China’s central government called for “unrelenting” implementation of its economic policies and reform measures to consolidate the nation’s recovery from a two-quarter slowdown and improve the quality of growth.
While the economy is “stable and trending for the better,” and the nation has the ability to achieve this year’s targets, the foundations of the rebound are “not yet firm,” the State Council said in a statement late yesterday after an Oct. 18 meeting led by Premier Li Keqiang.
China’s economic expansion accelerated to 7.8 percent in the third quarter from a year earlier, the statistics bureau said Oct. 18, reversing a slowdown that put the government at risk of missing its 7.5 percent growth target for 2013. The nation’s top leaders will meet next month to map out policies to reform the economy and sustain long-term growth at about 7 percent.
“When downward pressures on the economy are relatively big, we should harden our confidence; when the economy stabilizes and trends for the better, we should keep a sober mind,” the State Council said in its statement posted on the central government website. Local authorities and state agencies should quicken implementation of government policies to “further stabilize hard-earned expectations for improvement and for public confidence,” it said.
The government will boost financial support to small businesses, stabilize foreign trade growth, cut overcapacity and look for new engines to drive consumption, according to the statement, reiterating existing policies. The State Council meeting was to review the implementation of reform and economic policies this year and to arrange work to further consolidate the growth rebound, according to the statement.
China’s government will maintain its current policy stance through the fourth quarter, Song Guoqing, an academic adviser to the People’s Bank of China, said in Beijing yesterday. The economy will probably expand 7.7 percent from a year earlier this quarter and about 7.5 percent next year, he said.
“Curbing inflation won’t be a pressing issue and the need to push additional growth is not big, so the policies will be stable, at least through the fourth quarter,” Song said. Monetary policy may lean toward tightening if inflation accelerates, he said.
China’s consumer price index rose 3.1 percent in September from a year earlier, the first increase above 3 percent since February. At the same time, inflation has been below the government’s 2013 target of 3.5 percent every month this year.
The increase in gross domestic product may slow to 7.1 percent next year from 7.6 percent this year as the government focuses on rebalancing the economy and implementing reforms, Barclays Plc analysts Chang Jian and Joey Chew wrote in a research note on Oct. 18 after the third-quarter data release.
“Whether the government will announce meaningful fiscal reforms in the Third Plenum in November and lower the growth target to 7 percent for 2014 are key areas to gauge the new leaders with regard to their ability to make progress on the much needed but complicated reform agenda,” they wrote.