Kor Kian Beng, China Bureau Chief

A tricky Chinese juggling act

Think of China as a juggler trying to keep three balls in the air, each emblazoned with the letter S. Drop one and the others might also fall, with serious impact for China and even the world.

That is because the balls represent steady growth, structural reforms and social stability, which are all deemed crucial for the Chinese Communist Party's (CCP) long-term political legitimacy.

This imagery is an easy way to remember the key takeaway from the recent session of its national legislature: China will be preoccupied with these goals in the near future and in juggling them well with almost equal intensity.

To be sure, the three goals are not exactly new, having been articulated or set by the government in previous years. But they were certainly underscored during the annual session of the National People's Congress (NPC).

For instance, China has signalled its desire for steady growth by setting a target for economic expansion this year, despite growing calls for it not to do so to show its seriousness in weaning the country off its gross domestic product obsession.

The target, higher than some forecasts, also signals the government's intent to provide policy support to ensure steady growth. But the government has also stressed its commitment to deepening economic restructuring efforts by lowering its economic growth target from 7.5 per cent last year to around 7 per cent this year, its lowest since 2004.

The emphasis on social stability was clear, too, with Premier Li Keqiang devoting a larger proportion of his government work report this year to "min sheng" or livelihood issues as he listed numerous steps to improve on environmental protection, education, healthcare and retirement.

One would, however, be hard-pressed to tell from the NPC session which goal is more important for the leadership.

Even as he lowered China's growth target this year, Premier Li also sought to dispel any notions that structural reforms would supersede steady growth in importance as he repeatedly stressed the need for balance between growth and reforms.

"The growth rate must be kept steady to ensure that economic performance is stable, and that employment and personal incomes carry on increasing, thus creating a favourable environment for making structural adjustments and transforming the growth model," said Mr Li.

"At the same time, structural adjustments must be made to consolidate the foundation for ensuring steady growth."

One can only conclude that all three goals are important to the Chinese leadership, and rightly so because they are intricately intertwined. China cannot afford to drop any ball at this point.

The first goal of steady growth remains important so as to create enough jobs and prevent social unrest, a big fear of the CCP.

Since the reforms and opening up in the late 1970s, a key plank of the political compact with the people has been good jobs and income growth that is possible only with decent economic growth.

The latest signs of the slowdown gaining pace had made many wonder whether China would focus more on ensuring growth by resorting to stimulus measures and abandoning the much-needed reforms as a result. But Chinese leaders also know structural reforms are equally crucial as days of growing the economy through investment, cheap labour and low-value exports at the expense of the environment are too costly to continue.

Among the key reforms pursued since the CCP's policy-setting summit in November 2013 are minimising the state's presence in the economy, freeing up the financial and service sectors as future engines, and enhancing the social safety net so as to increase domestic demand.

Without these reforms, steady growth in the long run are even harder to achieve if China gets stuck in a middle-income trap. Focusing on fast growth again instead of reforms means kicking the problem down the road for future generations of leaders.

Therefore, the Chinese leadership under President Xi Jinping has often signalled its tolerance of slower growth within an acceptable range as long as unemployment is kept low and economic restructuring efforts are advanced.

But as economic reforms take time to implement and to reap benefits while political pressure is rising due to slowing growth, China has tried to buy more time for itself by assuaging public dissatisfaction through its crackdown on social ills such as corruption and environmental pollution.

The anti-graft drive, which has promised to target both "tigers and flies" or senior and junior officials, is also aimed at speeding up reforms by removing officials reluctant to implement them so as not to lose their vested interests.

But now, the same campaign, which has targeted more than 60 ministerial-grade officials and over 10,000 rank-and-file cadres, is also being blamed for slowing growth and reforms, as a culture of doing nothing so as not to invite trouble has crept into the bureaucracy. In juggling the social stability ball, China has to ensure it does not drop the other balls.

The difficulty in doing so and the desire for stronger economic growth in the short run might lead some to wish for China to be more focused on its policy goals. But for the long-term good of the country and perhaps even the world, China needs to stay committed to all three goals.

China's old economic model is not sustainable amid rising wages and discontent over pollution, and has even affected foreign countries negatively through its smog problem, among others.

An internally unstable China could also prove detrimental to regional stability, with the government often adopting a more aggressive foreign policy as distraction.

So for the foreseeable future, it is good and imperative for China to remain a juggler of its top three policy goals. And of course, a very good one at that.

kianbeng@sph.com.sg