Chinese leaders promise lower business costs to boost growth

BEIJING -- Chinese leaders promised Monday to promote economic growth by cutting business costs and reducing surplus production capacity in some industries as they try to reverse an unexpectedly sharp downturn.

See Full Article

After an annual planning meeting, Communist Party leaders also promised to reduce financial risks and rein in rising debt that has prompted concern about possible threats to China's financial system.

The leadership under President Xi Jinping is in the midst of a multi-year effort to nurture slower, more sustainable growth based on domestic consumption instead of trade and investment. Growth has slowed more abruptly than expected over the past two years, forcing the party to juggle competing demands of shoring up the expansion while keeping reforms on track.

The pledges in Monday's brief statement weren't new, but they indicate where the ruling party's priorities will lie in 2016.

The statement also gave no details of how key issues such as the status of state companies that dominate industries from banking to energy to telecoms would be affected.

Economic growth decelerated to a six-year low of 6.9 per cent in the quarter ending in September and the International Monetary Fund and private sector forecasters expect it to fall as low as 6 per cent next year. Communist leaders insist they are comfortable with slower growth after the last decade's explosive double-digit expansion but face pressure to avoid a spike in job losses.

In 2016, the party will "reduce the burden on enterprises," the statement said. It promised to promote "mass entrepreneurship and innovation," but gave no details.

The party has taken steps to help entrepreneurs by reducing regulatory approvals required to start a business. In November, Beijing cut costs for entrepreneurs by reducing interest rates charged by credit unions and other small lenders that serve the private sector.

Beijing will "resolve excess capacity," the statement said, a reference to industries including steel, cement, glass and solar panels in which supply exceeds demand.

That glut has led to price-cutting wars that threaten the financial health of companies. Regulators want to promote consolidation through mergers but face resistance from local officials who are reluctant to lose jobs and tax revenue. Monday's statement suggested local leaders might come under increased pressure from Beijing to co-operate.

The ruling party unveiled plans in September to inject more competition into industries controlled by state companies and to force them to become financially self-reliant. But it stressed the ruling party would retain its dominant role in the economy.

Reform advocates complain the ruling party is dragging its feet on promises to open industries dominated by politically favoured state companies that benefit from monopolies, low-cost loans and other favours.

Party leaders also "vowed to take further steps to guard against and defuse financial risks," the statement said.

Financial analysts have warned China's financial system faces mounting risks due to soaring levels of debt. A largely unregulated industry of private sector finance companies that flourished over the past decade has suffered rising defaults as economic growth slows, causing losses for depositors and a spate of protests.

Chinese regulators say banks are financially healthy but they have tightened control over private finance companies. Last week, an Internet-based lender, Ezubo, that news reports said collected billions of dollars in deposits, was raided by police who seized a bank account and detained executives.


Latest Economic News

  • Can Facebook restore public trust after privacy scandal?

    Economic CTV News
    CHICAGO -- It's a scandal of privacy, politics and an essential ingredient of business success -- public trust. Facebook is confronting a costly, embarrassing public relations debacle after revelations that Cambridge Analytica may have misused data from some 50 million users to try to influence elections. Source
  • China tells U.S. it will defend interests after Trump tariffs

    Economic CTV News
    BEIJING -- China's newly appointed economic czar told U.S. Treasury Secretary Steven Mnuchin on Saturday that Beijing is ready to defend its interests after U.S. President Donald Trump announced plans to slap tariffs on nearly US$50 billion in Chinese imports. Source
  • The biggest loser in a trade war between China and the U.S.? It's you (but don't worry about it)

    Economic CBC News
    The old adage tells us no one wins a trade war. So, the next logical question is: Who loses? Well, the short answer is — you do. Consumers have been the clear beneficiaries of globalization. Cheap stuff has flooded into North America at a historically unprecedented rate. Source
  • What's being done with your data: Experts ask, shouldn't someone get this under control?

    Economic CBC News
    Now that Facebook, Google and Amazon know pretty much everything about us, how they're using that information is drawing the focus of politicians throughout the Western world, asking in effect: "Shouldn't something be done about this?" Source
  • Bombardier executive compensation hits US$33.4 million in 2017

    Economic CTV News
    MONTREAL -- Bombardier's executive compensation rose seven per cent to US$33.4 million in 2017, according to a circular released ahead of the company's May 3 annual meeting. The increase comes after a year marked by improved results, but also by the Airbus takeover of the C Series program without the company having to pay a single cent. Source
  • U.S. sets May 1 tariff threat on Canada, Mexico amid rush to speed up NAFTA talks

    Economic CBC News
    The United States has just applied additional pressure in its rush to get a new NAFTA agreement within several weeks, establishing a May 1 deadline, after which Canada and Mexico would face tariffs on steel and aluminum. Source
  • United Airlines gives $10,000 voucher to traveller on overbooked flight

    Economic CBC News
    A passenger who was bumped off a full flight has scored the maximum prize — a $10,000 US travel voucher. A spokesperson for United Airlines confirmed Friday that a passenger got the big voucher, but he didn't name the person. Source
  • Canadian retailers could be boosted by a U.S. trade battle with China

    Economic CTV News
    MONTREAL -- U.S. President Donald Trump's plan to impose tariffs on up to US$60 billion of Chinese imports could help Canadian retailers by further easing cross-border shopping, even though a full-fledged trade war between the world's two economic superpowers would damage Canada's economy, experts say. Source
  • CRA audits just 5 Canadians out of hundreds of RBC Panama Papers accounts

    Economic CBC News
    Two years after it took aim at hundreds of Royal Bank clients exposed in the Panama Papers leak, the Canada Revenue Agency has decided just five cases require an audit. That's because most of the offshore accounts it unearthed ended up belonging to foreigners, the CRA says. Source
  • Manulife mix-up: $170K retirement nest egg transferred from account without warning

    Economic CTV News
    A Toronto woman’s retirement nest egg was transferred out of her RRSP account after Manulife Financial wired more than $170,000 to a foreign third-party stock transfer company, putting the funds in limbo amid an ongoing spat with the financial services giant. Source