Speech by President Xi Jinping fails to launch new reform measures
January 8, 2019 Category China News Round-up, Weekly
China faces “unimaginable” perils and dangers ahead and must rely on the Communist Party and economic reforms to sail through them, Chinese President Xi Jinping said in one of the most watched speeches of his leadership. Speaking at the Great Hall of the People on December 18 to mark the 40th anniversary of the country’s reform and opening up, Xi did not directly address the specific challenges facing the economy or touch on sensitive issues such as the ongoing trade war with the U.S. Instead, Xi spent much of the hour-and-a-half speech drawing general conclusions about China’s economic and social development in the past four decades since Deng Xiaoping, China’s former paramount leader, started to embrace market-oriented changes in China in December 1978. The No 1 lesson China can draw from the 40 years of success is that the country must stick to the leadership of the Communist Party, Xi said. “The practices of reform and opening up in the past 40 years have shown us that Chinese Communist Party leadership is the fundamental character of socialism with Chinese characteristics. East, west, south, north, and the middle, the party leads everything,” he said.
Share prices slid in Hong Kong and mainland China following the speech as President Xi Jinping refrained from announcing any new policy initiatives, unveiling any financial stimulus to boost the economy’s sagging growth, or provide a clear path out of the nation’s trade war with the United States. Analysts had expected more from Xi’s speech as the latest economic data showed China’s industrial production and retail sales were far below expectations. “There was a sense of disappointment, among both local and international investors that Xi did not give clearer signals about the direction of future economic reform at a time when the Chinese government’s commitment to market liberalization is seen to have waned,” said Tom Rafferty, Regional Manager for China at The Economist Intelligence Unit (EIU).
At the end of last year, dozens of Chinese companies, pressed by a slowing economy and tighter bank loans, were putting their prized assets on sale to raise money to dress up their books in a desperate move to avoid expulsion from the stock exchanges. The year 2018 was one of the worst in the Chinese capital market. The economy’s M2 money supply has fallen every month since March 2017, while November’s total lending grew by a mere 9.9%, the slowest year-on-year increase on record.
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