The imminent annual sessions of the National People's Congress (NPC) and the Chinese People's Political Consultative Conference (CPPCC) are expected to finalize the road map for reforms in some key sectors of the national economy, to reflect the recent concept known as the "new normal".

Reforms in regard to taxation, finance, state-owned enterprises, prices and more equal distribution of income are likely to be accelerated in order to bring positive changes to people's livelihood.

Continued VAT reform

Taxation reform, a key area in the overhaul of the economic structure, has been underway since last year. The revised Budget Law has been implemented, the shift to value-added tax has been piloted in the areas of railway transportation, postal services and telecommunications, the consumption tax on oil products has been raised three times, and batteries and paint have been added to the tax coverage, and a resource tax on coal has been promoted nationwide.

In the accelerated reform on taxation, life-oriented services, construction, real estate and finance will be subjected to VAT after the conclusion of the two sessions. The switch to VAT from business tax is seen as a solution to the problem of repeated taxation, and will mean huge alleviation for many. Data shows that, in 2014, the shift to VAT reduced tax nationwide by 191.8 billion yuan (US$30.52 billion). Reducing the burden helped create more jobs as well as wage increases.

Deposit insurance system

The past year saw remarkable progress in financial reform. The central authorities approved innovations in regard to money supply tools, private banks, and a further relaxation in interest rates allowed the market to have a bigger say in determining bank rates.

This year, the much anticipated deposit insurance system will be implemented. Under it, depositors will be eligible to compensation up to 500,000 yuan (US$79.574) for the loss of their bank deposits. It is calculated that the upper limit is able to provide a full-fund protection to 99.6 percent of depositors nationwide. Thus, the public will no longer need to worry about their money in the bank.

Deposit insurance system is among the key issues in the financial reforms to be finalized in the year. Apart from this, marketization of the exchange rate of RMB and insurance for major disasters will receive more attention.

Reform of state-owned enterprises (SOEs)

"State-owned enterprises should focus on raising their vitality and competence in deepened reform. They should seize the moment to tackle pressing problems, taking the lead in innovation and development," said Premier Li Keqiang recently. His requirement was interpreted as the central government's determination to accelerate SOE reform.

More than 20 provinces have unveiled plans to reform the local SOEs, but a national, comprehensive plan is yet to be announced, but is widely expected to follow the twin sessions.

SOE reform will enter a critical period this year. With more private capital flowing in and more of the SOE’s dividends going to expenditure on people's livelihood, both the private sector and the general public have a close interest in the results of the reforms.

Accelerated price reforms

The Consumer Price Index (CPI), main gauge of inflation, rose only 0.8 percent year on year in January, indicating a trend of continued low-inflation benefiting the whole price reform program.

The National Development and Reform Commission (NDRC) has relaxed the pricing mechanism for 24 commodities and services and promised more actions in coming months. The NDRC said recently that the price relaxation moves would encompass natural gas as well as the tiered pricing mechanism for residential water and natural gas.

The aim is to let the market have a bigger say in prices, which causes some concerns that the prices for scarce resources, such as parking fees in residential area, will rise. But the public is urged not to panic, because the government will still regulate the market. At the same time, relaxed prices will bring about intensified competition in various industries, leading to more price drops than actual increases.

Continued reform of income distribution

Income is key source of livelihood. An online poll involving 3.5 million people showed that "the reform on allocation of income" was the topic of most concern for this year's national political sessions.

There have been significant breakthroughs since 2013, when the central authorities issued a guideline opinion. Senior management officials in central SOEs are starting to face salary caps from this year, and pension plans for those on the government payroll will be unified with those people working in enterprises. Such measures are meant to limit excessively high income while narrowing the income gap.

Hence, while capping high income has started to take effect, this year's political sessions will focus more on expanding the middle income group, apart from raising low income. The “olive-shaped income structure”, it seems, is in sight.