News / Asia

China’s Next Leaders Inherit Economy at Critical Crossroad

A man walks past portrait of communist party members on display outside Imperial Ancestral Temple in Beijing, China, November 12, 2012.
A man walks past portrait of communist party members on display outside Imperial Ancestral Temple in Beijing, China, November 12, 2012.
William Ide
China's leaders have renewed pledges to boost the economy over the next 10 years during meetings this week in Beijing. But the economic challenges China's incoming leaders face are much more difficult than the challenges their predecessors faced a decade ago.

China’s aspirations for its economy over the next decade have come up repeatedly at the National Party Congress, in discussions on the sidelines of the meeting and in state media’s coverage of the event. It also figured prominently in the opening speech of outgoing President Hu Jintao.

In his address, Hu mentioned the economy 104 times in a wide range of contexts.  Economic development was mentioned more than a dozen times, as was former Chinese leader Deng Xiaoping’s catchphrase "gaige kaifang," or, "reform and opening up."

And while the risks China’s economy is facing were not mentioned as much, they were not ignored. Hu’s most direct comment on the challenges the country faces came when he said the opportunities and risks China face are not like anything before.

This year China’s economy is slowing to its slowest growth rate in more than a decade. And although the projected year-on-year growth rate of around 7.5 percent remains enviable to many countries, that is nearly half of what it was just five years ago.

Zhang Ping, head of China’s National Development and Reform Commission voiced confidence that the economy was improving, despite the slowdown. But he acknowledged there are still contradictions that need to be addressed.

Zhang says that China still lacks a balanced, coordinated and sustainable development, and its growth model is very crude. He says that along with the weakening overseas demand, China still has excessive production capacity in several sectors.

"We still lack a balanced, coordinated and sustainable development, and our growth model is still very crude. And along with the weakening overseas market demand, we still have an excessive production capacity in several sectors," he said. "There are also structural problems that need to be adjusted. It will take some time to solve these problems. These contradictions are having some impact on the development of domestic economy."

China’s economic growth model has long focused on exports. Now, its leaders are trying to move away from that to focus on boosting domestic consumption - or moving toward an economy where domestic consumers lead the way. Unlike his predecessor, that will be a key transition that China’s incoming leader Xi Jinping will oversee, says Patrick Chovanec, a Beijing-based economist.

"And that is a difficult transition for any economy. But particularly one as large as China and he’s [Xi Jinping] going to be tackling that challenge. It’s a challenge that people have been talking about for the past couple of years, but very little progress has been made in actually making that adjustment and he’s going to have to tackle that at a time when that is going to translate into a slowdown in the Chinese economy at least in the short run," he said.

While there are some who point to recent economic figures such as rising factory output and consumer spending as signs of a possible recovery, others are not as optimistic. Skeptics say the slowing of lending at banks is a sign the economy may still face challenges.

Patrick Chovanec says that as bank lending slows, investors are turning to other products such as bonds, private wealth management vehicles and trust funds.

"There are some people who say well this is part of financial reform in China and this will all work out fine," he said. "I am more skeptical and to me what it signifies is that more and more of the funding for China’s investment led growth is being shifted away from relatively low cost low interest bank loans to alternative investment vehicles that are promising higher and higher returns on the same assets."

There is also the problem of so-called "bad debt" such as defaulted loans written off by creditors as a loss. Chinese banking officials have acknowledged that bad debt is rising, but they insist the situation is under control. Shang Fulin, chairman of the China Banking Regulatory Commission spoke at a news conference in Beijing this week.

Shang says bad loans have been on a rise this year mostly due to the difficulties in management of some industries. He says, however, that the overall quality of bank assets is stable and the risk is still under control. Shang says that with China’s bad loan ratio still below one percent, the country's bad loans are still far lower than the world’s major banks.

