Top lead­ers vow to steer steady path

Xi and Li want re­form to cover ev­ery area of eco­nomic and so­cial de­vel­op­ment

China Daily (Hong Kong) - - FRONT PAGE - By CHEN JIA chen­jia1@chi­

Top lead­ers said on Fri­day China will seek steady eco­nomic progress by mak­ing more re­forms in all ar­eas.

The re­marks were made in a state­ment re­leased af­ter the an­nual Cen­tral Eco­nomic Work Con­fer­ence.

Dur­ing the four-day meet­ing that started on Tues­day — longer than the two-to-three-day events in pre­vi­ous years — Pres­i­dent Xi Jin­ping and Pre­mier Li Ke­qiang called for re­form to be spread to ev­ery area of eco­nomic and so­cial de­vel­op­ment, the state­ment said. Their com­mit­ment to more re­forms comes just one month af­ter the Third Plenum of the 18th Cen­tral Com­mit­tee of the Com­mu­nist Party of China out­lined fu­ture re­form in up to 60 ar­eas.

To boost the re­forms, top lead­ers asked all lo­cal gov­ern­ments and cen­tral gov­ern­ment de­part­ments to set up a branch or­ga­ni­za­tion to spe­cial­ize in re­form in their ar­eas.

This fol­lowed the de­ci­sion at the Third Plenum to form a high-level com­mis­sion to co­or­di­nate na­tion­wide re­form ef­forts.

The eco­nomic work con­fer­ence vowed to main­tain a sta­ble eco­nomic sit­u­a­tion while achiev­ing rea­son­able growth. But no spe­cific GDP growth tar­get was an­nounced.

In the state­ment, the lead­ers were can­did about the “down­side risks” fac­ing China, in­clud­ing ex­ces­sive pro­duc­tion ca­pac­ity, se­ri­ous struc­tural un­em­ploy­ment ( af­fect­ing cer­tain groups), en­vi­ron­men­tal degra­da­tion, poor qual­ity of food and medicine, and pub­lic se­cu­rity in­ad­e­qua­cies.

Ex­ter­nally, there are many un­cer­tain­ties, in­clud­ing a lack of sources for new growth.

The state­ment said China will use re­form to boost de­vel­op­ment, to speed tran­si­tion of the econ­omy’s growth model, and to im­prove peo­ple’s liveli­hoods.

It also said there should be a bal­ance be­tween healthy de­vel­op­ment of the econ­omy and GDP.

Li Boxi, se­nior re­searcher with the State Coun­cil De­vel­op­ment Re­search Center, a gov­ern­ment think tank, said sta­bi­liz­ing growth while ad­just­ing the eco­nomic struc­ture, or strik­ing a bal­ance on this, will be the ba­sic ori­en­ta­tion of China’s macro-eco­nomic pol­icy in 2014.

The doc­u­ment also said that China will main­tain a proac­tive fis­cal pol­icy and pru­dent mone­tary pol­icy, as it has in 2013.

It will ex­pand the pro­vi­sion of credit and do­mes­tic fi­nan­cial mar­kets, it said. The gov­ern­ment will also con­tinue to pur­sue tax and ex­change rate re­form.

This year’s Cen­tral Eco­nomic Work Con­fer­ence marked the first time that lo­cal gov­ern­ment debt has been listed as a ma­jor prob­lem.

Zou Linhua, a re­searcher at the Chi­nese Academy of So­cial Sciences, said the sharp growth in lo­cal gov­ern­ment debt has be­come one of the worst-hid­den dan­gers for the econ­omy.

Econ­o­mists are di­vided over how much lo­cal gov­ern­ment debt there is, and how it has risen from 10.7 tril­lion yuan ($ 1.76 tril­lion) by the end of 2010, the last time it was au­dited.

To tackle the lo­cal debt in­crease, the gov­ern­ment may need to con­trol in­vest­ment projects at a cost of slower GDP growth, to en­sure the banks’ lend­ing sys­tem re­mains healthy, Zou said.

But Dou­glas McWil­liams, ex­ec­u­tive chair­man of the Cen­tre for Eco­nom­ics and Busi­ness Re­search, a think tank in Bri­tain, said China will over­come its dif­fi­cul­ties and con­tinue to de­velop.

“The in­ter­na­tional sta­tus of the Chi­nese econ­omy, how­ever, now de­pends on the abil­ity of China’s lead­ers to steer the coun­try through a test­ing pe­riod of change,” he said. “If the lead­ers are brave enough, this could be the dawn of a new era of eco­nomic ex­pan­sion for China.”

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