‘CHINA TO OPEN DOOR WIDER TO INVESTORS’
Xi pledges to clean up rules and practices that hinder unified market and fair competition
BEIJING
CHINA will deepen economic and financial reforms and further open its markets to foreign investors as it looks to move from high-speed to high-quality growth, said President Xi Jinping yesterday.
China would push ahead with market-oriented reforms of its foreign exchange rate as well as its financial system, and let the market play a decisive role in the allocation of resources, said Xi at the opening of a key, twice-adecade Communist Party Congress.
“China’s open door will not be closed, it will be only be opened wider,” said Xi.
“The government will clean up rules and practices that hinder a unified market and fair competition, support development of private firms and stimulate vitality of all types of market entities,” said Xi, while pledging to further open China’s services sector to foreign investors.
However, while expressing support for market reform and private firms, Xi also called for stronger, bigger state firms.
Other painful reforms that many economists say are needed have also moved slowly under Xi. They include overhauling China’s bloated and debt-laden state sector, fixing the fiscal system to tackle local government debt and bringing in new property taxes to ward off housing bubbles.
China should strengthen consumption as a foundation for economic development, said Xi, and would expand the middle class and narrow the gap in development between rural and urban areas.
Beijing’s campaign to rein in high debt levels and industrial overcapacity would continue as part of supply-side structural reforms, said Xi.
Fiscal reform has been a key objective of policymakers as Beijing tries to make local governments take more responsibility for their own budgets and debt.
China is expected to post its strongest economic growth in several years this year, riding on a government-led construction boom, but analysts said it is still relying heavily on credit-fuelled stimulus.
Standard & Poor’s (S&P) ratings agency said on Tuesday China had only taken “baby steps” to contain its rapid build-up in debt and needed to take stronger measures. S&P downgraded the country’s sovereign credit rating last month, saying its credit growth was still too fast.
Meanwhile, China’s foreign exchange regulator said he expected yuan exchange rates to have a more stable foundation after the congress, amid market expectations of a move to widen the yuan’s daily trading band.
The central bank had “basically exited” from its regular yuan intervention as the currency had become more stable, said Pan Gongsheng, head of the State Administration of Foreign Exchange.
“We can also see that the exchange rate is market-driven,” said Pan, who is also a vice-central bank governor, speaking on the sidelines of the congress. Reuters