China's leaders vow steady growth - and some reforms

Politburo focus is stabilising mainland economy, with careful financial sector reforms to continue

PUBLISHED : Tuesday, 30 July, 2013, 9:05pm
UPDATED : Wednesday, 31 July, 2013, 9:08am

The nation's top leaders pledged to maintain steady economic growth while deepening fiscal and financial reforms, setting the tone for policymaking in the second half of the year.

The direction outlined in a Politburo meeting chaired by President Xi Jinping yesterday suggested Beijing remains committed to, and confident of, meeting its annual growth target but appeared to rule out any massive monetary or fiscal stimulus measures in the months to come.

Keeping policies stable with some fine-tuning should create a favourable environment for the annual policy conclave among Communist Party chiefs due to be held in the northern coastal resort of Beidaihe , where the leaders will discuss their policy agenda for a crucial party assembly this autumn.

"Conditions are there for the economy to develop continuously and healthily. In the second half, China's economy will maintain a generally steady development," the top leaders said in a statement posted on the government's website.

"Fine-tuning will be done with appropriate timing and appropriate magnitude."

In contrast to recent months, there were no expressions of concern about the "downward pressures facing the economy", which may bolster market confidence in the leaders' willingness to take action as needed to stabilise growth.

The statement also reinforces recent remarks by Premier Li Keqiang that the government would ensure that growth and employment stay above certain limits. A Xinhua article said the official bottom line for growth is 7.5 per cent this year and 7 per cent in the long run.

"Policymakers appeared to shift their focus slightly towards economic growth, but the aim seems to be to stabilise the economy rather than drive a rebound," said Wang Qinwei, an economist at Capital Economics in London.

Mainland economic growth slowed to 7.5 per cent in the second quarter from 7.7 per cent in the first, after the economy registered its slowest growth in 13 years last year.

The Politburo pledged to maintain reasonable investment growth, push forward with urbanisation and promote a "steady and healthy development" of the property market.

It also said it would upgrade industries and deepen market-oriented reform of both fiscal and financial systems, but indicated it would act cautiously.

Wang said the government would likely target selected sectors with assistance similar to the "small package" unveiled by the State Council last week, when the cabinet eased the tax burden for microbusinesses and decided to accelerate railway investment in poorer regions.

In a meeting last week with leaders from non-Communist parties, Xi said Beijing would continue to push for economic restructuring through reforms and opening up.

"Such thoughts have been accepted by more and more regions and enterprises," Xi was quoted as saying in a separate statement also posted yesterday, highlighting a growing social consensus in favour of reform. His words, however, also suggest that significant resistance to reform remains.