China’s top leaders vow to limit debt

beijing — China’s top leaders said they will effectively control leverage next year and prevent major risks, stepping up their pledges to ensure stability amid rising debt.

Authorities will aim to give more support to the real economy and promote higher-quality and more efficient development, according to the official Xinhua news agency, citing a statement late on Friday after a Communist Party Politburo meeting led by President Xi Jinping.

Policy makers mapped out three major tasks, placing risk reduction as the top priority. “Leverage should be effectively controlled, the financial sector should better support the real economy and progress should be made in reducing risks,” the statement said.

Poverty reduction and cutting pollution were listed as the other two missions. The Politburo also stressed social stability, work safety and property reforms, according to the statement.

The meeting of senior leadership is a prelude to the Central Economic Work Conference expected to be held later this month. There, policy makers have historically established priorities and set the tone for monetary and fiscal policies in the coming year, saying at their December 2016 gathering they planned prudent and neutral monetary policy in 2017.

Top priority

“This sets the tone for the upcoming central economic conference, making deleveraging the top priority for 2018,” Shen Jianguang, chief Asia economist at Mizuho Securities Asia in Hong Kong, said. He said policy makers are signalling they may tighten monetary policy.

Bloomberg Economics economists Fielding Chen and Tom Orlik estimate China’s total debt will reach 327 per cent of GDP by 2022. — Bloomberg