Sino File | China returns to growth to offset US trade war risk, but is it the right move?
- The annual Central Economic Work Conference, which concluded last week, declared a major shift in focus from the 2017 deleveraging campaign towards a more growth-oriented policy easing
China’s economy has rarely faced such great uncertainty as it does today.
Not only has the world’s second-largest economy been steadily decelerating over the past decade, but it must now grapple with a host of unprecedented internal and external challenges, such as the US trade dispute and alarming levels of off-balance-sheet borrowings by local governments.
That is why the annual Central Economic Work Conference, which concluded last week, declared a major shift in focus, deviating fundamentally from the 2017 deleveraging campaign towards a more growth-oriented policy easing.
Last year’s CEWC laid out a three-year programme to win “critical battles” against financial risk, pollution and poverty, with focus on deleveraging and derisking. This year, however, the three-day gathering landed on a “six-stability” policy, proposed by the top decision-making Politburo, seeking to achieve stabilities in employment, financial markets, trade, investment and foreign investment, and market expectations for 2019.
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According to an official statement, the CEWC plans to achieve this with a proactive fiscal policy, which includes “larger scale tax and fee cuts”, increased issuance of local government bonds and further “counter-cyclical adjustments” such as increased government spending.
