Steadily Up­wards: Keys to China's 2018 Eco­nomic Work

Keys to China’s 2018 Eco­nomic Work

China Pictorial (English) - - News - Text by Bian Yongzu

China’s 2017 Cen­tral Eco­nomic Work Con­fer­ence con­cluded in late De­cem­ber. This an­nual meet­ing sum­ma­rized the coun­try’s eco­nomic de­vel­op­ment in the past year, and set eco­nomic plans for the com­ing year. Con­sid­er­ing China’s el­e­vated eco­nomic sta­tus in the world, the meet­ing has also be­come im­por­tant for an­a­lysts to project how China’s eco­nomic plans will in­flu­ence the world in 2018.

Nowa­days, the world econ­omy is at a tran­si­tional and re­bal­anc­ing stage. Mone­tary poli­cies of West­ern de­vel­oped coun­tries need to re­turn to nor­malcy while de­vel­op­ing coun­tries in­clud­ing China face grave chal­lenges on en­ter­prise trans­for­ma­tion and in­dus­trial up­grad­ing. In to­day’s highly glob­al­ized world, in­ter­na­tional eco­nomic de­vel­op­ment will not nec­es­sar­ily be smooth. At the Cen­tral Eco­nomic Work Con­fer­ence, steady progress was once again em­pha­sized. It will re­main the guid­ing prin­ci­ple for the coun­try’s eco­nomic work in 2018.

The most im­por­tant realm to en­sure “steadi­ness” is risk con­trol. As China is elim­i­nat­ing its back­ward pro­duc­tion ca­pac­ity fea­tur­ing high pol­lu­tion, high en­ergy con­sump­tion and low ef­fi­ciency, the coun­try’s eco­nomic growth rate will in­evitably be af­fected. Fi­nan­cial risks pre­vi­ously con­cealed by high eco­nomic growth rates as well as governmental sup­ple­men­tary and com­ple­men­tary po­lices could pos­si­bly emerge. Prob­lems such as a real es­tate bub­ble and re­lated bad loans, risks on lo­cal gov­ern­ment debt de­fault, cap­i­tal flight, and de­val­u­a­tion pres­sure on RMB, as well as dis­lo­ca­tions in in­ter­net fi­nance and shadow bank­ing, will also put enor­mous pres­sure on the liq­uid­ity of China’s fi­nan­cial sys­tem. Ex­ac­er­ba­tion of any above-men­tioned risks could jeop­ar­dize the over­all sta­bil­ity of the coun­try’s fi­nan­cial sys­tem.

The re­port to the 19th Na­tional Congress of the Com­mu­nist Party of China (CPC) pointed out that sta­bi­liz­ing hous­ing prices and pre­vent­ing ex­ces­sive real es­tate bub­bles are im­por­tant tasks to avert sys­tem­atic risks. The Chi­nese gov­ern­ment is­sued a se­ries of poli­cies in 2017 to curb the pre­cip­i­tous rise of hous­ing prices. How­ever, hous­ing price rises in some re­gions of China were still big. Con­se­quently, the task of pro­mot­ing the prin­ci­ple of “houses for liv­ing, not spec­u­la­tion” and speed­ing up hous­ing sys­tem re­form, as well as the con­struc­tion of a re­lated longterm mech­a­nism, has be­come even more ur­gent. Some re­gions in China in­clud­ing Bei­jing and Zhe­jiang Province have be­gun test­ing new hous­ing poli­cies. At the same time, tack­ling prop­erty spec­u­la­tion at its root would re­quire China to im­prove its tax­a­tion sys­tem and pro­mote leg­is­la­tion as well as en­force­ment of real es­tate taxes.

