Leaders stress ‘new normal’ theme at key economic meeting

Chinese President Xi Jinping

China’s leaders gathered for an annual meeting to map their economic plans for next year under the theme of “new normal,” a phrase adopted by President Xi Jinping to reflect a push to manage slower expansion.
The Central Economic Work Conference, held at the end of each year, sets the tone for macroeconomic policy for the next 12 months. The biggest decision from the meeting, which the official Xinhua News Agency said began yesterday, will likely be the 2015 growth target. That number will be announced at the start of the annual National People’s Congress in March.
Leaders including Xi have stressed they want domestic consumption, rather than exports and investment, to drive the economy in the future and are willing to accept slower annual expansion. With the economy set to grow at the slowest pace since 1990 this year, the phrase “new normal” has cropped up frequently to describe that shift: It was the headline of the Communist Party’s flagship newspaper, the People’s Daily, yesterday and the party’s ruling Politburo mentioned the phrase last week.
Economists expect a 7 percent expansion target next year, down from this year’s forecast growth rate of about 7.5 percent. The People’s Bank of China last month lowered lending and saving rates and increased the ceiling for deposit rates. After the Nov. 21 announcement, it said the move didn’t represent a shift and its monetary policy remains “prudent.”
“We expect a cut in the GDP growth goal to 7 percent from 7.5 percent after the Politburo issued a statement last week about China being in an economic ‘new normal’,” said Dariusz Kowalczyk, senior economist at Credit Agricole CIB in Hong Kong. “A lowered objective means less need to stimulate growth.”
The theme of last year’s meeting was reform, fitting with an economic overhaul announced a month before at a gathering of leaders called the Third Plenum. The 2012 conference set the goal of accelerating and refining macroeconomic control and realizing healthy development, according to China Central Television. Bloomberg