China’s new Chinese Communist Party (CCP) leaders promised yesterday to be ready to spend more if needed to shore up a shaky economic recovery, but gave no sign of plans for major changes.
A statement quoted by Xinhua news agency after an annual planning conference pledged more market-opening reforms next year.
The world’s second-largest economy is gradually pulling out of its deepest slump since the 2008 global crisis, but weaker-than-expected trade data for last month prompted suggestions the rebound might be faltering.
The leadership under CCP General Secretary and Chinese Vice President Xi Jinping (習近平) pledged a “proactive fiscal policy” and “prudent monetary policy,” Xinhua said, referring to willingness to boost spending if needed and keep credit easy so long as inflation stays low.
The conference is the first opportunity for the new leaders to announce their own plans for China’s economic course.
Most analysts expect them to stick largely to the goals of the party’s current five-year development plan, which runs through 2015.
Xi and other leaders who were installed last month in a once-a-decade handover of power are under pressure to overhaul an economic model based on exports and investment that delivered 30 years of rapid growth, but is running out of steam.
The World Bank and other analysts say Beijing needs to curb dominant state companies and promote service industries and consumer spending to keep incomes rising.
They say without prompt action, growth might stall, leaving China stuck at middle-income levels.
Companies, investors and political analysts are watching to see how far Xi and others on the seven-member ruling Standing Committee are willing to go to change the state-dominated economy.
They face potential opposition from state companies that might be hurt by changes and have influential allies in the party.
“If China does not change its strategy, it risks falling into the ‘middle income trap,’” former World Bank president Robert Zoellick said in a speech at a Beijing business conference last week.
Brief reports by Xinhua on yesterday’s statement gave no details of long-term plans, but affirmed the new leadership’s commitment to party pledges to promote reform, open markets further and encourage economic efficiency.
Economic growth fell to a three-and-a-half-year low of 7.4 percent in the three months ended on Sept. 30.
Factory output, consumer spending and other indicators are improving in the current quarter, but analysts say a recovery is likely to be gradual and too weak to drive a global rebound without improvement in Europe and the US.
Yesterday’s statement promised to “fully deepen reforms” and “firmly promote opening up” next year, Xinhua said.
The leaders said that “enhancing quality and efficiency of economic growth” will be a “central task.”
The leadership pledged to increase domestic demand, though it gave no indication how it will do that.