Business reforms to drive growth
Print Edition
CHINESE leaders promised yesterday to promote economic growth by cutting business costs and reducing surplus production capacity in some industries as they try to reverse an unexpectedly sharp downturn.
After an annual Central Economic Work Conference, Party leaders also promised to reduce financial risks and rein in rising debt that has prompted concern about possible threats to China’s financial system.
China will “allow the market to play a bigger role” and “strengthen structural reforms,” Xinhua news agency said.
At the conference, which began last Friday, planners promised to implement long-called for structural reforms.
Among the proposed measures, Xinhua said, are plans to “defuse local government debt risks,” including placing stricter limits on illegal fundraising.
Planners also said they will strengthen the role of markets in the economy creating “conditions for execution of bankruptcy rules.”
The reforms are all part of China’s attempt to transition the country from years of overheated GDP growth to a “new normal,” where quality development replaces quantity.
But it has been a bumpy ride. Chinese growth hit a 24-year low in 2014 and has slowed further this year, raising concerns on global markets. The country logged its worst economic performance since the global financial crisis in the third quarter, with growth of just 6.9 percent.
President Xi Jinping has said that the country should maintain a growth rate of at least 6.5 percent if it hopes to achieve its goal of building a “moderately prosperous society” by 2020, an ambition that includes doubling national per capita income from 2010 levels.
In 2016, the government will “reduce the burden on enterprises,” the statement said. It promised also to promote “entrepreneurship and innovation.”
The government has taken steps to help entrepreneurs by reducing regulatory approvals required to start a business.
In November, the government cut costs for entrepreneurs by reducing interest rates charged by credit unions and other small lenders that serve the private sector.
China will “resolve excess capacity,” the statement said, a reference to industries including steel, cement, glass and solar panels in which supply exceeds demand.
That glut has led to price-cutting wars that threaten the financial health of companies. Regulators want to promote consolidation through mergers.
The Party unveiled plans in September to inject more competition into industries controlled by state companies and to force them to become financially self-reliant. However, it stressed that the Party would retain its dominant role in the economy.
China will further open up to the outside world, the statement said.
Vowing to “give equal treatment to domestic and foreign companies,” the statement said China will improve the business environment for foreign firms and pay attention to the protection of their legitimate interests and intellectual property.
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