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3 major tasks called key to sustainable economy

Xin Zhiming and Chen Weihua
Updated: Dec 16,2017 7:19 AM     China Daily

The central leadership’s pledge to achieve substantial progress next year in prevention of major risks, targeted poverty alleviation and pollution control, which may also top the agenda of the upcoming Central Economic Work Conference, will make the world’s second-largest economy more balanced and sustainable, economists said.

China is expected to convene the tone-setting economic conference soon-reportedly next week. Economists at home and abroad said it may reaffirm the decisions made at the Political Bureau of the Communist Party of China Central Committee meeting on Dec 8, such as pushing the three major tasks of preventing major risks, reducing poverty in a targeted manner and controlling pollution.

“These three ambitious and interrelated goals are well directed toward reducing risks and making growth more sustainable in economic, environmental and social terms,” said Eswar Prasad, the Tolani Senior Professor of Trade Policy at Cornell University in New York.

“While China appears to have secured robust short-term growth, there are mounting risks to the financial system that, in the absence of significant reforms, could threaten both stability and long-term growth,” said Prasad, who also is a senior fellow at the Brookings Institution and former head of the International Monetary Fund’s China division.

Dong Yuping, an economist at the Institute of World Economics and Politics of the Chinese Academy of Social Sciences, said: “China must handle the three major tasks well. The most important task is to prevent major risks, mainly financial risks, and policymakers must control overall leverage levels to ensure they will not continue to rise.”

China has issued a series of policies to tighten financial regulation, especially since last year, to ensure there will not be any eruption of systemic financial risks.

Dong said a fundamental way to prevent financial risks is to meet the financing demand of the real economy sectors. “Only when the real economy gets healthy can we fundamentally prevent systemic financial risks,” he said.

Meanwhile, China has also put the mission of poverty reduction and environmental protection high on its agenda. In the report he delivered to the opening session of the 19th National Congress of the CPC in October, Xi Jinping, general secretary of the Communist Party of China Central Committee, vowed to press ahead with the two tasks.

Prasad of Cornell University said, “It is certainly a welcome development that the government plans to focus on reducing the adverse environmental impacts of China’s growth model and on spreading the benefits of growth more evenly.”

However, he said, implementation poses a great challenge. “The key challenge the government faces is to effectively implement the financial market, real economy and institutional reforms that are essential to make progress on these goals.”