News analysis

Economic reforms: Xi Jinping makes sure everyone's on same page

People's Daily articles seen as tacit criticism of State Council

Two authoritative pieces on China's economic policy in the People's Daily this week could be a new push by President Xi Jinping for his reform efforts despite slowing growth and resistance among officials, say analysts.

On Tuesday, the Communist Party mouthpiece ran over nearly two pages a 20,000-word speech by Mr Xi, in which he expounded on his view of China's economy and also his policy of supply-side structural reforms.

Speaking to provincial and ministerial-level officials in January, Mr Xi said he felt the need to explain his signature policy, which he had outlined last December, again as officials did not understand its goal.

He said his concept of supply-side structural reform - which involves cutting red tape, lowering tax and improving innovation -was not the same as supply-side economics in the West.

"Our supply-side reform, to say it in a complete way, is supply-side structural reform, and that's my original wording used at the central economic work conference. The word 'structural' is very important," he said.

What has piqued the curiosity of analysts is that the speech was published a day after an interview with an "authoritative person" on China's economy and the most suitable growth strategies.

The People's Daily ran the interview, done in a question- and-answer format, on its front page and the entire second page.

The interviewee warned against being over-optimistic about China's economic trend - that "it would be L-shaped, rather than U-shaped, not to mention V-shaped" - and relying on credit expansion to boost growth.

The remarks are seen to be an indirect criticism of policies by the State Council this year that led to a record jump in credit, which helped stabilise the economy but also prompted concerns that China could be returning to the old ways of stimulating growth through investment and leverage.

While senior officials have expressed optimism about the economy, whose 6.7 per cent first-quarter growth met government targets and market forecasts, the interviewee struck a contrasting tone.

Analysts reckon that the interviewee has to be someone very senior, possibly Mr Xi or his top economic adviser Liu He.

Hong Kong-based economists Wang Tao and Zhang Ning of UBS, in a note on Monday, said the interview shows "different views in the government about current policies and the senior leadership has signalled the desire to correct the impression that the government has scaled down reform in exchange for more leverage to support growth".

University of International Business and Economics analyst Ding Zhijie told The Straits Times he does not think there is a divergence of views over China's economic direction.

"But there are officials who remain unclear over the priorities of the top leaders... The articles aim to increase their understanding."

OCBC's economist Tommy Xie said the divergent views could be a source of worry over their impact on the implementation of reforms.

"But the two articles have helped send calming signals to the market that China's leaders remain committed to long-term reforms despite short-term pain in slowing growth," he told The Straits Times.

A version of this article appeared in the print edition of The Straits Times on May 12, 2016, with the headline 'Economic reforms: Xi makes sure everyone's on same page'. Subscribe