China should focus less on economic growth as financial risk mounts

Vastavam web: China should focus less on rapid economic growth and more on the quality of its economy, given the dangers from already accumulating financial risks, a senior Chinese Communist Party official warned on Saturday.In the past 30 years, China had created a miracle of high-speed growth, Yang Weimin, deputy director of the Office of the Central Leading Group on Financial and Economic Affairs Yang said at the annual China Development Forum in Beijing.

President Xi Jinping said China should focus on the quality of its growth last October at the opening of the twice-a-decade Communist Party congress.Economists say better-than-expected growth in 2017, when the country handily beat its target of around 6.5 percent, gives Beijing room to press ahead with its campaign to reduce risks in the country’s financial system.Li Yang, an influential economist at the Chinese Academy of Social Sciences (CASS), a top government think tank, told the forum China’s macro leverage ratio rose 2.5 percentage points in 2017, but the structure of the leverage has impoved.

While the household debt ratio rose 4.2 percentage points to 50 percent, the debt ratio of non-financial firms fell 2.4 percentage points to 152.7 percent, Li said.“We are here to celebrate the miracle, but we cannot just assume that because you pulled off this great miracle in the past, you can just push the button and do it again,” Roach, a former chief economist at Morgan Stanley, told the forum.

Roach, a well-regarded China expert, said he is also concerned about the deterioration in the trade relationship between the United States and China, and warned against serious policy blunders from the Trump administration.