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Stability and progress to be economic keys

By Xin Zhiming | China Daily | Updated: 2016-12-17 04:03

Stability and progress to be economic keys

Containers are loaded on the first train heading for Madrid, Spain, at the railway freight transport station in Yiwu, Zhejiang province.[Photo/China Daily]

Top leaders vow to balance growth with risk prevention as they set the tone for next year

The nation's top leaders pledged on Friday to balance stable growth and risk prevention as they wrapped up an annual tone-setting meeting that mapped out economic policies for next year.

"Maintaining stability while seeking progress" will be an important principle for China's economic work next year, said a statement from the three-day Central Economic Work Conference.

The meeting agreed that China's economic policy stance will remain largely stable next year. It said that China will maintain a prudent and neutral monetary policy and a proactive fiscal policy in 2017, according to a report from Xinhua News Agency.

The nation should maintain an appropriate growth range and try to prevent risks in key areas, according to the statement.

The country also should continue to push forward supply-side structural reform aimed at cutting excessive capacity and lowering the tax burdens on enterprises, and keep liquidity and the yuan basically stable, it said.

"A stable policy environment, including a stable currency, provides a foundation for stable economic growth," said Dong Yuping, an economist at the Chinese Academy of Social Sciences.

Participants agreed that attention should be paid to prevention of financial risks.

Asset bubbles should be put under control and regulatory capacity should be improved to prevent systemic financial risks.

Stability and progress to be economic keys

"China's stock, bond and currency markets all experienced huge fluctuations recently, which means financial risks have become more apparent," Dong said.

The nonperforming-loan ratio for banks is rising and capital outflows have increased. Therefore, the government must focus on financial risk prevention while trying to stabilize growth, he said.

China should keep its real estate market stable and healthy, as "properties are for residential use, not speculation", according to the statement.

Stability and progress to be economic keys

A market-oriented and long-term mechanism should be established that can curb a real estate bubble and prevent erratic fluctuations, it said.

Local governments will be held accountable if prices rise too high, it said, adding that the land supply should be increased to ease price rises.

Niu Li, an economist at the State Information Center, said that in the first 11 months of the year, about 45 percent of the country's new yuan lending was used by residents to buy properties, compared with about 25 percent in previous years.

The statement also said the government should increase the confidence of private business owners by strengthening property rights protection.

It also said China should deepen reform of State-owned enterprises, and "substantial progress should be made in some areas, such as power, oil, natural gas, railway, civil aviation, telecom and the military industry".

Sound bites

Stronger-than-expected data in November, mainly industrial production growth, suggest that the economic growth momentum remained stable. We maintain our forecast of GDP growth at 6.6 percent in the fourth quarter.

- Zhao Yang, chief China economist at Nomura Securities

Concerns for the nation’s near-term economic outlook are limited. We expect a soft landing in economic growth, and the impact from cooling measures in the property sector will be balanced by fiscal stimulus measures.

- Robin Xing, chief China economist at Morgan Stanley

China needs to accelerate financial reforms and use innovation to extend substantial financial support to the real economy.

- Zong Liang, deputy director of the Institute of International Finance at Bank of China

A long-term mechanism for the healthy development of China’s real estate market that looks at supply, demand, finance and taxes is essential.

- James Macdonald, head of Savills China Research


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