According to a report from the Wall Street Journal published today, "the annual conclave of senior economic officials from central and local governments follows a gathering of top Communist Party leaders last month that hammered out a longer-term blueprint for economic and social reforms. The meeting that opened on Tuesday offers the leadership its first high-profile shot at more specific policy direction".
The official Xinhua news agency said the Central Economic Work Conference got under way Tuesday to review the country's economic performance for 2013 and "put forward overall requirements and major tasks for economic work in 2014." Xinhua didn't say when the conference would end. Last year's meeting lasted two days.
The meeting normally sets targets for growth and a ceiling on inflation, though the government usually doesn't make a formal announcement until the nation's parliament, the National People's Congress, convenes its annual session in March.
This year's growth target was set at 7.5%, and economists have been trying to assess whether the government will reduce its goal for next year to 7% or keep it at 7.5% amid a recovering—but still sluggish—global economy. China's economy regularly exceeds the growth target, but it is still a closely watched measure of the government's priorities, offering hints of monetary policy and shedding light on Beijing's views of the global economy.
A higher growth target will mean that efforts to restructure the economy, which has long relied on government investment and exports for growth, could take a back seat to providing sufficient economic momentum to create enough new jobs and ensure social stability. That would mean more government investment projects—one of the tried-and-true methods for stimulating growth.
By contrast, a lower growth target would give China room to streamline bloated state enterprises, curb polluting industries and tackle industry overcapacity. Less emphasis on infrastructure spending could also give them room to expand social services, which could help Beijing's efforts to make consumers a greater driver of growth.
On Tuesday, policy makers got a little bit of good news in their efforts to rebalance the economy as retail sales climbed 13.7% year over year—their fastest pace since December last year and signaling that consumption was gaining a bit of traction—just as fixed asset investment showed signs of slowing.
"I hope to see a growth target of 7% next year," said Li Xuesong, an economist at the Chinese Academy of Social Sciences, who adds that slower growth will let the government focus on its longer-term objectives. "But we are expecting a target of 7.5%."
Economists expect China to maintain an inflation target of 3.5% next year—unchanged from this year's target but above recent price increase levels. The consumer price index rose 3% year on year in November, slipping back slightly from a 3.2% gain in October. If Beijing follows through on giving markets greater say in areas where it controls pricing, such as energy and water, that could lead to higher inflation.
The work conference may also give a hearing to key social policies—such as a relaxation of the one-child policy—unveiled at the November meeting of Communist Party leaders. Local governments are to set their own pace for pushing ahead with what is seen as helping to slow a reduction in the workforce as fewer babies are born. The work force decline is pushing up wages and potentially undermining the nation's social security system as the number of retirees expands rapidly.
