Quick Take: China's Economic Work Conference

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Last month, China held its annual Central Economic Work Conference, which lays out economic priorities for the year. Here's what you need to know as you consider your 2020 China market strategy.


Key Takeaways from China's Economic Work Conference

In early December, China held its annual Central Economic Work Conference which sets the agenda for the upcoming year. President Xi Jinping chaired the session. Premier Li Keqiang presented the key work report.

While the big “news” coming out of the conference was that China had set a target of 6% for growth in 2020, there were other more important developments related to China’s economic agenda. At the start of President Xi’s second term, he outlined three priorities: addressing financial risk, fighting pollution and climate change and poverty alleviation. These remain key priorities, but have been reordered with poverty alleviation taking the top spot and addressing risk moving down to third.

These changes in priorities reflect Xi’s goals of developing a “moderately prosperous society” by 2020 and that China believes it has begun to address the more immediate concerns of financial risk that followed the 2015 stock market crashes.

While details are scare and not often revealed until the National People’s Congress in March, we have been able to glean a number of themes. Understanding these themes can be useful and informative to companies as they refine their 2020 China strategies.


  • Poverty alleviation: This is the lead priority as President Xi attempts to meet the goal of reaching a “moderately prosperous society” by 2020. There is a focus on doubling China’s 2010 per capita GDP to over $3,000 and reaching a per capita income for urban residents of RMB18,000, around $2,570.
  • Climate change is still an issue: With emissions rising again in China, the government has said it will crack down on loans going to high polluting sectors and promote green lending along the Belt and Road.
  • Stability is key: Through fiscal and monetary policy, China will attempt to ensure stable economic growth at home. In addition, it hopes to continue to play an important role in global economic growth including through the Belt and Road Initiative. The leadership vows to safeguard economic stability in six areas: employment, finance, foreign trade, foreign investment, investment and expectations.
  • Financial risk remains a concern: Progress has been made in starting to address some of the underlying sources of risk, including debt, invisible promises (i.e. commitments by state banks to state-owned enterprises that do not appear on the books), “irrational” overseas investments, shadow banking, and allowing bankruptcies, but there is still a long way to go to ensure the economy is on a sturdier footing. To that end, the government is also working to enhance the professionalism of the financial system – including the policy making. And, the focus for monetary policy will be “flexible and moderate” versus “moderate” as last year’s statements indicated.
  • Excess capacity concerns: China will curb financial loans to industries in sectors with excess capacity in an attempt to bring production under control.
  • State-owned enterprise reform:The reform of state-owned assets and enterprises is to be accelerated and a three-year action plan for SOE reform will be formulated and implemented. SOE reform will be a focus of the phase two trade agreement.
  • Market opening: China committed to continue opening its key sectors to foreign firms as part of its efforts to promote supply-side growth as well as promote and better protect foreign investment.
  • Attention on financing for corporations and manufacturing: This year, the conference placed a priority on reducing the financing burdens on private companies as well as small and micro-enterprises. Banks have been directed to loosen the criteria for loans as well as try to allocate up to 30% of their loan portfolios to private firms. In addition, it calls for increasing the middle- and long-term financing for manufacturing to promote development of new sectors that would be internationally competitive while encouraging upgrades to the traditional manufacturing industries.

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