TechniciansworkinacloudcomputingcenterinFuzhou,capitalofsoutheastChina鈥檚FujianProvince,onApril24XINHUA
Themeetingpointedoutthatdespitestablegrowth,theChineseeconomyisnowfacingnewchallengesandproblemsandthatexternalcircumstanceshavechangedsignificantly.Whatarethesenewchallengesandproblems?Andwhatarethechanges?XuHongcai,DeputyChiefEconomistoftheChinaCenterforInternationalEconomicExchange(CCIEE):Asfarasthedomesticlandscapeisconcerned,China鈥檚economyisnowfacinggreatdownwardpressure.Inthesecondquarter,investment,consumptionandexportsexperiencedasignificantslowdown.Investmentandconsumptionincreased6percentand9.4percentrespectively,whilethetradesurplusnarrowed.
Thestock,foreignexchangeandbondmarketshaveseendrasticfluctuations,resultinginmountingpotentialrisks.Fixedassetinvestmentincreased6percent,markingarecordlow.Thedramaticdeclineininfrastructureinvestmentisprimarilycausedbymeasuressuchasthedeleveragingofstate-ownedenterprisesandthestandardizationofpublic-privatepartnershipprojects.
Fiscalrevenue,taxrevenueinparticular,hasgrownquickly,whichhasallowedau-thoritiestoadoptamoreproactivemonetarypolicyaswellasimprovingitseffectivenessinexpandinginvestmentandrestructuringtheeconomy.
Chinashouldkeeppacewiththechangestakingplaceintheworldandgiveprioritytostabilitybyfocusingonsteadyemployment,finance,foreigntradeandinvestment.Effortsshouldalsobemadetoseekimprovementandgrowthamidstability.
YuanYouwei,DeputyDirectoroftheCommunicationDepartmentofCCIEE:Iwouldliketoapproachthetopicwithafocusontheexternalenvironment.Firstofall,significantchangeshavetakenplaceintheworldeconomiclandscape.Theemergenceofunilateralismandtradeprotectionismhasbroughtaboutgreatuncertaintyintheworldeconomyandseverelyunderminedinvestorconfidence.TheInternationalMonetaryFundhaslowereditsexpectationsforglobaleconomicgrowthinthesecondhalfoftheyear,andsomeacademicinstitutionsandthinktanksalsofearthatunilateralistandprotectionistpracticescouldtriggeraglobalrecession.
Secondly,theongoingtradewarwagedbytheUnitedStatesagainstChinaisseeminglyaresponsetotheSino-U.S.tradeimbalance.Butinessence,itisanoverreactiontoChina鈥檚rapidriseinrecentyears.TheUnitedStatesseesChinaasitsbiggestopponentandistryingtocontainitsdevelopment,especiallyinareasofcoretechnology,whichposesachallengetothefuturedevelopmentofthelatter.
Thirdly,asunilateralismandprotectionismincreaseworldwide,majoreconomiesintheWestsuchastheUnitedStates,JapanandtheEuropeanUnion(EU)haveintensifiedtheirattemptstoremoldworldtraderules,demonstratedbythetariffagreementreachedbetweentheUnitedStatesandtheEU.Accordingtosomemediareports,JapanandtheUnitedStatesarealsoplanningtoholddiscussionsovertariffs.Inmyview,thesemovesaretargetedatreshapingworldtraderulesinaccordancewiththevaluesheldbytheWest.Inthefaceoftheseexternalcircumstances,China鈥檚economicdevelopmentisverylikelytoencounternewproblemsandchallenges.
Policymakersatthemeetingproposedthatimprovingweaklinksshouldbeconsideredakeytaskindeepeningsupplysidestructuralreform.Progressshouldalsobemadeinstrengtheningthecountry鈥檚abilitytoinnovateandfosternewgrowthengines.Whatarethesepotentialnewgrowthengines?Andwhataretheweaklinksthatneedtobeimproved?
JiangJiang,DirectoroftheInnovationStrategyDepartmentoftheMacroEconomicResearchInstituteoftheStateDevelopmentandReformCommission:Inanarrowsense,newgrowthenginesarethosethatwillleadindustrialtransformationandupgrading.Currently,peopletendtodeemnewbusinesstypessuchasthedigitaleconomy,sharingeconomyandbiologicaleconomy,ornewtechnologiesconcerningenergyconservationandenvironmentalprotectionasnewgrowthenginesunderpin-ningfutureeconomicdevelopment.Thesestrategicemergingindustrieshavehugepotentialandrepresentthedirectionoffuturedevelopment.
