MNI POLICY: China Must Prevent A Prolonged Slowdown: Advisor

     BEIJING (MNI) - China's top economic priority next year is keeping the

economy stable, preventing slowing growth from becoming the norm and ensuring

the targets under the 13th five-year plan are smoothly achieved, a senior policy

advisor said on Sunday.

     While the economy registered some slowdowns in the first three quarters

this year, it will continue to expand in the longer term due to a large

population that sustains demand, said Yang Weimin, a deputy director of the

economic committee of the Chinese People's Political Consultative Conference.

     "The so-called principles or theories derived from other countries'

development, such as the Middle Income Trap known to everyone, I don't think

these concepts apply to China," Yang said. Most of the mid-income countries that

experienced stalled growths had populations of 100 million at the most, while

China's is more than 10 times bigger, he said.

     Here are other takeaways of Yang's speech at the Jinjialing Wealth

Management Forum held by China Finance 40 Forum in Qingdao city of Shandong

province:

     - Consumption growth has been hindered by high levels of household debt.

Spending accounts for 66.5% of urban resident incomes in 2018, down from 69.8%

in 2013, Yang said.  

     - While the level of consumption of some industrial products, such as coal,

has peaked, demand for other industrial goods, such as auto, has more room to

grow given China's per capita car ownership is still below that of developed

economies. Demand for steel rebar and wire products is also growing given the

urban infrastructure needs spurred by 200 million rural migrants settling in

cities and 8 million university graduates each year.  

     - It is important to balance risks prevention and supporting the real

economy. Policymakers should reduce financing costs further next year to boost

companies' returns on investment and ease pressure of mortgage repayments, even

if doing so reduces profits of lenders.

     - China must enhance the system rooting out inefficient SOEs, or the

so-called the zombie companies, in an orderly, market-based and law-based way. 

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

--MNI Beijing Bureau; +86 (10) 8532 5998; email: marissa.wang@marketnews.com

--MNI Beijing Bureau; +86 (10) 8532-5998; email: wanxia.lin@marketnews.com

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