China's economy navigates a 'crucial year'

Photo taken on Nov. 2, 2018 shows an illuminated flyover in Shanghai, east China. (Xinhua/Li Xin)

Braving domestic and external headwinds, China's economy is sailing toward a successful finish to a crucial year for its development.

Steered by the Communist Party of China (CPC) Central Committee with Xi Jinping at the core, the country secured steady economic growth, gained an initial victory in the "three tough battles," and launched bolder reforms and opening-up.

The year 2018 is the first year for implementing the spirit of the 19th CPC National Congress and a key year in the decisive stage of building a moderately prosperous society in all respects by 2020. It is also the first year of Xi's second term as Chinese president.

"China has made new and important achievements in economic and social development in 2018, making a solid step toward realizing its first centenary goal of achieving moderate prosperity in all respects," said Han Wenxiu, an official with the Central Committee for Financial and Economic Affairs.

"This has given us greater confidence in overcoming new difficulties and challenges," Han said.

WORLD GROWTH DRIVER

Despite downward pressure from the Sino-U.S. trade frictions, a deleveraging and restructuring domestic economy and tightening monetary policies in certain developed countries, China has continued to defy doomsayers and inject certainty to the world economy this year.

With a 6.7-percent growth for the first three quarters, China is well on its way to deliver the government's annual economic growth target of around 6.5 percent, according to Ning Jizhe, deputy head of the National Development and Reform Commission.

This level of growth means China remains a top performer in the world economic arena.

The country's share in the world economy could rise to around 16 percent this year, contributing nearly 30 percent to global growth, Han estimates.

The Chinese economy "continues to perform well," according to a World Bank projection earlier this month, which predicted the country's growth to be 6.5 percent in 2018.

To shore up growth, authorities have slashed taxes on businesses and individuals, maintained a prudent and neutral monetary policy and revved up financial support for private companies in difficulty.

The Sino-U.S. trade frictions have been properly tackled. Employment remains stable, resident income continues to grow steadily and economic development is more balanced and sustainable with higher quality.

Consumption is set to contribute 78.2 percent of China's economic growth this year, the highest level since 2001, according to a report released by the Chinese Academy of Social Sciences (CASS) this month.

While consumer spending became a bigger driver of growth, technology and innovation are picking up the slack as certain traditional industries took a hit.

High-tech manufacturing and equipment production sectors saw fast expansion. In a ranking by the World Intellectual Property Organization, China became the first middle-income economy on the list of the world's 20 most innovative economies this year.

"The economic accomplishments in the past year demonstrate the excellent leadership of the CPC Central Committee with Xi at the core in navigating complex situations, as well as the resilience of the Chinese economy and its ability to withstand risks," Han said.

WINNING BATTLES

This year has seen a good start in the "three tough battles" against major risks, poverty and pollution, with leverage contained, millions lifted out of poverty and punishment over pollution toughened.

Shadow banking has declined sharply, the level of local government debt is well within the official limit, and the leverage ratio of major industrial firms has dropped.

"The excessively fast growth of macro leverage ratio has been checked, financial risks have generally retreated, and initial success has been achieved in amending financial dysfunction," the People's Bank of China, the central bank, said in a report last month.

Over 10 million people in the countryside are estimated to have been brought out of poverty this year, with marked progress made in areas of extreme poverty.

The country aims to reduce the poor population by another 10 million next year, a further step toward China's goal of eradicating poverty by 2020.

A full-scale campaign to safeguard clean air, water and soil has been launched, with laws put in place, inspectors mobilized, and officials punished for pollution.

Inspections launched in May and October this year have led to over 1 billion yuan (about 150 million U.S. dollars) of fines, with more than 8,600 people held accountable, according to the Ministry of Ecology and Environment.

In the first 10 months, Chinese cities had more days with good air quality than in the same period last year, while the density of PM 2.5, a key indicator of air pollution, dropped by 7.5 percent, official data showed.

WIDER DOORS, BOLDER REFORM

This year marks the 40th anniversary of its reform and opening up, which China commemorates with more concrete moves to open and overhaul its economy.

The country has broadened market access, reduced import duties, built new ground in opening up and provided new platforms for win-win cooperation to share the dividends of its growth with other countries.

To name a few: foreign ownership restrictions in the financial and auto sectors have been eased, with some equity caps to be removed completely in the coming few years; tariffs were reduced for an array of imported products from cars to medicine; and more import duty cuts will come into effect next year.

In November, the world's first import-themed national-level expo was held in Shanghai, with 172 countries, regions and international organizations, as well as more than 3,600 enterprises, participating in the event.

China has moved faster in reform on the fronts of taxation, finance, administrative approvals and state-owned enterprises this year, resulting in a better business environment and a greater role of the market in resource allocation.

According to a World Bank report on the ease of doing business released in October, China advanced to a global ranking of 46 among 190 economies this year, up from 78 last year, as the country implemented the largest number of reforms in the East Asia and Pacific region.

In its latest move, the government announced on Dec. 25 a negative list for market access that is shorter and applies to all market players, allowing them to equally enter sectors that are not on the list.

Looking forward, unwavering reform and opening-up will bring enduring resilience and vitality to China's economy, analysts said.

China's economy will operate within a reasonable range in 2018 and 2019, with no "hard landing" expected, according to the CASS report.

"There will be no changes to the fundamentals of sustained and steady growth for China's economy," said Li Yang, an economist with the CASS. Enditem