China Economic Update: 13th 5 Year Plan
China’s Communist leaders gathered on Monday to plan the country’s course for the next five years, official media reported, as the world’s second largest economy confronts slowing growth and structural inefficiencies.
Beijing has pledged to tackle economic malaise and rampant pollution as it faces increasing calls to address problems that have soured the public mood and worried investors.
The meeting, called the Fifth Plenum, began with a raft of disappointing economic figures prompting “increasing attention from observers both home and abroad”, the official Xinhua news agency said.
Five-Year Plans — it will be the 13th since the People’s Republic was founded in 1949 — are a holdover from the days before China embraced market reforms that have lifted hundreds of millions out of poverty.
But they still provide wide-ranging guidelines for managing the nation’s affairs, from the boardroom to the bedroom.
China is a key driver of the world economy and analysts have urged more and broader structural reforms to sustain its long-term expansion.
The ruling party’s legitimacy depends on projecting an aura of ultra-competence, but growth fell to its lowest since the global financial crisis in the third quarter, according to official figures.
Leaders on Friday took another step towards loosening remaining Communist-era economic reins, with a surprise announcement that the People’s Bank of China was removing controls on what interest rates banks can pay savers.
At the same time it cut benchmark interest rates for the sixth time since November, and lowered the amount of money banks must keep in reserve, as authorities try to stimulate the economy and avoid a hard landing.
A weekend posting on a government website reported Premier Li Keqiang saying authorities may let growth rates slip below the previous target of around seven percent.
“We never said we must defend any target to the death,” he said.
– Calls to restrict coal –
The dedicated focus on promoting growth has, among other problems, led leaders to ignore the effects of the country’s dependence on heavy industry powered by cheap but dirty coal.
That must change, according to an editorial in Monday’s China Daily, which is published by the government.
“The government should resort to energy restriction, particularly of coal, in order to press ahead with the transformation of the economic structure,” wrote Lin Boqiang, director of the China Center for Energy Economics Research.
Beijing is also considering loosening restrictions on its one-child policy, which has fuelled public discontent and experts say is now raising demographic dilemmas.
The plan is to be implemented next year after it is formally approved by the rubber stamp legislature.
Over the four-day meeting, the 205 members of the Central Committee, plus around 170 alternates, are also expected to discuss changes to the party’s upper ranks.
The discussions follow a widespread anti-corruption drive under President Xi Jinping, which some have compared to a political purge.
More than half the Central Committee have changed jobs or been removed from their posts since they were appointed in 2012, according to a social media post by the Beijing Daily, the official newspaper of the capital’s Communist committee.
The Global Times, a newspaper with close ties to the government, said the “large-scale reshuffle is extremely rare” in the history of the party.
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