China Daily Global Edition (USA)
Reforms and curbs key to an efficient, open economy
BEIJING — China is just gone through a difficult year in 2017. Beginning this year, it is on a new journey toward a more efficient and open economy.
Despite some turbulence, China’s economy ended 2017 on a stronger-than-expected note. Headline growth is sure to meet the target of about 6.5 percent.
Financial risks are being contained; the property market is cooling down; and key reforms are making steady progress.
So far, the world’s secondlargest economy has proved to be a key engine for global growth.
Will its role continue to improve?HowwillChinanavigate troubled waters?
The following are some key factors to watch:
Reforms: China’s wideranging structural reforms, designed to improve the supply side of the economy, have produced desired outcomes in 2017 and are expected to gear up in 2018.
China launched a battle against production overcapacity in key industries such assteelandcoal.Ithasaccomplished its plans to slash steel production capacity by around 50 million metric tons and coal by at least 150 million tons last year.
Progress has also been reported on the other four fronts: deleveraging, destocking, lowering costs and enhancing weak links.
The annual Central Economic Work Conference last month pledged that China will press ahead with supplyside structural reform in 2018 with more efforts to improve economic quality.
Financial prudence: In what some dubbed the “toughest year” for China’s financial industry, authorities have taken real steps to curb widespread malfeasance in the rapidly expanding financial markets.
Banks, insurance and securities companies have received heavy fines for flouting market rules, and internet-based finance companies that were prospering on easy and fat profits are having a difficult time surviving the enhanced rules.
The hardline stance is set to continue as senior leaders agreed to maintain the resolute crackdown on irregular and illegal activities in the financial sector to forestall risks.
Although a statement released after the key economic meeting did not mention deleveraging, financial risk control is still a priority given that defusing major risks is one of the three tough battles that the country has vowed to fight.
Pollution measures: One of China’s “three tough battles” for the next three years is against pollution. There is no better gauge than the clear and blue skies in Beijing this winter to demonstrate the effects of China’s anti-pollution drive.
Once a rarity, blue winter skies are no longer a luxury in Beijing, thanks to a government campaign for increased use of clean fuel for heating and tough punishments for polluting enterprises.
It will target a significant reduction in the emissions of major pollutants and an improvement in the overall ecological environment.
To win the battle, efforts should be focused on adjusting the structure of industries, strengthening energy conservation and making the skies blue again, according to the Central Economic Work Conference.
Property curbs: In 2017, the property market, once deemed a major risk for the broader economy, cooled down amid tough curbs such as purchase restrictions and increased down payment requirements as the government sought to rein in speculation.
With the market holding steady, Chinese authorities aim for a “long-term mechanism” for real estate regulation and a housing system that ensures supply through multiple sources and encourages both housing purchases and rentals.
In large and medium-sized cities, the government will step up the development of housing rental market, especially long-term leases. Meanwhile, reducing the unsold housing will still be a priority for the third- and fourth-tier cities and counties.
A report from the National Academy of Economic Strategy predicted that the country’s property market should remain stable in 2018 if there is no major policy shock.
SOE recast: Reforms of State-owned enterprises or SOEs will also go into deeper waters in 2018 as the Chinese government expects them to play a bigger role in leading excess capacity cuts, keeping the debt ratio under control and driving high-quality economic development.
In 2017, almost 69 percent of the central SOEs were involved in mixed-ownership reforms, and authorities are reviewing plans for more to join the drive.
At the 19th National Congress of the Communist Party of China, the Chinese leadership pledged to further reforms to make SOEs “stronger, better and bigger”, and turn them into “worldclass, globally competitive firms”.
The government will press ahead with stronger restructuring and deleveraging efforts, as well as furthering mixed-ownership experiments at more SOEs, authorities said.
Opening-up: The year 2018 will mark the 40th anniversary of China’s reform and opening-up policy, and Chinese leaders have promised that the country’s door to the world will only open wider.
China will increase imports and cut import tariffs on some products to promote balanced trade, according to the Central Economic Work Conference.
To give foreign firms greater opportunities in China’s booming market, a pruned negative list approach to marketentry, which identified sectors and businesses that are off limits to foreign investment, will be unveiled nationwide this year.