Fo­cus on sta­bi­liz­ing growth and de­fus­ing ma­jor risks

China Daily (Hong Kong) - - COMMENT -

The most re­cent data have shown that the mo­men­tum of the coun­try’s eco­nomic devel­op­ment is get­ting stronger, with the eco­nomic in­di­ca­tors for the first half of the year beat­ing ex­pec­ta­tions and ur­ban em­ploy­ment steadily im­prov­ing. There has also been fur­ther progress in growth re­bal­anc­ing, with the ra­tio of con­sump­tion to GDP in­creas­ing and the ser­vice sec­tor’s share in the econ­omy con­tin­u­ing to grow. But de­spite the good mo­men­tum in the first half of this year, the coun­try’s lead­ers are con­scious of the need to strike a bal­ance be­tween sta­bi­liz­ing growth and the de­fus­ing of ma­jor risks, as sig­naled by the state­ment re­leased af­ter a meet­ing of the coun­try’s top lead­er­ship on Mon­day.

Al­though the fun­da­men­tals re­main sound, prompt­ing the In­ter­na­tional Mone­tary Fund to raise its fore­cast of the coun­try’s growth this year from 6.6 per­cent to 6.7 per­cent, it was rec­og­nized at a meet­ing of the Po­lit­i­cal Bureau of the Com­mu­nist Party of China Cen­tral Com­mit­tee presided over by Gen­eral Sec­re­tary Xi Jin­ping, that this does not mean the eco­nomic and fi­nan­cial risks can be ig­nored.

The au­thor­i­ties need to re­main fo­cused so they do the right things at the right time, as Xi em­pha­sized at a sym­po­sium on Fri­day.

Look­ing ahead, al­though pol­i­cy­mak­ers will need to be pre­pared for a pos­si­ble eco­nomic slow­down in the sec­ond half of this year as the cool­ing of the real es­tate mar­ket takes ef­fect, the meet­ing has made it clear there will be no let up on re­forms, and the con­ti­nu­ity and con­sis­tency of poli­cies will be main­tained to push for­ward sup­ply-side struc­tural re­form and guard against sys­temic fi­nan­cial risks.

This means mea­sures will be in­tro­duced to fur­ther cut ex­cess ca­pac­ity and re­duce in­ven­tory, as well as ease the cor­po­rate debt bur­den. And, as the state­ment re­leased af­ter Mon­day’s meet­ing em­pha­sized, the key to the suc­cess of th­ese re­forms is ef­fec­tively han­dling “zom­bie en­ter­prises”, those un­prof­itable State-owned com­pa­nies that are bur­dened with debt, mis­man­age­ment and/or over­ca­pac­ity.

Other press­ing tasks in­clude con­trol­ling the lo­cal gov­ern­ment debt prob­lem, chan­nel­ing more funds into the real econ­omy and keep­ing a watch­ful eye on the fi­nan­cial mar­ket tur­bu­lences to ward off dam­ag­ing reper­cus­sions.

Whether th­ese tasks are suc­cess­fully han­dled or not has sig­nif­i­cant im­pli­ca­tions for the coun­try’s eco­nomic tran­si­tion and fu­ture devel­op­ment.

The com­mit­ment to re­forms and the re­solve to take a stead­fast ap­proach to eco­nomic lib­er­al­iza­tion demon­strated at the meet­ing should in­still con­fi­dence that while main­tain­ing sta­bil­ity is the pri­or­ity, as Xi stressed, progress will con­tinue to be pur­sued.

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