It was a busy period for economic announcements for the Central Committee at the tail end of this year. Their Third Plenum set of reforms consisting of 70-points is generally enough to keep the most die-hard economist reading for a while.
Then there was the Central Economic Work Conference two months later, which put forward 5 core tasks, in which China’s leaders insist needed to be confronted if the country is to continue being the world’s second largest economy and maintain the kind of expansion that investors and corporations at large expect.
Michael Richmond, Senior Vice President at Sinolink Japan, says that when you look at the suggested measures from a broader point of view there are many contradictory and incoherent positions even to the untrained eye.
“On the one hand, the Work Conference’s core tasks are pushing the idea that China needs to maintain the core growth it has enjoyed for the past decade and a half. But that philosophy really doesn’t tally with the Third Plenum initiatives which promote reform, pro-consumption and a move into more advanced markets like the technology and services sectors, and to be honest the entire strategy is about as clear as mud even to the layman” Richmond said in a presentation to the company’s investors.
“If they want to restructure the balance of the economy then they seem to be at a very important crossroads at the moment. You can’t maintain traditional growth and transform the economy at the same time,” he added.
Indeed, Chinese policymakers are going to find it nearly impossible to accomplish all the tasks presented by their economic bodies, and this is by no means a new kind of problem with both developed and emerging markets going through this phase at some point. The choice is quite simple at the bare bones of it, long-term or short term?
