China Leaders Signal Slowdown Tolerance

China’s President Xi Jinping signaled a tolerance for slower expansion to avoid environmental degradation as policy makers outlined plans for the private sector to take a bigger role in boosting growth.

The country won’t sacrifice the environment to ensure short-term growth, Xi said during a study session of the Communist Party’s top leadership on May 24. His comments follow a statement issued on the same day that the State Council, which is chaired by Premier Li Keqiang, approved measures including tax reform to revamp the economy.

Xi and Li, who took over respectively as president and premier in March, are laying the groundwork to cut the government’s role in the economy, open state-dominated industries to private investment and revamp the household registration system that’s hampering urbanization. Some changes are already being trialed while others will be decided at a meeting of the Communist Party’s leadership later this year.

“Reforms are more pressing now — growth is running out of space, there’s more pressure on the labor markets and local governments have too much debt,” said Jean-Pierre Cabestan, head of the department of government and international studies at Hong Kong Baptist University who has studied Chinese politics for three decades. “They need to boost the economy but they can’t do it with another stimulus or some form of quantitative easing.”

Since taking office, Li has pledged to cut government interference in the economy, give market forces more power and boost the role of private companies.

Bloomberg

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