China to focus on high-quality growth

Tackling major financial risks, pollution, poverty also top priorities for next 3 years

China's top leaders have decided that for the next year the nation should emphasise quality of growth rather than its speed, and shift from "Made in China" to "Created in China".

They also listed curbing major risks, eradicating poverty and fighting pollution as top economic priorities for the next three years as the country aims to shift from high growth to high-quality development.

These pledges were laid out yesterday at the close of the three-day Central Economic Work Conference chaired by President Xi Jinping.

The closed-door annual conference, attended by top officials from the central government, ministries, provinces and the military, is keenly watched by investors for clues on China's policy directions for the year ahead.

State media reported that "Xi Jinping Thought on Socialist Economy with Chinese Characteristics for a New Era has taken shape", an apparent offshoot of the "Xi Jinping Thought" that was enshrined in the party charter at the 19th National Congress of the Chinese Communist Party in October.

The leaders decided that preventing financial risks would be the main focus of the government in the next three years, saying that all "illegal financial activities" would be stamped out and supervision strengthened over "weak areas".

This comes as Beijing take steps to deal with a massive debt overhang, especially in the state sector, which stood at nearly 170 per cent of gross domestic product by the end of last year.

On eradicating poverty, China said it will not "lower standards" nor "overstretch its targets". It will focus its attention on targeted groups and step up efforts to reach out to the far-flung poor areas to fulfil Mr Xi's promise of wiping out extreme poverty by 2020.

As for fighting pollution, the key would be to revamp industries, eliminate backward production capacity, restructure the energy and transport mix, as well as improve energy conservation.

The Central Economic Work Conference usually decides the growth target for the new year, which is formally announced by the premier at the annual parliamentary session in March.

Analysts expect the target to be slightly lowered from this year's level of around 6.5 per cent.

China's economy beat the government's target to grow at 6.9 per cent in the first three quarters of this year. But this is unlikely to be sustainable given the top leadership's emphasis on fighting a three-pronged battle against financial risks, poverty and pollution.

The emphasis on higher-quality growth also saw the meeting make promises to deepen supply-side structural reforms, speed up state-owned enterprise reforms, further open up the Chinese markets for private and foreign investors, improve social services such as education and healthcare, and speed up work on environmental protection.

UOB economist Ho Woei Chen noted that these policy measures are a reiteration of what the government has said before. "The important message here is that the government is placing less emphasis on high growth rates going forward," said Ms Ho.

A version of this article appeared in the print edition of The Straits Times on December 21, 2017, with the headline 'China to focus on high-quality growth'. Print Edition | Subscribe