China’s Communist Party meets to discuss financial reforms

After China performs poorly economically in third quarter of 2009 and announced rate cut to boost economic growth, China’s ruling party gathers to set economic direction for upcoming five years

Photo by: Reuters
Photo by: Reuters

Senior officials stand while waiting for a welcoming ceremony in front of the Great Hall of the People, the venue of China's parliament, in Beijing, China, June 18, 2015

China's ruling Communist Party opened a key meeting on Monday that will focus on financial reforms and how to maintain growth of around seven percent and more broadly map out economic and social targets for the next five years.

The Central Committee, the largest of the party's elite governing bodies with more than 200 full members, is gathering until Thursday to finalize the 13th Five-Year Plan, a blueprint for economic and social development between 2016 and 2020.

The meeting takes place amid growing concerns over a slowing Chinese economy.

China cut interest rates for the sixth time in less than a year on Friday. Monetary policy easing in the world's second-largest economy is at its most aggressive since the 2008/09 financial crisis, as growth looks set to slip to a 25-year-low this year of under 7 percent.

China's economy grew 6.9 percent in the July-to-September quarter from a year earlier, data showed last week.

The official Xinhua news agency, in a brief dispatch, said the meeting - formally called a plenum - had opened in Beijing. It gave no other details.

The highly secretive event, normally held at the Jingxi Hotel in western Beijing, will end with a long communique released by Xinhua, and will then probably be followed by a more detailed statement about a week later.

In a slew of commentaries on Monday, state media offered details on what could be decided.

Jin Zhongxia, executive director for China on the International Monetary Fund's policymaking board, told the Shanghai Securities News that China will increasingly rely on the interbank market to set bank deposit rates and interest rates.

He also said China's central bank will adjust repo rates using open market operations, and will influence other rates through the Shanghai Interbank Offered Rate and bonds.

Commentators from China's government-backed research departments also defended the country's recent growth figures.

Xiao Xiao, a researcher from the state planner's macroeconomic research department, wrote in the party's official People's Daily that slower growth was reasonable and a necessary occurrence as the economy undergoes an adjustment.

Premier Li Keqiang said the government had never said the economy must grow seven percent this year, according to comments reported by the government over the weekend.

In a separate article published by Xinhua on Saturday, the People's Bank of China's chief economist, Ma Jun, said China's financial reforms were likely to focus on four areas of finance - inclusive finance, venture capital, Internet finance and green finance.