Since Chinese president Xi Jinping took office in March last year, he has stamped his personality and authority on Chinese politics in a way that many thought had died out with Deng Xiaoping. The main reason why people inside and outside China have started to look to Xi as a leader is because he has demonstrated the two vital characteristics of leadership: identifying the destination and showing the way to reach it.

The third plenum in November, which the president dominated, pointed the way to China's destination: a society based on fairness and the rule of law and an economy of high efficiency and productivity, based on an increase in the share of economic output generated by the non-State-owned sector.

The follow-up Central Economic Work Conference, held in Beijing in December, headlined six action areas: China should be able to feed itself; industrial overcapacity should be eliminated; local government debts should be brought under control; regional development should be balanced to reduce inequality; services that provide quality of life, such as education, should be developed; the trend of opening up to the outside world, started 35 years before by Deng, should continue.

Onlookers dispute whether China today should be compared with the early stages of one of its greatest periods of military, economic and cultural achievement under the Tang Dynasty in the seventh and eighth centuries, or rather to the final stages of the Qing Dynasty (1644-1911) more than 1,000 years later, which ended with China's economic and social collapse. Are we at the beginning of a great new Chinese era?

The third plenum reassured the optimists. It showed that the new government is prepared to address the fundamental issues that can undermine China's society and economy, particularly the government's direct involvement as an owner of economic assets, and the unchecked power of provincial Party officials.

A number of academic studies have demonstrated that China's State-owned enterprises use the majority of available resources, but contribute less than 20 percent of China's economic output. They create an even smaller share of Chinese employment.

Meanwhile, the ramping-up by the new government of the war against Party corruption has demonstrated, with stark clarity, the extent of the problem, which reaches to the top in China.

The issues identified by the economic conference in December are all important. But they are symptoms, not causes, of the underlying problem. Reducing industrial overcapacity certainly reduces financial risk and should increase economic efficiency, but it does not weaken monopolistic government-owned enterprises. Rather, it strengthens their operating capability by removing competition and reducing supply, so that prices and profits tend to rise.

Allowing local governments to issue their own bonds does not remove the financial risk of over-indebted local governments, if the central government continues to underwrite local government finances. It may even aggravate the problem of over-powerful local officials by increasing their financial independence.

As the November plenum noted (and the economic work conference hinted) it is the system itself that is the problem. The government and the Party need to withdraw as active participants in the economy and turn themselves from economic agents, with their own profit and loss accounts, into regulators and managers answerable to the Chinese people under the Chinese law.

Against the brave new world unveiled by the plenum, can one detect in the utterances of the December economic work conference a moderation of enthusiasm for real change?

The fundamental importance given to consumption, against the pivotal role of investment and the subsidiary role of exports in the December conference's public statement is noteworthy. But what about the withdrawal of government as a direct player in the economy, and a reduction in the economic role played by State-owned enterprises?

And where, on the economic conference's to-do list, stands a call for the independence of the Supreme Court as the defender of the people's rights against over-mighty Party officials?

One is tempted to conclude that the hard but vital issues regarding government economic involvement and the supremacy of law over the government and the Party have not yet been resolved.

What remains is valuable, but may not be enough to convince skeptics who favor the later 1800s as a period of comparison with China's situation today.

Meanwhile, will economic growth slow significantly from 7.5 percent to accommodate reforms, some of which are already underway? Some steel plants have been closed in Hebei.

The Peoples' Bank of China is accelerating the transition to a freely floating currency by liberalizing interest rates, which are moving much higher.

The author is a visiting professor at Guanghua School of Management, Peking University.