Balance between stability and growth key to economic restructuring

BEIJING - China will balance stability and growth to achieve medium-to-high speed growth in 2015 through stabilizing macro-economic policies while deepening economic reform, economists observed.

A meeting of the Political Bureau of the Communist Party of China (CPC) Central Committee, chaired by Chinese President Xi Jinping, on Thursday stressed the determination of policymakers to strike a balance between stability and growth in adapting to the new normal of economic growth.

China will stabilize and improve its macro-economic policies; maintain the proactive fiscal policy and prudent monetary policy; and continue fine-tuning and targeted regulatory measures in 2015 to secure steady economic growth, said the meeting.

The meeting also called for deepening reforms in the investment, financing, pricing and taxation sectors and the continued streamlining of administrative procedures and powers to tackle economic slowdown.

The meeting signalled policymakers' resolution to continue the quality-growth drive in the second largest economy, which is pushing forward restructuring measures to fend off impacts from a continued slowdown, said Zhang Zhuoyuan, an economic researcher from the China Academy of Social Sciences.

China's economy grew 7.4 percent in 2014, the weakest annual expansion in 24 years, and a string of economic indicators for the new year, including in manufacturing and trade data, all suggested continued weakness.

The purchasing managers' index (PMI), the main gauge of manufacturing activity, fell below 50 for the first time since October 2012 in January, and data last week showed exports fell by 3.2 percent and imports plunged 19.7 percent for January.

Zhang said the ongoing slowdown would not force China to backtrack on its reform promises, because a lack of reforms could be fatal for long-term development.

Furthermore, stability and growth can be mutually reinforcing as the the necessary adjustment in economic structure will help promote the steady growth, he added.

Zhang Qing from the Chinese Academy of Governance observed that China had an arsenal of policy options at its disposal to counter the slowdown in 2015.

One of the options, he noted, was to increase efforts to expand effective investment to help stabilize economic growth.

According to the meeting, China will step up the management and regulation of investment this year to expand effective investments, improve their profitability, strengthen certain vulnerable areas in economic and social development.

"Expanding investment, particularly in infrastructure, will not cause overcapacity, but will benefit economic restructuring and sharpen China's competitive edge," said Zhang Qing.

In addition, the significance of service sector was also on the meeting's agenda, Zhang said, noting that the consumption and service sector will replace traditional engines of manufacturing and investment to drive economic growth in 2015.

"A service sector-led economic structure is the strategic option of China's economic transformation and upgrading," he said.