Chinese officials expect bumpy ride in economic policy
2024.07.19 00:07
By Joe Cash and Ellen Zhang
BEIJING (Reuters) – Chinese officials acknowledged on Friday the sweeping list of economic goals re-emphasised at the end of a key Communist Party meeting this week contained “many complex contradictions,” pointing to a bumpy road ahead for policy implementation.
Following a four-day, closed-doors meeting led by President Xi Jinping, which takes place once every roughly five years, officials made a raft of pledges, from modernising the industrial complex to expanding domestic demand and from stimulating growth while curbing debt risks.
The initial summary of the meeting, known as plenum, did not contain details on how Beijing plans to resolve these tensions between these goals, such as how to get consumers to spend more while resources flow primarily to producers and infrastructure.
“Pushing forward Chinese-style modernisation faces many complex conflicts and problems, and we must overcome multiple difficulties and obstructions,” Tang Fangyu, deputy director of the policy research office of the Party’s central committee, said on Friday as committee members met the media.
These contradictions in Chinese policy efforts have been present for decades, as were goals to increase manufacturing value added, enhance social security, liberalise land use and improve local government tax revenues.
But making tough choices is an increasingly urgent task as the world’s second-largest economy faces multiple challenges, from weak domestic demand and deflation risks, to a relentless property sector downturn, a debt crisis in some cities and higher tariffs on Chinese goods from key trade partners.
China grew at a slower than expected pace in the second quarter, leaning hard on industrial output and external demand, but showing persistent domestic weakness.
Some analysts saw the fact that the plenum outcome borrowed heavily from China’s existing playbook as disappointing.
“Nothing new under the sun: the same industrial policies, the same sense of things,” said Alicia Garcia Herrero, chief economist Asia-Pacific at Natixis.
“Really no change in direction, no consumption-led growth, nothing. No sentence on the power of market forces, nothing. So, it’s really disappointing.”
