BEIJING, China, Dec 18 – China opened a major economic planning conference on Monday as it tries to pivot away from its model of no-holds-barred growth.
The annual Central Economic Work Conference gives leaders the opportunity to review past policy and to plan for 2018.
The pursuit of high growth at all costs made China the world’s second-largest economy but led to severe pollution, rampant waste and a mountain of debt.
President Xi Jinping has indicated the country would move in a new direction, telling the Communist Party Congress in October that it needs to shift from high-growth to high-quality development.
Xi also notably omitted economic growth targets from his three-and-a-half hour speech to the party leaders.
Implementing this new approach will be the focus of the closed meetings convened over three days in Beijing, state news agency Xinhua said.
The “three tough battles” for 2018 will be curbing major risks, eradicating poverty and controlling pollution, it reported, repeating Xi’s directions to the party congress.
Debt’s ‘dangerous pace’
This year Beijing made halting progress tackling its ballooning debt, easing the speed at which it has been accumulating.
Still, the International Monetary Fund warned in October that the debt was growing at a “dangerous pace” and said earlier this month that banks should raise their capital to avert debt-related risks.
Much of China’s debt is concentrated in large and unwieldy state-owned enterprises and analysts say the sector needs reform if China is to get a handle on curbing financial risks.
“If there are financial problems at state-owned companies, that would definitely trigger a series of financial risks,” said Wendy Chen, a China economist at Nomura bank.
“Corporate debt is the largest portion of China’s overall debt.”
But Xi has shown little sign he will push through reforms to the state sector.
He told the party congress of the need to make state-owned enterprises “stronger, better and bigger” and last week described them as the “backbone of China’s special socialist economy”.
Another prong of the push tackling the country’s noxious air pollution is already showing signs of dampening economic growth.
Official data last week showed industrial output slowing in November, as authorities in some northern cities have forced steel factories and smelters to cut production — with some running at half capacity.
The industrial cuts and measures to switch the country to natural gas heating have given the capital a rare series of blue sky days but some analysts forecast a meaningful impact on growth.
In a recent note, Julian Evans-Pritchard of Capital Economics forecast the aggressive crackdown on pollution “would shave just short of half a percentage point off gross domestic product growth” for the final quarter of this year and beginning of 2018.