The annual Economic Work Meeting, which ended Thursday, lays out overall goals for the coming year. Companies and investors usually have to wait for the meeting of China’s ceremonial legislature the following March for details of how they will be achieved.
This week’s meeting “sent a strong signal that stability is the first priority,” said Citigroup economists in a report. Still, they warned, “some of the elements that plagued China’s 2019 slowdown will continue to shape next year’s economy.”
This year’s plan comes amid a tariff battle with President Donald Trump over Beijing’s technology ambitions and trade surplus and a steady decline in economic growth from the previous decade’s explosive double-digit rates.
Communist leaders are in the midst of a marathon campaign to steer China to more sustainable, if slower, growth based on domestic consumption instead of trade and investment. Their plans have been challenged by the trade war and an unexpectedly sharp downturn in Chinese consumer demand.
Economic growth sank to a multi-decade low of 6% over a year earlier in the quarter ending in September. Friday’s statement promised to fight “three major battles” against poverty, pollution and financial risk. Is said the ruling party will “ensure reasonable growth” in the economy and “stable growth” of trade.
It made no direct mention of the trade battle with Washington but said China faces “mounting risks and challenges at home and abroad.” The party has tried to shore up growth by easing controls on bank lending and pumping money into the economy through higher spending on building highways and other public works. But the leadership wants to avoid reigniting a rise in already-high debt and has said it wants to rely on economic reforms instead of stimulus spending.
Trump’s tariff hikes have battered Chinese exporters, but they have responded by stepping up sales to other markets, putting China on track to end 2019 with little loss in global trade. Exports to the United States fell 25% from a year ago in the 11 months through November but global sales were off only 0.3%.
On Thursday, the two governments were close to agreeing on details of an interim agreement announced by Trump in October. Investors were hoping that would persuade the White House to postpone a new increase in tariffs due Sunday on $160 billion of Chinese imports.
Friday’s statement also promised “vigorous efforts” in “supply-side structural reform,” a reference to reducing excess production capacity in steel, coal and other industries. Overproduction by Chinese industry has depressed prices, threatening produces with financial ruin. A flood of low-cost exports is straining trade ties with Washington and Europe.