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Reforms go hand in hand with risk controls, president says

China will stick to the basic economic theme of "seeking progress while maintaining stability" this year to achieve healthy development, President Xi Jinping said on Tuesday.

The nation will strive to improve the quality and efficiency of the economy, deepen supply-side structural reform, and make major headway in economic restructuring, Xi said at a meeting of the Central Leading Group on Finance and Economic Affairs.

Xi, also general secretary of the Communist Party of China Central Committee, urged that more efforts be made to reduce excessive production capacity.

He added that government departments should unswervingly solve the problem of zombie enterprises, which are unprofitable and debt-laden but still have access to bank loans and public resources. Xi also said that people affected by excessive capacity reduction should receive training so they can find new jobs as well as social aid.

Xi said regulatory coordination methods should be established as soon as possible to ward off financial risks, and prudent macroeconomic supervision should be strengthened to prevent and resolve any systematic financial risks. Regulatory loopholes must be filled in a timely manner, he added.

The president reiterated the necessity of establishing long-term methods to promote the stable and healthy development of the real estate market. He said the principle that "houses are built to be inhabited, not for speculation" should be adhered to, and regulators should seek to establish a long-term mechanism that properly combines both short-term and long-term arrangements.

Equilibrium needed

A combination of policies should be devised to properly guide market expectations to achieve a "dynamic equilibrium" in the real estate market, he added.

Home prices have continued to surge in recent months in China"s major cities, sparking concerns that prices may not stop rising in the short term, at least.

Yan Yuejin, research director of the E-House China R&D Institute, said, "By referring to the term "dynamic equilibrium", policymakers hope to prevent drastic fluctuations in prices so that the real estate market can ultimately stabilize at a certain point to achieve its stable and healthy growth."

Xi called for boosting the development of manufacturing and making a strategic shift from quantity-centered expansion to quality-based improvement. He said the principle of improving the quality of supply should be upheld by all manufacturers and, meanwhile, policymakers should try every means possible to lower enterprises" burdens.

Zheng Xinli, an economist at the China Center for International Economic Exchanges, suggested that business taxes be reduced. "Lowering taxes for enterprises can help them better participate in international competition," Zheng said.

Xi also said decisions made by all meetings of the Central Leading Group on Finance and Economic Affairs must be implemented.

Contact the writers at [email protected]

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2018-06-20 13:42:32

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