Chi­nese lead­ers pledge sta­ble cur­rency, less fi­nan­cial risk

Con­cern about pos­si­ble threats from rapidly ris­ing debt

Kuwait Times - - BUSINESS -

BEI­JING:

China’s lead­ers pledged yesterday to keep its cur­rency sta­ble and trim bloated heavy in­dus­try as they wrapped up an an­nual plan­ning meet­ing amid pres­sure from US Pres­i­dent-elect Don­ald Trump and Euro­pean lead­ers over trade. Re­spond­ing to con­cern about pos­si­ble threats from rapidly ris­ing debt, the of­fi­cial Xin­hua News Agency said lead­ers at the three-day meet­ing also promised to re­duce fi­nan­cial risks.

The re­ports sug­gested Pres­i­dent Xi Jin­ping’s gov­ern­ment plans no sig­nif­i­cant changes de­spite calls by re­form ad­vo­cates to move faster on pledges to make the world’s sec­ond-largest econ­omy more pro­duc­tive by giv­ing mar­ket forces a big­ger role. There was no in­di­ca­tion of con­ces­sions to pres­sure from Wash­ing­ton and Europe, which com­plain Bei­jing blocks ac­cess to its mar­kets in vi­o­la­tion of its free-trade com­mit­ments. For­eign com­pa­nies com­plain Chi­nese reg­u­la­tors are try­ing to squeeze them out of tech­nol­ogy and other promis­ing in­dus­tries.

Trump, who takes of­fice in Jan­uary, has vowed to press Bei­jing for ac­tion by im­pos­ing 45 per­cent tar­iffs on Chi­nese goods. Few econ­o­mists ex­pect him to go that far but any sanc­tions could hurt Chi­nese ex­port in­dus­tries that sup­port mil­lions of jobs. The Eco­nomic Work Con­fer­ence, at­tended by Xi and other Com­mu­nist Party lead­ers, is a throw­back to China’s era of cen­tral plan­ning but still plays a key role in di­rect­ing de­vel­op­ment of the state­dom­i­nated econ­omy.

Tighter con­trols

The Chi­nese lead­er­ship is try­ing to shore up eco­nomic growth while re­duc­ing re­liance on debt that econ­o­mists worry is dan­ger­ously high. Growth held steady at 6.7 per­cent over a year ear­lier in the quar­ter end­ing in Septem­ber, propped up by a boom in real es­tate sales and credit growth. Fore­cast­ers ex­pect growth to cool as reg­u­la­tors tighten con­trols to cool bank lend­ing and hous­ing costs.

Some econ­o­mists and busi­ness groups say they ex­pect no ma­jor new ini­tia­tives un­til af­ter a Cab­i­net reshuf­fle fol­low­ing a congress of the rul­ing party late next year. That gath­er­ing might see the re­tire­ment of some fig­ures from the party’s seven-mem­ber Stand­ing Com­mit­tee, China’s rul­ing in­ner cir­cle, giv­ing Xi a chance to for­tify his al­ready ex­ten­sive pow­ers by pro­mot­ing al­lies.

The lead­er­ship promised to en­sure the “ba­sic sta­bil­ity” of the yuan, ac­cord­ing to Xin­hua. The cur­rency has weak­ened against the dol­lar, prompt­ing con­cern it might be al­lowed to fall fur­ther. Trump has ac­cused Bei­jing of sup­press­ing the yuan’s ex­change rate to help its ex­porters. Econ­o­mists say while that was true ear­lier, the Chi­nese cen­tral bank has spent heav­ily from its re­serves in re­cent months to prop up the yuan’s value. Yesterday’s state­ment promised to press ahead with “sup­ply-side struc­tural re­forms,” a ref­er­ence to shut­ting down ex­cess ca­pac­ity in in­dus­tries in­clud­ing steel and ce­ment in which sup­ply ex­ceeds de­mand. Euro­pean gov­ern­ments face com­plaints by steel­work­ers and oth­ers that a flood of low-cost Chi­nese ex­ports threat­ens their jobs. US alu­minum pro­duc­ers say they are be­ing driven out of busi­ness by Chi­nese im­ports. — AP

BEI­JING: A woman jumps for a photo near an LED ceil­ing dis­play­ing images of gold and jew­elry. — AP

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