China Economy

Urbanisation and domestic consumption Beijing's economic priorities

New leadership's first Central Economic Work conference identifies key strategies for boosting growth, including faster pace of urbanisation

PUBLISHED : Monday, 17 December, 2012, 12:00am
UPDATED : Monday, 30 May, 2016, 5:01pm

Promoting domestic consumption and urbanisation is at the heart of a blueprint for the mainland economy thrashed out at a weekend conference of leaders.

"China will actively and steadily push forward urbanisation next year, with a focus on improving quality of the efforts," Xinhua said in a statement after the two-day Central Economic Work Conference in Beijing, the first such meeting under the Communist Party's new leaders.

The country's annual economic policy-setting conference is widely watched by analysts for insight into the strategies guiding economic development in the world's second-largest economy.

In the event, there were no surprises, as most of the policies were more of the same or had been telegraphed beforehand.

"Expanding domestic demand will be a strategic basis for China's development next year," the official news agency said.

Analysts said Beijing wanted to reduce the economy's reliance on exports, hurt by the weak economies of key markets in Europe and the US this year.

Christopher Cheung Wah-fung, a legislator for Hong Kong's financial services sector, said: "China is heading in the right direction to boost both domestic consumption and urbanisation, as this is how it can reduce its reliance on export income. To have strong domestic consumption would ensure more long-term growth for China regardless of global market uncertainties."

Joseph Tong Tang, executive director of Sun Hung Kai Financial, said construction and consumer stocks would benefit from both strategies.

"Recent statistics have shown China's economy is back on the uptrend after a slowdown earlier this year. The economic outlook is positive for stocks in the finance, construction and consumer sectors," Tong said.

The Beijing conference also decided to maintain a prudent monetary policy and a pro-active fiscal policy next year.

Cheung said this showed the country would not follow the US and Europe, which are relying on monetary easing to boost their weak economies.

The meeting said "enhancing quality and efficiency of economic growth" would be a central task next year and that policies to control the property market would be continued.

"This showed China wants to set its economic growth on a stable track and does not want to see any overheating," Cheung said.

Policymakers will deepen economic reforms, open up its market and enhance protection of foreign investors' rights, including intellectual property rights. "The country will step up its effort to stabilise foreign direct investment inflows while expanding its outbound investment next year," Xinhua said.