China economy

How has Xiconomics changed China? Beijing gives a review 

Fewer plants were idle and the debt ratio fell during 2017, according to a National Bureau of Statistics report

PUBLISHED : Thursday, 01 March, 2018, 9:13am
UPDATED : Thursday, 01 March, 2018, 11:25pm

President Xi Jinping’s hallmark economic policy focusing on supply-side structural reforms has achieved “solid progress” as fewer plants were idle and the debt ratio fell in 2017, according to a report from the National Bureau of Statistics. 

While not all economists are convinced that Xi’s administrative measures can solve the country’s overcapacity and debt problems, the statistics agency said in its annual economic and social report that hard evidence shows the approach is working. 

Among China’s coal mining facilities, 68.2 per cent were in operation at the end of the year, up 8.7 percentage points from a year earlier. As 2017 drew to a close, 75.8 per cent of steel plants were running, up 4.1 percentage points, according to the statistics agency. 

Unsold property as measured by floor area fell 15 per cent, or 101 million square metres, to 589 million square metres. 

The average debt ratio at industrial firms nationwide fell 0.6 percentage point to 55.5 per cent. 

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Simon Zhao, founding director of the International Centre of China Studies, said Chinese corporate profitability improved last year after the government shut down a number of small and polluting plants. 

Meanwhile, Zhao said China’s debt hangover persisted as household borrowing soared despite a modest drop in corporate leverage. 

“Household borrowing is spreading from urban areas to the countryside,” he said. 

“A large number of people in rural villages across the mainland are taking personal loans to race to get on the property ladder in county-level cities and towns.” 

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Xi first mooted the term “supply-side reform” in 2015 to smooth the way for China’s economic restructuring, as traditional stimulus actions such as monetary easing and fiscal spending were losing their effectiveness. 

In its comprehensive review of economic, environmental and social changes in China in 2017, the statistics agency said the country has become more urbanised. As many as 57.35 per cent of Chinese lived in cities and towns at the end of the year, up 1.25 percentage points from 2016. 

The country’s growth is becoming less energy-intensive, according to the report. While China’s GDP rose 6.9 per cent last year, its total energy consumption rose just 2.9 per cent. 

Meanwhile, the labour population continued to shrink. 

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The country’s total working-age population, or people aged 16 to 59, was 901.99 million at the end of 2017. That figure was down from 907.47 million at the end of 2016, according to the statistics agency.