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Eight ways 'Xi Jinping Thought' could change China's economy
[BEIJING] By adding "Xi Jinping Thought" to its constitution, the Communist Party of China has signalled that it will put environmental protection and other quality-of-life issues on more equal footing with its historical emphasis on growth.
The changes adopted on Tuesday come after decades of focus on hitting economic expansion objectives delivered breakneck expansions, accompanied by fouled air and water.
"Xi Thought increases the chances that China's leaders will focus more on quality over quantity of growth next year," said Rob Subbaraman, chief economist for Asia ex-Japan at Nomura Holdings Inc in Singapore. He said he now has a "high conviction" leaders will lower the official economic growth target to 6 per cent to 6.5 per cent next year.
Mr Xi's dominance gives him more policy control and suggests less resistance to his agenda in his second five-year term, Julian Evans-Pritchard, a China economist at Capital Economics Ltd in Singapore, wrote in a report.
"This should mean more rapid progress in some areas, such as efforts to address environmental concerns, but it seems unlikely to resolve many of the key structural problems that threaten China's growth prospects."
Here are eight excerpts from the amendments, and how they may shape the economy.
Principal Contradiction: "The principal contradiction facing Chinese society has evolved and is now that between the people's ever-growing needs for a better life and unbalanced and inadequate development; it reflects the realities of the development of Chinese society."
This is an epochal change. Historically this contradiction was about balancing meeting people's needs with upgrading production. The change acknowledges rising inequality and citizens' demands for economic gains along with cultural, societal and environmental benefits. Economists say this suggests policymakers have more leeway to let near-term growth slip as they focus more on environment and social equality.
Open Development: "Innovative, coordinated, green, and open development that is for everyone."
This emphasis is another sign leaders want the economy to move up the value chain and also provide for a cleaner environment.
Better Quality: "Achieve better quality and more efficient, equitable, and sustainable development."
This expands on the implications of the "principal contradiction" shift, further confirming that leaders wants to steer away from a growth-at-all-costs approach.
Decisive Role: "Give play to the decisive role of market forces in resource allocation and ensure the government plays its role better."
This call for allowing greater influence for market forces hasn't lived up to expectations since it was first made at a high-level meeting in 2013. Still, its new place in the constitution shows cadres want the "invisible hand" to work alongside that of the state.
"Advance supply-side structural reform." This often-repeated call forms the core of Mr Xi's recent emphasis on cutting overcapacity and reducing leverage while also boosting domestic demand. This year's deleveraging campaign doesn't let leaders claim victory just yet, but they've made progress in crucial areas. Inclusion in the constitution might indicate greater emphasis to come.
Lucid Waters: "Lucid waters and lush mountains are invaluable assets."
This is one of Mr Xi's pet phrases on environment protection. Chinese welcome the clean-up push, though it may prove to be a short-term drag on economic growth.
Belt and Road: "Pursue the Belt and Road Initiative."
Mr Xi has called his plan to rebuild ancient trade routes the "project of the century". Adding it to the constitution helps "strengthen the willingness of other stakeholders such as private sector firms and financial institutions to taking long-term investment stakes", said Rajiv Biswas, Asia-Pacific chief economist at IHS Markit in Singapore.
Higher Standards: "Develop an open economy of higher standards."
This offers assurance to foreign companies that have long complained Beijing puts up market barriers. Wei Jianguo, former vice-commerce minister and now an executive deputy director of the China Center for International Economic Exchanges said last week he expects more measures to attract foreign investment after the party congress.