China holds its breath on eve of vote that will shape future

As Beijing's arid summer turned to autumn, Zhang Jianyi packed the suitcases of her 16-year-old son, Fei, and took him to the railway station for a 900-mile journey south. Fei, an average student but a keen basketball player and artist, was born and raised in China's capital. But because of an arcane piece of bureaucracy left over from the heyday of hardline Communism, he now has to go to senior school in the county his parents were born, deep in the countryside.

"He does not know the area at all," his 43-year-old mother said. "Of course we used to go back every Chinese new year to visit our relatives, but he never liked it: there is no heating and he complained about the food because they eat rice down there and we eat noodles up here in Beijing." Fei is enrolled in a state-run boarding school, while his parents and brother will continue to live in Beijing.

Underneath the image of vibrant modernity that China likes to project to the world, behind the bullet trains and skyscrapers, everyday life continues to be grindingly and frustratingly governed by countless such Kafkaesque regulations. Millions of working hours are wasted applying for permits, ticking boxes and searching for loopholes in China's enormous, corrupt bureaucracy.

But, increasingly, armed with the internet, greater affluence and growing self-confidence, the public is pushing back. This weekend, the new Chinese leadership, under Xi Jinping, the president, is working on a plan that many hope will sweep away some of the state's overbearing control and re-energise an economy that is starting to slow. The meeting is secret. No one will know its outcome until a document is delivered, via the state media, on Tuesday.

Any disagreements among the 376 attendees, all members of the Communist party's Central Committee, will not be aired. Indeed, the delegates are not even allowed to leave the venue until it is over. They have gathered in the Jingxi hotel, run by the People's Liberation Army and surrounded by what one minister described as a "security moat".

Members of the public are not permitted inside the hotel, and as the meetings began yesterday (Saturday) dozens of protesters, who had come to Beijing to air their grievances, were arrested both outside it and in Tiananmen Square. The job of the meeting, known by its official name as the Third Plenary Session of the 18th Central Committee, is to set a road map for the economy under the country's new leadership - to try to give China another boost on its path towards overtaking the United States as the world's largest economy.

China has averaged 10 per cent growth since it began liberalising its economy in 1978, and, on a purchasing power parity basis, the Organisation for Economic Co-operation and Development believes China's GDP could surpass the US as early as 2016.

But there remains a delicate and difficult job ahead. During the past decade, under the leadership of Hu Jintao and Wen Jiabao, important planned reforms have been cautiously shelved in case they destabilised the country. Now, everywhere you look in China, an entrenched system is working against, or extracting bribes from, the likes of Mrs Zhang.

To get her younger son, Feng, into primary school this summer she had to take 10 days off work, and call in a range of favours, to tick all the boxes on the application. "They needed seven documents, three of which I did not have," she said. "For example, they said they needed the deeds of the house I owned, but we only rent. It was only when 100 other parents protested outside the government office that they relented and allowed us to submit our landlord's property deeds."

She added: "My job is caring for an elderly couple, but they wanted a company licence. I had to ask a friend of my husband to issue me an employment certificate from his company." The root of her difficulties lies in a small brown plastic wallet, with the words "household register" stamped on the front. This document, known as a hukou, ties her to her place of birth and classes her as a rural resident, even though she has spent more than half her life in Beijing.

That makes her and her family, in the eyes of the Beijing authorities, second-class citizens. She is not entitled to buy a house in the city, nor is she guaranteed education for her children. The value of having a Beijing registration is now so great that it can take a bribe of up to 500,000 yuan (pounds 50,000) to secure one, the Chinese media has reported.

"Many things are still tied to the hukou and it will be difficult to change the situation," said Peng Xizhe, a professor at the demographics research Institute of Fudan university. "Most of the time local governments welcome migrant workers, but they do not want to give them welfare because it runs up government expenses." There is usually a Third Plenum every five years, accompanying each change of the Central Committee. The First Plenum generally introduces the new leadership, the second sees its administration formally take the reins.

It is the third meeting at which a blueprint for the country for years to come is discussed. In 1978, the Third Plenum saw Deng Xiaoping launch the "reform and opening up" that turned China away from Maoism and set it on its path to the prosperity that came with a more market-based economy.

In 1993, the Third Plenum provided the groundwork for several large state monopolies to be overhauled and thousands of loss-making state-owned enterprises to be closed. The outcome of this weekend's meeting will be pored over by the rest of an increasingly economically connected world - not least in Britain, where the Prime Minister, David Cameron, is preparing to make a crucial fence-mending visit to Beijing over the next few weeks.

Since the beginning of this year, many in Beijing have pointed to this as the moment when President Xi will attempt something radical. Yu Zhengsheng, a fellow member of the Politburo standing committee, has promised "unprecedented reform" 

"Xi is very strong and he has a great mandate. This is when we will be able to tell how serious he is about fixing the problems left by the last 10 years," said one senior manager at a state-run financial institution. On the table are discussions over whether to allow farmers the chance to sell their land, a change that could see China embrace modern, large-scale farming, and how to change the tax system to give local governments more sustainable budgets.

There is also a broad push for state-owned companies, which still dominate Chinese life, to be dismantled or at least forced into professional management. The financial sector could also see increased liberalisation. "It will be a smorgasbord of gradual changes," said Stephen Green, an economist at Standard Chartered. The stakes are high.

Until now, opponents of the Communist Party often protested for greater justice, but rarely called for revolt; the Chinese have had their fill of instability. But two terrorist attacks in as many weeks in the lead-up to the Plenum could be the first signs of how frustration at the government has hardened into despair and destruction. The middle class, meanwhile, has become disenfranchised by the moral decay in society, overwhelming pollution, and unattainable property prices.

The news last week that an eight-year-old girl had succumbed to lung cancer because of pollution from the motorway beside her home has no doubt persuaded more middle-class parents to consider moving abroad for a better quality of life. "Failing to deliver will significantly undermine Xi's leadership credibility," noted Cheng Li at the Brookings Institute. But for Mrs Zhang, there is little hope that her family will soon be reunited. "What can we do?" she shrugged. "I expect my younger son will also have to be sent away when his time comes."

Additional reporting by Adam Wu Sunday Telegraph, London