone of China's economy they would be exposed to more competition and less protected than in the past.
"We will try to make them compete on an equal footing, which means the government will not continue to provide some fiscal or financial advantage to state-owned enterprises." President Xi Jinping and Premier Li Keqiang, appointed in March, also announced several breakthroughs in social policy.
Besides relaxing the one-child policy, they also pledged to unify rural and urban social security systems and to abolish controversial labour camps.
The 60-point plan eased concerns that Xi would need months, if not years, to take full charge of China's vast party and government bureaucracy.
But the sheer ambition of the plans and the new focus on letting market forces play a greater role bring new challenges and risks, economists say.
Beijing got a taste of that in June, when a money market squeeze engineered by the central bank to rein in overly risky lending practices, sparked a brief spell of panic and a financial market rout that spread well beyond China's borders.
Economists also point out that while some reforms can take shape within weeks or months, others will take years because of their sheer complexity, the number of interest groups affected and the need to balance the sweeping changes with the desire to ensure stability, which remains the watchword for successive Beijing administrations.
"The pre-condition for reforms is that economic growth will be steady and social stability will be maintained," said Xu Gao, chief economist at Everbright Securities in Beijing.
Xi and his team gave themselves until 2020 to achieve"decisive" results - a tacit acknowledgement of the risks involved in Beijing's balancing act between letting market forces eventually take over and preserving financial and social stability and the Communist Party's political monopoly.
The experience of the past decade is also a reason why many economists and international observers view Beijing's bold reform plans with guarded optimism.
Just like Xi and Li, the previous leadership promised to overhaul China's economy and kick its addiction to rapid, investment and credit-fuelled growth, but left it saddled with more debt, industrial overcapacity, pollution and financial strains.