China's top leaders vow to steer steady path

Top leaders said on Friday China will seek steady economic progress by making more reforms in all areas.

The remarks were made in a statement released after the annual Central Economic Work Conference.

During the four-day meeting that started on Tuesday - longer than the two-to-three-day events in previous years - President Xi Jinping and Premier Li Keqiang called for reform to be spread to every area of economic and social development, the statement said.

Their commitment to more reforms comes just one month after the Third Plenum of the 18th Central Committee of the Communist Party of China outlined future reform in up to 60 areas.

To boost the reforms, top leaders asked all local governments and central government departments to set up a branch organisation to specialise in reform in their areas.

This followed the decision at the Third Plenum to form a high-level commission to coordinate nationwide reform efforts.

The economic work conference vowed to maintain a stable economic situation while achieving reasonable growth. But no specific GDP growth target was announced.

In the statement, the leaders were candid about the "downside risks" facing China, including excessive production capacity, serious structural unemployment (affecting certain groups), environmental degradation, poor quality of food and medicine, and public security inadequacies.

Externally, there are many uncertainties, including a lack of sources for new growth.

The statement said China will use reform to boost development, to speed transition of the economy's growth model, and to improve people's livelihoods.

It also said there should be a balance between healthy development of the economy and GDP.

Li Boxi, senior researcher with the State Council Development Research Center, a government think tank, said stabilizing growth while adjusting the economic structure, or striking a balance on this, will be the basic orientation of China's macro-economic policy in 2014.

The document also said that China will maintain a proactive fiscal policy and prudent monetary policy, as it has in 2013.

It will expand the provision of credit and domestic financial markets, it said. The government will also continue to pursue tax and exchange rate reform.

This year's Central Economic Work Conference marked the first time that local government debt has been listed as a major problem.

Zou Linhua, a researcher at the Chinese Academy of Social Sciences, said the sharp growth in local government debt has become one of the worst-hidden dangers for the economy.

Economists are divided over how much local government debt there is, and how it has risen from 10.7 trillion yuan ($1.76 trillion) by the end of 2010, the last time it was audited.

To tackle the local debt increase, the government may need to control investment projects at a cost of slower GDP growth, to ensure the banks' lending system remains healthy, Zou said.

But Douglas McWilliams, executive chairman of the Centre for Economics and Business Research, a think tank in Britain, said China will overcome its difficulties and continue to develop.

"The international status of the Chinese economy, however, now depends on the ability of China's leaders to steer the country through a testing period of change," he said. "If the leaders are brave enough, this could be the dawn of a new era of economic expansion for China."

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