A woman holds a baby as she walks along a road in Tangshan, in northern China's Hebei province on Friday. China's Communist rulers announced an easing of the country's controversial one-child policy as part of a raft of sweeping pledges. (WANG ZHAO/AFP/Getty Images)

President Xi Jinping announced Friday the most sweeping package of economic, social and legal reforms in China in decades, including a relaxation of the country’s “one-child” policy and the scrapping of its much-criticized system of labor camps.

The changes rolled back harsh social policies that dated back to Communist China’s two most eminent leaders, Mao Zedong and Deng Xiaoping, while cementing Xi’s hold on the levers of power. It offered the promise of a country driven by market forces, with a stronger rule of law, but still firmly under the grip of the Communist Party.

“This is the most market-oriented and the most comprehensive package of reforms in two decades,” said Cheng Li of the Brookings Institution in Washington. He emphasized the “concrete efforts to promote judicial independence” and abolish a labor camp system which has long been a symbol of arbitrary and politically motivated punishment.

The measures, announced after a meeting of top party officials, promised to address some of the roots of China’s growing unrest by giving peasant farmers a greater share of the benefits of the nation’s economic boom, with more rights to sell land and settle permanently in the cities. But there is to be no relaxation of the Communist Party’s overarching control of China, and efforts to stamp out dissent and “manage” the Internet could even be intensified.

The new family-planning policy states that if either member of a couple is an only child, the couple may have two children. The change means that most young Chinese couples can now have second children, if they wish.

Human rights groups said the changes to the one-child policy were disappointingly limited, but they praised the decision to get rid of labor camps as a step in the right direction for Xi’s eight-month-old government.

Projected effects

The pace and precise extent of planned economic reforms remains uncertain, but financial markets reacted enthusiastically as the detailed nature and overall direction of the plan leaked out early in the day.

“Xi has an ambitious agenda for reforming China’s economic and governance structures, and the will and political craft to achieve many of his aims,” said Arthur Kroeber, founding partner of GK Dragonomics in Beijing. “His program may not satisfy market fundamentalists, and he certainly offers no hope for those who would like to see China become more democratic. But it is likely to be effective in sustaining the nation’s economic growth and enabling the Communist Party to keep a comfortable grip on power.”

The relaxation of the one-child policy may not cause a significant rise in the country’s population of 1.3 billion people, demographers say. Couples where both partners are only children — common in Chinese cities — have long been allowed to have a second child, but, because of because of the rising costs of housing and education, not all do. Rural families are also allowed to do have a second child if their first child is a girl.

“There could be a slight rise, but this policy will not cause a dramatic growth in the birth rate,” Li Jianmin, a population professor at Nankai University, said. “A majority of only-child parents are living in the cities, where the cost of raising a child is very high, and many young parents cannot afford to have a second child.”

China enacted the controversial one-child policy in 1980 to rein in runaway population growth. Internal debate about relaxing the policy has intensified in the face of an aging population and a looming shortage of labor.

Human rights groups, which have repeatedly exposed forced abortions, infanticide and involuntary sterilizations being propagated under the policy, had wanted it abolished altogether.

China's one-child policy could potentially leave parents childless

“What they’re doing is just tinkering with it,” said Nicholas Bequelin of Human Rights Watch in Hong Kong. “The whole system needs to be dismantled.”

The one-child policy reshaped Chinese society — with birthrates plunging from 4.77 children per woman in the early 1970s to 1.64 in 2011, according to estimates by the United Nations — and contributed to the world’s most unbalanced sex ratio at birth, with boys far outnumbering girls.

A ‘revolutionary’ reform

The “reeducation through labor” system — China’s labor camps — was introduced under Mao in the 1950s as a way to deal with political enemies. Statistics are hard to come by, but according to the government, 160,000 people were held in 350 such facilities throughout the country in 2008.

Stories abound of the harsh conditions at the camps: sleep deprivation, freezing temperatures, regular beatings, barely edible food and little respite from the relentless pace of factory work.

Xi’s own father was sacked as vice premier during China’s Cultural Revolution (1966-1976) and imprisoned for seven years. The abolition of the labor camps is believed to be something he personally advocated in the face of opposition within the party.

But potentially more significant than the closing of the camps was a promise to “explore the establishment of a judicial system that is properly separate from the local administration” and extend the use of the jury system. Saying that most people were dissatisfied with miscarriages of justice, Xi called judicial reform one of the “key points” of his reform plan.

He Bing of the China University of Political Science and Law called that reform “revolutionary.”

Xi also promised to grant more property rights to peasants, who are often forced off collectively owned land with minimal compensation to make way for development — a major source of social unrest.

And Xi pledged to relax China’s strict registration system to allow rural residents to settle permanently in smaller cities for the first time. Current rules have created a vast underclass of rural migrant workers, unable to access the social welfare benefits available to permanent urbanites.

Friday’s 20,000-word document, seven months in the drafting, was released three days after the conclusion of the Third Plenum of the 18th Central Committee of the Communist Party. Written under the direct supervision of Xi, it appeared to further consolidate his powers through a new State Security Committee that will have control over both domestic security and foreign policy.

Arguing that China faced growing risks at home and abroad, Xi said that “state security and social stability are the preconditions for reform and development,” according to a written statement read on state television.

Analysts said the new committee could bear some similarities to the U.S. National Security Council and described it as an attempt to bring greater coordination and clarity to China’s sometimes disjointed foreign policy and strengthen Xi’s control over internal security.

A newly created team to hasten economic reforms also gives Xi more power to push through measures that may face opposition from powerful vested interests.

Xi said economic reform was “complicated” and impossible without a top-level department to plan, coordinate, push forward, “supervise and urge.”

Specific plans were announced to make market forces — rather than the government — determine the price of water, petroleum, natural gas, electricity, transportation and telecommunications. But some observers were disappointed that more was not done to rein in the power of increasingly inefficient state-owned enterprises.

Liu Liu, Li Qi and Guo Chen contributed to this report.