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strengthening the construction of economic mechanisms


Source: Global Times    Published: 2017-12-20

The Central Economic Work Conference, which concluded on Wednesday, stressed balanced growth, curbing financial risks and more efforts to improve economic quality.

The tone-setting annual economic meeting, held behind closed doors from Monday to Wednesday, reviewed the economic work of the past five years and set policy priorities for 2018.

The meeting is the first major policymaking conference after the 19th National Congress of the Communist Party of China. It is expected to also apply for the next five years.

In the coming three years, the country will strive for solid progress in curbing major risks, eradicating poverty and controlling pollution - known as the "three tough battles," according to a statement released after the meeting.

Experts say the process of reform is a balancing act between pushing for change while maintaining stability. Wan Zhe, chief economist with the International Cooperation Center of China`s National Development and Reform Commission, told the Global Times that "maintaining stability" should not be used to return to outdated economic development strategies.  

In 2018, authorities may strengthen the construction of economic mechanisms in a bid to supervise market problems through "policy normalization," Wan said.

Domestic economic performance has been generally stable with improved economic structure and quality growth, and the economy is expected to maintain a positive trend in 2018, Xu Hongcai, deputy chief economist at the China Center for International Economic Exchanges, told the Global Times.

Challenges persist

The Chinese economy, against all odds, has improved significantly and is on track to meet an average growth target of 6.5 percent by 2020, and the new central leadership is poised to launch a fresh round of policies in 2018.

Still, China may encounter some challenges amid increasingly fierce global competition, Wan noted.

"Global economic recovery trends have continued, and many countries and regions face the challenge of economic transformation and upgrading. The global monetary policy shows a tightening cycle and the US recently passed tax cuts, all of which will influence China`s economy," she said.

Wan noted that some policies targeting the domestic currency market have already been implemented in the first half of 2016, so their impact is expected to weaken in 2018.

A good balance should be kept between financial deleveraging and containing risks. Amid deleveraging and more stringent management of local debts, insufficient liquidity may otherwise lead to financial risks, Xu said.

In the coming three years, China will seek to foster a "virtuous circle" between finance and the real economy, between finance and the property sector, and within the financial system, according to the statement.

The property sector also requires close monitoring in 2018. "In 2016 and 2017, the government released a series of measures to regulate first and second-tier housing markets, but house prices are still on the rise. The authorities may need to control house prices with stronger market measures and long-term mechanism," said Lian Ping, chief economist at the Bank of Communications.

All those challenges can be resolved by a shift in government priorities from emphasizing the speed of GDP growth to a more high-quality, green and balanced growth, experts noted.

The National Bureau of Statistics is about to release a green development index to measure economic development using elements such as ecological protection, growth quality and public content, reported.

`Latest fruit`

Meanwhile, Xi Jinping Thought on Socialist Economy with Chinese Characteristics for a New Era has taken shape, according to the conference statement.

The thought is the "theoretical crystallization" of the past five years of practice in pushing forward China`s economic development, and the "latest fruit" of socialist political economy with Chinese characteristics, the statement said.

The meeting also described the thought as the "extremely precious spiritual wealth" of the CPC and the country. It must be adhered to for a long time and developed continuously.

According to the statement, the thought is mainly based on the new development philosophy, which was put forward by Xi in 2015 and features innovation, coordination, green development, openness and sharing.

Wan Zhe is a visiting fellow of Chongyang Institute for Financial Studies, Renmin University of China.

Key Words: China   economy   RDCY   Wan Zhe  

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