Annual Central Economic Work Conference (CEWC)


The CEWC is part of the annual policy cycle, following on the Politburo meeting earlier this month.


The CEWC issued a statement emphasizing the need for stability, stability of economic reform and macroeconomic policy.


The statement mentions several areas of reform, but does not give much detail. However the need to resolve the overcapacity problem gets more attention than before.


6 key tasks a mentioned for 2014:


Food security; industrial structure (including overcapacity problem); dept risk prevention; coordinated regional development; to protect and improve the people’s livelihood; continuously improve the openness of economy.


An emphasis on stability[1]|

Sustainable growth and further reform

Development of the Chinese economy in the first 3 Quarters 2013.

In the first three quarters of 2013 the Chinese economy was stable and showed overall growth, albeit with lower growth rates than in 2012.

CPC Central Committee and the State Council continue to support stable growth trend, focus on deepening reforms and opening up, accelerating transformation and upgrade the Chinese economy as well as protect and improve the livelihood of the population.

[Chinese Bureau of Statistics,;]

The government statements show confidence that the economy will continue to grow and reforms will be successful. However according to the IMF, “Space for demand support policies through government spending and lending (including through the shadow banking in China) is approaching its limits and can no longer be relied on as engine for growth.”

[Managing Director’s Global Policy Agenda to the International Monetary and Financial Committee; October 12, 2013; Page 5: Emerging market economies]

“Bold structural reforms are needed to contain growing credit risk and maneuver a smooth transition to consumption – driven growth.”

“Interest rates should be liberalized and a more transparent interest – rate based monetary framework developed, supported by strengthened financial sector regulation and supervision, including of the shadow banking system.”

[Managing Director’s Global Policy Agenda to the International Monetary and Financial Committee; October 12, 2013; Page 8: China]

The current central government seems to be somewhat committed to change, but currently also faces massive problems: Air pollution in major Cities for example has become a major problem in 2013. Unrest among ethnic minorities has increased and peaked in the recent attack at the Tiananmen square. Also the urbanisation comes with problems for the environment and living condition of the population. Which may result in increase of social unrest. Further reforms are urgently needed in China.

Wage growth to slow in 2014

Recent developments in China have shown that the overall macro-economic fundamentals remain stable. The central government is aiming for a sustainable growth model. Stimulus programs will be limited to key sectors, while more reforms will be implemented.

Economic growth should remain stable, but on lower levels at around 7-8% for 2013 and 2014. Double digits GDP growths rate will be a thing of the past.

The labour market remained tough in 2013 and we witnessed problems to find and retain semi-skilled workers. However these problems were significantly less pressing then in 2012. Wage growth may slow down a little in 2014, but employers still have to watch and monitor developments closely.

Pilot free trade zone (FTZ) in Shanghai will launch on Sept 29


Easier access and greater freedom for the Shanghai FTZ is promised by China’s central government. The now suggested negative list approach will allow everything that is not explicitly forbidden. Investors will have to wait and see, how long and complicated the restrictions of that negative list will be.

“The National People’s Congress Standing Committee (China’s legislature) has authorized the State council (Cabinet) to modify laws related to foreign enterprises in the zone.” [Xinhua]

“In the FTZ goods can be imported, processed and re-exported without the intervention of customs authorities. ” [Xinhua]

Housing price vs. Chinese dream

Ever higher housing prises are putting huge pressure on the Chinese middle-class home owners. Most of the income will flow into monthly loan payments. The negativ effect on domestic consumption can be felt in all major cities. Keeping housing prices within certain limits, will be crucial to keep the Chinese domestic growth on track and help the people to fulfill their Chinese dream.

“Since President Xi Jinping talked about the Chinese Dream last year, government departments have been working together to help realize the goal. For the nation as whole, the Chinese Dream means maintaining social stability, ensuring economic growth and common prosperity, and building a secure future. For an ordinary family, however, the key factor in the Chinese Dream is a better life. And keeping housing prices within a reasonable limit is essential to realize the dreams of both the nation and individuals. “[By Zhang Zhouxiang (China Daily)]

Growth range to push forward reforms and balance growth

By Xinhua

At the opening ceremony of the Annual Meeting of the New Champions 2013, also known as Summer Davos, Li [Chinese Premier Li Keqiang]described the reasonable growth range he first proposed in July as a benchmark for policy adjustments. This range is marked by a lower limit designed to ensure steady growth and job creation and an upper limit meant to avert inflation.

“As long as the economy runs within the reasonable range, we will keep macroeconomic policies generally stable and focus on shifting the growth model and structural readjustment,” Chinese Premier Li Keqiang.

Balanced growth is key to further development of the Chinese economy. Reforms should help opening up the economy and create more chances for private sectors, both domestic and foreign.

Plan to establish the Shanghai FTZ approved by the State Council in June.

By HE WEI and WEI TIAN (China Daily)


Shanghai wishes to become one of the leading locations to conduct global trade and confirm its status as a world-leading financial hub.

The establishment of the Shanghai Free Trade Zone (FTZ) may support this development and create new opportunities for manufacturers in the region.

“Goods in the zone may be landed, handled, manufactured or reconfigured and re-exported without the intervention of customs authorities,” Sun Lijian, a professor of economics at Fudan University.

Sun said such a tariff-free environment would foster offshore trade and offer tantalising new opportunities to Chinese exporters keen to expand their production capabilities to other low-cost markets in the region. He added that such eased rules would also help them concentrate on the higher-value-added front and back ends of the manufacturing process.

“In order to support the ordinary Chinese social model, the mainland needs more sophisticated financial services. When people feel that their future is more secure, they will consume more,” Dan Steinbock, research director of international business at the India, China and America Institute in the US.

Chinese exports expand in August – signs of recovery

By Li Jiabao (China Daily)


The accelerated pace of China’s exports in August has added to the signs of a gradual recovery, experts said on Sunday.

Exports jumped in August by 7.2 percent from a year earlier to $190.73 billion, compared with 5.1 percent growth in July, the General Administration of Customs said on Sunday.