Inthefirsthalfoftheyear,whiletraditionalindustrieswereexperiencingdecapacityandslowdown,newtechnologiesinthebiologicalandinformationindustriesaswellasnewtypesofbusinesssuchasthesharingeconomy鈥攑oweredbycombiningtheapplicationoftheInternet,bigdataandcloudcomputing鈥攈aveassumedthemantleofinjectingnewvigorintothenationaleconomy.
Ontheflipsidehowever,problemsemergedinthecourseoffosteringnewgrowthengines,suchastheheavyshocksustainedbysanctionsonZTE,whichindicatesthatChinastilllagsbehindthedevelopedworldintermsofcorecompetitivenessandtechnologicalinnovationandapplicationinsomesectors.
Inabroadersense,newgrowthimpetusdoesnotonlyexistinemergingindustries,butintraditionalsectorstoo.Aslongasanindustryhasthecapacitytofurtherraiseaddedvalueandproducequalitybrands,wecansaythereispotentialnewgrowthimpetusinthisindustry.
Chinacanreinvigorateemergingandtraditionalindustriesbyimprovingtheinstitutionalenvironmentandimprovingtheenvironmentforinnovation.Tothisend,Chinaneedstofocusonitsweakareassuchasinnovationandfundamentalresearch.
Itwassuggestedatthemeetingthatproblemsarisingfromtherealestatemarketshouldbemetwithfirmresolutions.Effortsshouldbeacceleratedtoestablishalong-termmechanismforthestableandhealthydevelopmentoftherealestatemarket.Whatisthislong-termmechanism?Howdoesitdifferfromthecurrentregulatorymechanism?Whatnewpoliciesareinthecards?
XuHongcai:Sincethebeginningofthisyear,housingpriceshavebeenrelativelystableinfirst-tiercities,butpricesinthird-andfourth-tiercitieshaveshownaslightupwardtrend.Therefore,along-termmechanismneedstobeestablishedtotreatbothsymptomsandrootcausesinthepropertymarket.
Firstly,toaddresstherootcauses,therelatedsystemsandmechanismsneedtobeimproved,suchasencouragingbothrentingandpurchasing,andestablishingamulti-channelsupplymechanism.Ifmeasuresaretakentooptimizesupplyatthesource,thesurgeofpropertypricescanbeeffectivelycurbed.Infact,relatedpoliciestothisendhavebeenineffectsincelastyear.
Secondly,urbanandindustrialdevelopmentplanningshouldbescientificandrational.Attentionshouldbepaidtotheintegrationofcityandindustriesaswellasthecoordinateddevelopmentofthetwo.Considerationshouldbegiventolocalcomparativeadvantages,andreplicativeconstructionshouldbeavoided.
AresidentialhousingprojectinShenzhen,southChina鈥檚GuangdongProvinceXINHUAThirdly,progressneedstobemadeinmarket-orientedlandreformtofacilitatetheorderlyflowoflandasaproductionfactor.Immobilityleadstotheshortsupplyofland,whichisamajorcauseofskyrocketinghouseprices.
Fourthly,thesocialsecuritysystemmustbefurtherimprovedandequalaccessshouldbeguaranteedtobasicpublicservices.Thegovernmentsofthird-andfourth-tiercitiesshouldincreaseinvestmentinpublicfacilitiesconcerninghealthcare,educationandculture,andnarrowthegapbetweencitiesinanefforttoaddressthecausesmotivatingpeopletofloodintothecountry鈥檚majorurbancenters.Thereformofthehouseholdregistrationsystemshouldalsobeacceleratedtothisend.
Lastly,fiscalandfinancialpoliciesshouldbegearedtoensurethestabledevelopmentoftherealestatemarket.Bankcreditpoliciesshouldbedifferentiatedtoharnessspeculationandguaranteerigiddemandismet.ItwasdemandedatthemeetingthatthelegalrightsandinterestsofforeignfundedenterprisesinChinabeprotected.InthecontextoftheSino-U.S.tradewar,whatmessagedoesthatconvey?
YuanYouwei:AnofficialvoicefromtheChineseGovernmentonthismatterissignificant.Tomyknowledge,intheUnitedStatesthereisalotofmisunderstandingaboutChina鈥檚attitudetowardsforeignenterprisesinthecountry,particularlyaroundtheprotectionofintellectualpropertyrightsandtechnologytransfer.Inpartsofthemediaandsomethinktanks,thereistheassumptionthatforeignenterprisesinChinamayseetheirrightsandinterestsunderminedbecausetheUnitedStatesinitiatedatradewar.Againstthisbackdrop,avoicefromChina鈥檚topleadershipcanhelpcleartheairandbolsterforeignbusinesses鈥檆onfidenceintheChinesemarket.
