China leaders to set policy, reform priorities for 2014

Reuters News
Posted: Dec 05, 2013 4:12 AM
China leaders to set policy, reform priorities for 2014

BEIJING (Reuters) - China's leaders are expected to gather at a closed-door meeting next week to set policy and reform priorities for 2014, sources with government think tanks said, following a party meeting that laid out a bold reform agenda for the next decade.

The annual Central Economic Work Conference will bring together top party leaders, ministers and provincial officials to discuss economic targets, including the rate of economic growth, inflation and money supply for the year ahead.

Analysts and investors expect the government to spell out detailed reform plans for next year, after a plenum of the Communist Party's Central Committee charted the course of sweeping economic and social changes.

Top leaders are likely to held a meeting around the same time on urbanization to issue detailed plans on how to proceed with the much debated program without fanning a renewed local spending frenzy, according to the sources.

The sources said the leadership is expected to maintain a "prudent" monetary policy in 2014 - the catch word since late 2010 that has encapsulated at first modest policy tightening and then modest loosening following the global financial crisis.

Top government think tanks, which make policy proposals for the leadership, are still locked in a debate over whether the government should cut its annual economic growth target to 7 percent in 2014 from this year's 7.5 percent.

The State Information Centre and the Chinese Academy of Social Sciences have proposed a cut, arguing a lowering growth target will be help Beijing focus more on reforms and discourage local governments from pursuing high growth rates.

"We've suggested the growth target should be cut to 7 percent in 2014," Zhu Baoliang, chief economist at the State Information Centre in Beijing, told Reuters.

Zhu expects China's economy to grow an annual 7.6 percent in 2014, while inflation could be 3.2 percent.

But other think tanks, such as China Centre for International Economic Exchanges (CCIEE), have proposed to maintain the current target of 7.5 percent.

"If we cut the growth target, there could be some negative impact on investor confidence and raise the risk of further slowdown," said Wang Jun, a senior economist at CCIEE.

A recent Reuters poll showed annual economic growth this year could slow to 7.6 percent - the weakest in 14 years.

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The government had maintained an annual growth target of 8 percent for eight years before cutting it to 7.5 percent in 2012.

The exact date of the economic conference is not known. The official Xinhua news agency usually reveals the date just before the meeting opens and announces details once it is over. It was held between Dec 15-16 last year and Dec 12-14 in 2011.

The government may not announce the targets before the annual parliament meeting in early March 2013.

Reform priorities would include making preparations for freeing up bank deposit rates, including the establishment of a deposit insurance system, and experiment with freer yuan convertibility in a free trade zone in Shanghai.

Fiscal reforms will be unveiled to help relieve burdens on debt-laden local governments and quicken urbanization to turn millions of migrants into urban dwellers - a crucial step to spur consumption and reduce the economy's reliance on investment, economists say.

(Reporting by Kevin Yao; Editing by Kim Coghill)