China plans to bank on reforms to spur growth

Earlier, reports said that the Chinese economy which posted about 7.7 per cent growth rate last year a notch above the official target of 7.5 per cent could slip to around seven per cent or even below

As China faced mounting pressures by decelerating economy raising doubts whether it could meet this year's official gross domestic product target of 7.5 per cent, top leaders on Thursday admitted big ‘downward pressures’ and assured to deepen reforms in nine areas to spur growth.

China's economy still faces many challenges and ‘relatively big’ downward pressures such as increasing difficulties for businesses and the emergence of economic risks, the Central Economic Work Conference stated.

The meeting was attended by top Chinese leaders, including President Xi Jinping and Premier Li Keqiang.

The economy will actively adapt to the economic ‘new normal’ of slower speed but higher quality, it said.

About concerns that Chinese economy for the first time in the recent decades would miss the 7.5 per cent growth target, a statement issued at the end of the three day meeting said China could deliver its social and economic goals for 2014 ‘relatively well’, with the economy staying within a reasonable range.

The meeting was held amid a string of weak economic data which stoked speculations that China may miss annual growth target.

The statement did not give a specific growth target for 2015, which is usually made public in March, but said China will be ‘reasonable’ when setting up goals and maintaining the flexibility of its macro-control policies.

Earlier reports said that the Chinese economy which posted about 7.7 per cent growth rate last year a notch above the official target of 7.5 per cent could slip to around seven per cent or even below amid dropping export markets and reconfiguration of the export driven economy by boosting domestic demand, which is not taking place at a pace wanted by the government.

Observers say that it is relatively new situation for the China for over three decades accustomed to double digit growth rates which in the last few years have become a thing of past.

The CEWC meet said that China will accelerate reform in nine areas next year including the capital market and market access for private banks.

Reforms will be expedited in administrative approval, investment, pricing, monopolies, franchising, government purchased services, and outbound investment.

This takes into consideration both the need for the next year and the long-term interests, according to a statement released after the conference, state-run Xinhua news agency quoted the statement as saying.

More effort will be made to transform the reform into growth, it said adding that the evaluation system for reform and general public access the reform work will also be improved.

The problems of state-owned enterprises will be addressed and efforts will be made to improve their efficiency and core competitiveness.

China will continue targeted and structured control policies to maintain a medium- and high-speed growth for the economy and will actively adapt to the economic ‘new normal’ of slower speed but higher quality, it said.         

Dragged down by a housing slowdown, softening domestic demand and unsteady export, China's growth slid to a low not seen since the 2008/2009 global financial crisis in the third quarter.

In the first three quarters, China's gross domestic output expanded by 7.4 per cent.

To support the faltering growth, the central bank last month decided to lower the one-year benchmark lending rate by 40 basis points and the one-year deposit rate by 25 basis points, the first interest rate cuts in more than two years.

The move gave a big boost to the stock market, but with China's deflation risk on the rise, analysts are expecting further easing to invigorate the economy.

Data released on Thursday showed China's consumer prices grew by their slowest pace in five years in November, rising by 1.4 per cent year on year.

This is the third month in a row that China has seen its Consumer Price Index rise within 2 per cent.

For the first 11 months, inflation grew 2 per cent, well below the 3.5 per cent full year target set by the government.