TheresponseisalsoinlinewithrecentmeasuresimplementedbyChinatoopenwidertotheoutsideworld.ItisworthmentioningthatmanyU.S.entrepreneursinChinaarehopingthatthetradewarwillendassoonaspossible,becausetheybelieveitisdifficulttofindanotherplacewherethebusinessenvironmentisasgoodasitisinChina.
Afterfourdecadesofreformandopen-ingup,Chinahasdevelopedcompletesupplyandindustrialchains.Itishardtofindsuchalargemarketandidealproductionbaseelsewhere.
ThemessagefromtheChineseGovernmentwillnotonlydispelmisunder-standingsandone-sidedinterpretationsaboutChina,butalsomakeclearthecountry鈥檚determinationtofurtheropenup.
CopyeditedbyLaurenceCoultonCommentsto
CPCMeetingStressesEconomicStabilityinH2
Chinawillkeepitseconomyonastableandhealthydevelopmenttrackwithaproactivefiscalpolicyandprudentmonetarypolicyinthesecondhalfof2018,accordingtoameetingofthePoliticalBureauoftheCPCCentralCommitteeonJuly31.
ThemeetingstressedthatChinawillmaintainthebasictoneof鈥渟eekingprogresswhilemaintainingstability鈥漟oritseconomicworkandallowtheeconomytocontinuetoperformwithinareasonablerange.
Effortsshouldbemadetopushsupplysidestructuralreformandwinthe鈥渢hreetoughbattles,鈥漚ccordingtoastatementreleasedafterthemeeting.
China鈥檚economyhasmaintainedsteadygrowthwithgoodmomentuminthefirsthalfyear,accordingtothestatement.
However,theeconomystillfacessomenewchallengesandtheexternalenvironmenthaschangednotably.Chinashouldfocusonthe鈥減rincipalcontradiction鈥漚ndtaketargetedmeasurestosolveit,thestatementsaid.
Thecountrywillcontinuetoimplementaproactivefiscalpolicyandprudentmonetarypolicywhilemakingpoliciesmoreforward-looking,flexible,andeffective.
Fiscalpolicyshouldplayabiggerroleinexpandingdomesticdemandandstructuraladjustments.Chinawillmaintaincontroloverthefloodgatesofmonetarysupplyandkeepliquidityatareasonableandamplelevel.
Effortsshouldbemadetokeepemployment,thefinancialsector,foreigntrade,foreignanddomesticinvestments,andexpectationsstable.
Thelegitimaterightsofforeign-fundedcompaniesinChinawillbeprotected,accordingtothestatement.
Thecountryshouldmakestrengtheningareasofweaknessanimportanttaskindeepeningsupply-sidestructuralreform,withintensifiedeffortstobemadeinimprovinginfrastructure.
Workshouldalsobedonetoimproveinnovationcapability,developnewenginesofgrowth,eliminateinstitutionalbarriersforcuttingexcessivecapacity,andlowercostsforcompanies.
鈥淐hinamustbettercombinethetaskofforestallinganddefusingfinancialriskswithservingtherealeconomy,鈥漷hestatementsaid.
Tothatend,thecountryshouldstandfirmonreducingtheleverageratio,ensuretheproperpolicyintensityandtempo,andcoordinatethetimingofunveilingnewpolicies.
鈥淭hroughinnovationofmechanisms,Chinamustraisethecapacityandwillingnessoffinancialinstitutionstoservetherealeconomy,鈥漷hestatementsaid.
Themeetingcalledforpressingaheadwithreformandopeningupandcontinuingtorolloutmajoreffectivereformmeasures.Crucialpoliciesofexpandingopeningupandsignificantlyrelaxingmarketaccessshouldbeimplemented,andthejointconstructionoftheBeltandRoadshouldbeadvancedindepth.EffortsshouldbemadetomakeChina鈥檚firstimportexpo,theChinaInternationalImportExpo,successful.
Themeetingstressedthattheproblemsinthepropertymarketmustberesolvedproperly.Adifferentiatedapproachtopropertymarketregulationindifferentcitiesshouldbeupheldfirmlytopromotebalancedsupplyanddemand.
Theexpectationshouldbeproperlyguidedandthemarketordershouldberegulatedtofirmlycurbtheriseinhomeprices.Theestablishmentofalong-termmechanismtopromotethestableandhealthydevelopmentofthepropertymarketshouldbeaccelerated.
(Source:XinhuaNewsAgency)