China pushes reform agenda
Supply-side restructuring key priority for economic work in 2017
China vowed to press ahead with supply-side structural reform in 2017, continuing to cut overcapacity, improving weak links and strengthening regulations on the real estate market in the next five years.
Experts said the efforts aim to stabilize the economy and shore up public confidence.
China expects substantial progress of the reform in five key areas next year, including cutting overcapacity, de-stocking, de-leveraging, lowering costs and improving weak links, and efforts should continue in reduction of steel, iron and coal capacity next year, with focus on “zombie enterprises,” read a statement issued Friday after the completion of the Central Economic Work Conference.
The Central Economic Work Conference, an annual meeting during which top Chinese leaders review the past year’s economic performance and map out plans for the next year, was held in Beijing from Wednesday to Friday.
President Xi Jinping
and Premier Li Keqiang addressed the meeting, summarizing the work on economic development in 2016 and arranging new plans for the next year, the Xinhua News Agency reported.
“The mission to deepen the supply-side structural reform is urgent in the face of economic downturn. China needs to find the new engine for economic development, since the real estate market, which has made great contribution in 2016, remained risky,” Tian Yun, an economist at the National Development and Reform Commission’s China Society of Macroeconomics, told the Global Times on Friday.
China will promote a stable and sound development of the real estate market in 2017 and establish a market-oriented and long-term mechanism that can curb a real estate bubble and prevent erratic fluctuations, read the statement.
“Houses are built to be inhabited, not for speculation,” the statement said.
It added that land supply should be increased reasonably in cities with strong pressure from rising prices.
Aside from reforms in the real estate market, supply-side structural reform also covers more fields, including reforms on the State-owned enterprises (SOEs), poverty alleviation and urbanization, said Tian.
Tian’s remarks echoed with the Friday statement which stressed that mixed-ownership reform, conducted through diversifying the shareholding structure of SOEs, is an ice breaker for overall SOE reform.
“China will take substantial steps in mixed-ownership reform in electricity, oil, natural gas, railways, civil aviation, telecommunications and military industries … Pilot reforms for State-owned asset investment companies, designed to make the ‘State’ a stakeholder instead of an SOE manager, will raise management and operational efficiency,” read the statement.
The conference also called for strengthening the reform of SOEs and State-owned assets and speeding up the creation of a flexible and efficient market-oriented operation mechanism.
Guidelines on SOE reform were issued in September 2015, promising mixed-ownership pilots, opening up more industries to private capital, and a modern enterprise system.
China has about 150,000 SOEs, holding more than 100 trillion yuan in assets and employing over 30 million people.
Financial reforms
“China will push forward fiscal, taxation and financial reform in a steady and proper manner. Revenue will be distributed between central and local governments in accordance with the clarified division of administrative responsibilities, and the formulation of the system will be quickened,” read the statement.
“A steady monetary policy and proactive fiscal policy would boost the real economy and reduce the outflow of capital,” Mei Xinyu, an associate researcher at the Chinese Academy of International Trade and Economic Cooperation, told the Global Times on Friday.
China will reform its financial supervision and regulation mechanism in an active, steady and proper way and work to establish a multi-layer capital market. The government has also vowed to improve the governance of State-owned commercial banks and push for the development of private banks in an orderly manner, according to Xinhua.
“The statement intended to stabilize the expectation of enterprises amid a decline of private investment in 2016,” said Mei.
The world’s second-largest economy grew 6.7 percent in the third quarter of the year, according to the National Bureau of Statistics, while private investment increased 2.9 percent from January to October, 0.4 percentage point higher than the first three quarters.
According to Reuters, that number is far below the above 20 percent growth in peak years.
The Friday statement also called for strengthening the protection of property rights of individuals and organizations, and correcting wrong judgments on the infringement of the rights of enterprises.
The Central Committee of the Communist Party of China and the State Council jointly released guidelines on November 27, stating that the country will provide equal, comprehensive and law-based protection to all property rights and encourage the participation of the public in the process.