Edition:
HIGHLIGHTS
Donald Trump’s China policy
NEW
US-China relationsHong Kong economy
News
Hong KongChinaEconomyAsiaWorldSportThis Week in AsiaUS Elections
Business & Tech
BusinessTech
Opinion
Latest
Lifestyle
LifestylePeople & CultureStylePostMagK-popOutdoorCooking
More +
VideoTalking PostSCMP FilmsInfographicsPicturesPodcastsSCMP SeriesExplainedSCMP SpotlightNewslettersSpecial Reports
Topics
Donald Trump’s China policyUS-China relationsHong Kong’s Article 23 national security lawChina’s militaryChina's economic recoveryTrending in ChinaTaiwanChina’s Communist PartyUkraine warWellness
Focus
Greater Bay Area
avatar image
Advertisement
China economy
OpinionComment
Chaoping Zhu
Chaoping Zhu

Macroscope | Coronavirus or not, China must focus on the big picture: economic reforms

  • For China, the short-term coronavirus shock is coming on top of an economic slowdown. Policymakers now gathered at the annual NPC session remain cautious about an all-out stimulus, and will be eyeing long-term reforms to improve economic structure and boost productivity

Reading Time:3 minutes
Why you can trust SCMP
0
People commute during the morning rush hour before the opening session of the National People’s Congress in Beijing. Photo: AFP
Chaoping Zhu
The annual session of the National People’s Congress is getting the market’s full attention these days since Beijing is expected to announce a strong stimulus package to stabilise the Chinese economy amid the Covid-19 shock. However, to my mind, the market might be overly focusing on short-term issues, while to some extent ignoring some policies over a longer time horizon.

To take a step back, the Chinese authorities have in the past few months published a series of documents pledging to push forward reforms. These reforms could also be raised for review and discussion during the NPC meeting.

Admittedly, the Covid-19 outbreak poses the foremost threat to Chinese economic growth at this moment. Despite its unprecedented severity, this pandemic should be deemed a short-term economic challenge, which could be mitigated with stimulus policies. However, for China, this short-term shock is coming on top of a secular economic slowdown.

Policymakers remain cautious about an all-out stimulus, in case it might introduce further long-term risks into the economy. Therefore, they are eyeing long-term reforms to improve economic structure and boost productivity.

03:35

The ‘two sessions’ explained: China’s most important political meetings of the year

The ‘two sessions’ explained: China’s most important political meetings of the year
On April 9, the Communist Party Central Committee and the State Council published policy guidelines on building effective factor markets: labour, land, capital and technological knowledge. On May 18, a more comprehensive document was released on improving China’s socialist market economy. While these have been talked about as policy priorities for several years, the latest announcements may augur an acceleration in policymaking and execution in some key areas in the next couple of years. Substantial progress is expected in the areas of factor markets, state-owned enterprises, and market access.

On factor markets, a key point of the reform measures is to facilitate more efficient allocation of labour, land and capital. Recently, we have seen a strong momentum in capital market reform. A new Securities Law took effect on March 1, and a registration-based initial public offerings system on ChiNext is on trial. However, reforms of the labour and land markets continue to lag behind.

Advertisement