China will implement various reforms across many different industries. State-owned enterprises, finance, fiscal policy and social security are sectors that need reforming. According to an economic statement released by the Political Bureau of the CPC Central Committee, these changes will start to take place in 2017.
President Xi Jinping oversaw the meeting, who is also general secretary of the CPC Central Committee. Other key notes within the statement include China opening up the economy to attract foreign investment and enhancing the rule of law. Introducing proactive measures shall tap into the consumption potential within the economy.
Economic growth continued at a “reason” level over the course of the previous year. Increased quality and efficiency were pleasing aspects, according to the statement. Challenges facing the economy were not overlooked. Industrial overcapacity and high corporate debts levels concern the government. Furthermore, demand for infrastructure and construction is contracting. Certain regions will also see economic difficulty, even if it does not appear on a national level.
The 5 key areas within the economic statement that need substantial progress include: lowering corporate costs, destocking, deleveraging, reducing industrial overcapacity and improving weak links. If successful, 2017 should continue to become closer to economic stabilization. As a result, citizens should notice a higher quality of life. Through reforms, restructures and stable economic growth, China’s economy should be able to hold firm against potential risks.
2017 should set the foundation for the country to build towards their economic targets. 12 months is a relatively short amount of time to achieve all goals set out. However, if strong progress is made, economic stability is much closer than analysts thought. Political and social stability had been recognised within the statement, two factors that can disrupt a healthy economy. However, the statement conceded national security needs addressing and remains complicated. New guidelines issued will enhance safeguards to try and reduce risk. Through an integration of resources, and an efficient, centralized and authoritative leadership system, national security will become tighter.
Once again the Chinese government have shown themselves to be self-aware and competent. Through conceding that challenges await, but announcing plans to confront, the country can feel at ease.
Stating the consumption potential within the country needs highlighting. Combined with the industrial overcapacity, these takeaways from the economic statement draws attention to the transitioning economy. Clearly, the country is moving towards a service and consumption based economy. Though the government suggests that may try and speed this process up.
Known threats in 2017 are addressed by the economic targets. Predicting all factors is impossible. Will these be the stumbling block China’s economy meets?