In China, officials acknowledged at the end of a major Communist Party meeting this week that there are “many complex contradictions” and pointed to a bumpy road ahead for policy implementation.
Pressure for profound changes to the way China, the world’s second-largest economy, operates has increased this year, with consumer and
Business confidence at home and abroad at record lows
Leaders are increasingly concerned about China’s export dominance.
After a four-day closed meeting chaired by the President
Xi Jinping, which takes place approximately once every five years,
officials made a series of seemingly contradictory promises, from
modernization of the industrial complex and at the same time expansion of the domestic
demand to stimulate growth while reducing the debt burden
risks.
The first summary of the meeting, known as the plenum, contained no
contain details on how Beijing plans to resolve tensions
between policy goals, such as how to encourage consumers to spend more, while resources flow mainly to producers and infrastructure.
In China, there is growing concern that without structural change
gives consumers a bigger role in the economy, the debt will
continue to outpace growth to finance Beijing’s reforms
industrial modernization and global prominence goals.
That raises the stakes. Some analysts warn that the current path
fuel risks from a prolonged period of near-stagnation and
persistent threats of deflation such as those that have occurred in Japan since the 1990s.
“High debt levels plus increasing deflationary pressures
could eventually result in a Japanese style… low growth and very
“Low inflation,” said China chief Julian Evans-Pritchard
economics at Capital Economics.
“I think that would force them to change course.
current policy. But that may not happen right away. That
“It may not happen for a few years.”
There have been contradictions in Chinese policy efforts
for decades, as well as the objectives of increasing production value
added, improve social security, liberalize land use and
local government tax revenues.
But making difficult choices is becoming increasingly urgent.
China grew at a slower-than-expected pace in the second quarter,
heavily reliant on industrial production and external demand, but
show persistent domestic weakness.
Speaking at a press conference on Friday alongside other
Party officials, Tang Fangyu, deputy director of the central
The Commission’s policy research bureau acknowledged the challenges.
“The deeper the reform, the more complex and acute the
“It touches on conflicts of interest,” Tang said.
“Implementing Chinese-style modernization faces many challenges
complex conflicts and problems, and we have to overcome multiple problems
difficulties and obstacles.”
The European Union Chamber of Commerce in China said that the
“it is positive that the Chinese leaders are again taking many of the
the headwinds facing the country’s economy,’ but noted
The outcome was largely “a repetition of points.”
“There does not appear to be any deviation from (China’s) immediate
priority, namely balancing economic recovery with
concerns about national security, while maintaining social stability.”
