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By William Bi
BEIJING (MNI) - China's top leaders will wrap up by Wednesday evening their
annual closed-door meeting that sets the economic agenda for next year. Taking
place just after the 19th Chinese Communist Party Congress, the meeting is also
expected to set out how China's new leadership will guide the country in
realizing its ambition to achieve global economic supremacy.
The Central Economic Working Conference (CEWC) will further expound on the
spirit of President Xi Jinping's report to the October Congress rather than
laying out new policies. The CEWC, which began on Monday, was also held just
after the meeting of Central Committee Politburo on Dec. 8, itself a precursor
of what to expect out of the CEWC meeting.
Observers expect the conference to urge quicker reform, as 2018 marks the
40th anniversary of China's reform and opening. Both the 19th Congress and the
Politburo meeting emphasized "promoting a new structure in a comprehensive
manner." Opening can have multiple dimensions, from state to private, or
domestic to international, according to economists at CMB International. The
People's Daily newspaper on Wednesday cited the Ministry of Commerce as saying
China's goal was "to greatly reduce barriers of entry to markets."
--THE 'THREE SOLIDIFYING BATTLES'
Mitigating financial risks through deleveraging, target-reducing poverty
and cutting pollution are what policymakers have been calling the "Three
Solidifying Battles." These are the continuation of Xi's supply-side reform
polices implemented over the last two years: reducing high capacity, inventory,
leverage, boosting efficiency, and strengthening weaknesses.
Many new initiatives fall within this category. Concerns of stalling growth
have eased as spending and robust job growth in a new economy help balance the
effects of reduced investment. Tightened lending and overhauling of China's
bloated industrial sectors are almost certain to continue.
A long-anticipated property tax may finally come to fruition, at least in
some measured form. On Wednesday, Finance Minister Xiao Jie penned an article in
People's Daily, calling for the building of a modern taxation system, including
the introduction of taxes on commercial and residential housing.
--A CHINA BENT ON QUICK RESULTS
Love it or hate it, the Chinese government has demonstrated its ability to
push through changes with little opposition. "Even if it's something with
poisonous side-effects, the Chinese government can force you to swallow," said
Liu Yuhui, an economist with the government think-tank Chinese Academy of Social
After consolidating his power, Xi has left little doubt that he wants
results, marked by his theory of "Two Hands Together," which is a play on Adam
Smith's "invisible hand" economic theory. In practice, Xi has endorsed what he
believes to be the power of an efficient bureaucracy that cuts through
administrative and legal due processes.
To meet air pollutant reduction targets and return China to "Clear Water
and Blue Sky," authorities have routinely shut down steel plants and halted
construction projects. To contain Beijing's sprawling development and reposition
it as "a center of politics, culture, international exchange and technological
innovation," as endorsed by the Politburo, Beijing authorities have leaned on
coercive and cruel measures to push out thousands of migrants, such as
demolishing unsightly housing for non-residents, which have drawn criticism for
violating human rights.
"In the long run, these administrative approaches will do our country a
disservice" as they undermine the role of the market and the rule of the law, Xu
Xiaonian, a prominent economist, said at a steel conference in Shanghai last
Yet many economists and market participants counter that given China's
unique culture, size and the mounting challenges, that kind of decisiveness is
what has allowed it to avert crisis in the past, such as controlling the exodus
"Xu's thinking is too Western-leaning. A pure market-based approach just
doesn't work in China," said a Shanghai-based commodities trader.
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