“Progress” should mainly be re­flected in the cul­ti­va­tion of new eco­nomic mo­men­tum. The Chi­nese gov­ern­ment has deep­ened sup­ply­side struc­tural re­form, ac­cel­er­ated trans­for­ma­tion and up­grade of en­ter­prises and made real progress in cul­ti­vat­ing new eco­nomic mo­men­tum. um. Eco­nomic data re­leased by the Na­tional Bureau of Sta­tis­tics of China tes­tify to these points. In the e first three quar­ters of 2017, the to­tal al value added of in­dus­trial en­ter­prises es above des­ig­nated size rose by 6.7 per­cent year-on-year af­ter de­duct­ing ng the price fac­tor. High-tech in­dus­tries es and equip­ment man­u­fac­tur­ing rose e by 13.4 per­cent and 11.6 per­cent year- on-year, re­spec­tively. These num­bers rs in­di­cate that China’s man­u­fac­tur­ing g sec­tor is shift­ing to­ward mid­dle-to- high-end faster. More­over, in the same ame pe­riod, ex­ports of me­chan­i­cal and elec­tri­cal prod­ucts rose by 13 per­cent, ent, ac­count­ing for 57.5 per­cent in China’s na’s to­tal ex­ports. China’s man­u­fac­tur­ing g in­dus­try is be­com­ing more com­pet­i­tive itive on the global stage. In the first three ee quar­ters of 2017, China’s re­tail sales es amounted to about 26.3 tril­lion yuan an (US$4 tril­lion), up by 10.4 per­cent year-on-year. On­line re­tail sales to­taled aled about 4.9 tril­lion yuan (US$747 bil­lion), up by 34.2 per­cent year-on- year. New busi­nesses such as those in­volv­ing the shar­ing econ­omy are emerg­ing in China, and con­sump­tion on has be­come the lead­ing force to drive ive the Chi­nese econ­omy for­ward.

The ru­ral econ­omy is an­other key sec­tor for progress. The ru­ral vi­tal­iza­tion strat­egy, first men­tioned d in the re­port to the 19th CPC Na­tional nal Congress, will cre­ate new mo­men­tum tum and room for China’s eco­nomic growth. Im­bal­anced de­vel­op­ment be­tween ur­ban and ru­ral ar­eas has been a persisting prob­lem for China. na. At present, ur­ban-ru­ral ra­tio in per r capita in­come sits at 2.8:1, which in­di­cates a big in­come gap. More than 60 mil­lion peo­ple in the coun­try ntry re­main un­der poverty line, and most ost of them re­side in ru­ral ar­eas. Pac­ing ng up the ru­ral vi­tal­iza­tion strat­egy is es­sen­tial to com­plet­ing the goal of f build­ing a mod­er­ately pros­per­ous

so­ci­ety in all re­spects by 2020.

The ul­ti­mate goal of ac­cel­er­at­ing ru­ral re­forms is to bring pros­per­ity to the ru­ral pop­u­la­tion. This re­quires not only co­or­di­nated de­vel­op­ment of ur­ban-ru­ral ar­eas through bol­ster­ing agri­cul­ture with in­dus­trial de­vel­op­ment and trans­fer­ring sup­port from ur­ban to ru­ral ar­eas, but also in­ter­nal mo­men­tum for de­vel­op­ment in ru­ral ar­eas de­rived from pro­mo­tion of deep pro­cess­ing of agri­cul­tural prod­ucts and growth of ser­vice in­dus­tries, which will ex­pand chan­nels to in­crease in­come. As Chi­nese con­sumers el­e­vate their stan­dards for agri­cul­tural prod­ucts, agri­cul­tural tech­nol­ogy will also ad­vance rapidly. Huge cap­i­tal de­mand for in­fra­struc­ture in ru­ral ar­eas will cre­ate new room for in­vest­ment. As farm­ers’ liveli­hood im­proves, ru­ral ar­eas in China will be­come promis­ing mar­kets for con­sump­tion of elec­tric home ap­pli­ances, cars and more.

Com­plex sit­u­a­tions at home and abroad have con­fronted China with both chal­lenges and op­por­tu­ni­ties. Fac­ing thorny prob­lems in re­form, China needs to take in­no­va­tive mea­sures and make break­throughs in key sec­tors. The coun­try needs to build a mod­er­ately pros­per­ous so­ci­ety with re­duced wealth gap, leav­ing no one be­hind, while at the same time lead­ing global eco­nomic trends, build­ing a com­mu­nity of a shared fu­ture for mankind and mak­ing greater con­tri­bu­tions to the world. A sta­ble en­vi­ron­ment for eco­nomic growth is crit­i­cal for the Chi­nese econ­omy to main­tain vi­tal­ity and com­pe­tence. With a fine-tuned com­bi­na­tion of “steadi­ness” and “progress,” the Chi­nese econ­omy will en­joy healthy de­vel­op­ment in 2018.

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