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Communist leaders in China pledge to spend if needed
Question of the Day
In the first statement of their economic goals, the leaders wrapped up a two-day planning meeting by pledging continuity with earlier party plans aimed at making China’s economy more productive and spreading prosperity to its poor. They gave no indication of plans for major changes.
The world’s second-largest economy is gradually pulling out of its deepest slump since the 2008 global crisis, but weaker-than-expected November trade data prompted suggestions the rebound might be faltering.
The leadership under party General Secretary Xi Jinping pledged a “proactive fiscal policy” and “prudent monetary policy” in a statement distributed by the official Xinhua News Agency, referring to willingness to boost spending if needed and keep credit easy so long as inflation stays low.
Mr. Xi and other leaders who were installed last month in a once-a-decade handover of power are under pressure to overhaul an economic model based on exports and investment that delivered 30 years of rapid growth but is running out of steam.
The World Bank and other analysts say Beijing needs to curb dominant state companies and promote service industries and consumer spending to keep incomes rising. They say without prompt action, growth might slow abruptly, leaving China stuck at middle-income levels.
Companies, investors and political analysts are watching to see how far Mr. Xi and others on the seven-member ruling Standing Committee are willing to go to change the state-dominated economy. They face potential opposition from state companies that might be hurt by changes and have influential allies in the party.
“If China does not change its strategy, it risks falling into the ‘middle income trap,’” Robert Zoellick, former World Bank president, said in a speech at a Beijing business conference last week.
The new leadership affirmed support for earlier party pledges to promote reform, open markets further and encourage economic efficiency. The statement promised to “accelerate structural reform” but gave no details of how far or how fast Mr. Xi and other leaders are willing to go in changing the state-dominated economy.
Economic growth fell to a 31/2-year low of 7.4 percent in the three months ended Sept. 30. Factory output, consumer spending and other indicators are improving in the current quarter but analysts say a recovery is likely to be gradual and too weak to drive a global rebound without improvement in Europe and the United States.
Data last week showed November trade deteriorated sharply following a rebound that started in August. Export growth plunged to 2.9 percent over a year earlier from October’s 11.6 percent. Imports were flat, down from October’s 2.4 percent growth.
Sunday’s statement gave no indication the leadership plans to depart from the party’s official annual economic growth target of 7.5 percent through 2015.
The statement promised to “fully deepen reforms” and “firmly promote opening up” next year. It said “enhancing quality and efficiency of economic growth” will be a “central task.”
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