Unlike during the global financial crisis when the confidence of China’s leaders in China’s growth did not waver, the language from the country’s economic policymakers has shifted this month in a growing acknowledgment of the risks facing the economy domestically and from international tensions. China’s state planning body on Tuesday warned China’s employment market was not immune to downward pressure.
Mr Xi highlighted long-term challenges to the ruling Communist Party’s ability to maintain social stability and open up the economy.
“We need to be prepared for risks and also equipped with skills in defusing risks,” he said in a translation of his speech. The last time Mr Xi summonsed the nation’s top officials in such numbers for a Communist Party “study session” was one year ago when the focus was on re-emphasising political theory known as “Xi Jinping Thought”.
Economists and academics said Mr Xi’s speech was significant as it emphasised the ruling Communist Party was taking risks facing the world’s second-largest economy and the potential for any slowdown to create social instability seriously.
There has been speculation that Mr Xi faces internal pressure within the Communist Party for underestimating US President Donald Trump’s aggressive stance towards China.
Mr Xi’s warning about a tough external environment came as the US told Canada on Tuesday it would proceed with a formal request to extradite Meng Wanzhou, the chief financial officer of controversial Chinese telecom giant Huawei.
The sensitivities surrounding the arrest of the high-profile Chinese executive threaten to upset efforts to negotiate a truce in the trade war with the United States. Former foreign minister Gareth Evans and other Australians were among more than 140 academics and former diplomats who wrote to Mr Xi, demanding the release of two Canadians jailed in China since Ms Meng’s arrest.
“China now faces a lot of risks brought about by the economic slowdown and uncertainty in the relationship between China and the United States,” Peking University political scientist Yang Zhaohui said, noting it was unusual for the annual symposium to focus on risk and the economy.
“This shows China’s top officials have a pessimistic outlook on the economy. This is quite different from a few years ago when everyone was optimistic and talking about China’s renaissance,” he said.
China on Monday posted its lowest quarterly growth rate since the global financial crisis. China’s gross domestic product rose 6.4 per cent in the fourth quarter, in line with economists’ forecasts, while annual growth came in at 6.6 per cent, which was the lowest in 28 years. But markets were heartened by better-than-expected growth in retail sales and industrial output.
Economists said Mr Xi’s speech reinforced expectations that China’s leaders will pare back growth forecasts for 2019 and seek to maintain stability through stimulus measures such as tax cuts and improved lending for private enterprise.
“Although we were successful in guarding against systematic risk last year, we saw lots of local risks,” Xu Hongcai, chief economist at the China Centre for International Economic Exchange, a Chinese government think tank said.
He pointed to an increase in corporate bond defaults, the collapse of peer-to-peer lending and the local stockmarket slump. He said the Chinese government would not tolerate a big economic slowdown but local governments would not be encouraged to push beyond their growth targets if it risked stability.
“We are also facing a complicated and fast-changing external environment,” he said, pointing to US tensions and Brexit. The International Monetary Fund this week downgraded its global growth outlook for the second time in three months.
A spokesperson for China’s National Development and Reform Commission warned on Tuesday that downward economic pressure would be passed on to jobs, a sensitive area for the Communist Party, which must maintain low unemployment to ensure social stability. China’s unemployment rate rose to 4.9 per cent at the end of December from 4.8 per cent a month earlier. Data released this week also showed China’s birth rate slowed last year despite the abolition of the one-child policy three years ago.