You May Like

Americans Celebrate Thanksgiving

Feasts centering on turkeys with an array of traditional sides and desserts are part of the holiday's traditions, which falls on the fourth Thursday in November More

Video For Obama, Ferguson Violence is a Personal Issue

With two years left in term, analysts say, president has less to lose by taking conversation on race further More

Video Italian Espresso Expands Into Space

When Italian astronaut Samantha Cristoforetti headed for the ISS, her countrymen worried how she would survive six months drinking only instant coffee More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
US Community Kicks Off Thanksgiving With Paradei
X
Anush Avetisyan
November 26, 2014 10:57 PM
Thursday is Thanksgiving in the United States, a holiday whose roots go back to the country's earliest days as a British colony. One way Americans celebrate the occasion is with parades. Anush Avetisyan takes us to one such event on the day before Thanksgiving near Washington, where a community's diversity is on display. Joy Wagner narrates
Video

Video US Community Kicks Off Thanksgiving With Parade

Thursday is Thanksgiving in the United States, a holiday whose roots go back to the country's earliest days as a British colony. One way Americans celebrate the occasion is with parades. Anush Avetisyan takes us to one such event on the day before Thanksgiving near Washington, where a community's diversity is on display. Joy Wagner narrates
Video

Video For Obama, Ferguson Violence is a Personal Issue

Throughout the crisis in Ferguson, Missouri, President Barack Obama has urged calm, restraint and respect for the rule of law. But the events in Ferguson have prompted him to call — more openly than he has before — for profound changes to end the racism and distrust that he believes still exists between whites and blacks in the United States. VOA White House correspondent Luis Ramirez reports.
Video

Video Online Magazine Gets Kids Discussing Big Questions

Teen culture in America is often criticized for being superficial. But an online magazine has been encouraging some teenagers to explore deeper issues, and rewarding their efforts. VOA religion reporter Jerome Socolovsky went to this year’s Kidspirit awards ceremony in New York.
Video

Video Aung San Suu Kyi: Myanmar Opposition to Keep Pushing for Constitutional Change

Myanmar opposition leader Aung San Suu Kyi says she and her supporters will continue pushing to amend a constitutional clause that bars her from running for president next year. VOA's Than Lwin Htun reports from the capital Naypyitaw in this report narrated by Colin Lovett.
Video

Video Mali Attempts to Shut Down Ebola Transmission Chain

Senegal and Nigeria were able to stop small Ebola outbreaks by closely monitoring those who had contact with the sick person and quickly isolating anyone with symptoms. Mali is now scrambling to do the same. VOA’s Anne Look reports from Mali on what the country is doing to shut down the chain of transmission.
Video

Video Ukraine Marks Anniversary of Deadly 1930s Famine

During a commemoration for millions who died of starvation in Ukraine in the early 1930s, President Petro Poroshenko lashed out at Soviet-era totalitarianism for causing the deaths and accused today’s Russian-backed rebels in the east of using similar tactics. VOA’s Daniel Shearf reports from Kyiv.
Video

Video Hong Kong Protests at a Crossroads

New public opinion polls in Hong Kong indicate declining support for pro-democracy demonstrations after weeks of street protests. VOA’s Bill Ide in Guangzhou and Pros Laput in Hong Kong spoke with protesters and observers about whether demonstrators have been too aggressive in pushing for change.
Video

Video US Immigration Relief Imminent for Mixed-Status Families

Tens of thousands of undocumented immigrants in the Washington, D.C., area may benefit from a controversial presidential order announced this week. It's not a path to citizenship, as some activists hoped. But it will allow more immigrants who arrived as children or who have citizen children, to avoid deportation and work legally. VOA's Victoria Macchi talks with one young man who benefited from an earlier presidential order, and whose parents may now benefit after years of living in fear.
Video

Video New Skateboard Defies Gravity

A futuristic dream only a couple of decades ago, the hoverboard – a skateboard that floats above the ground - has finally been made possible. While still not ready for mass production, it promises to become a cool mode of transport... at least over some surfaces. VOA’s George Putic reports.
Video

Video Falling Gas Prices Impact US Oil Extraction

With the price of oil now less than $80 a barrel, motorists throughout the United States are benefiting from gas prices below $3 a gallon. But as VOA’s Kane Farabaugh reports, the decreasing price of petroleum has a downside for the hydraulic fracturing industry in the United States.
Video

Video Tensions Build on Korean Peninsula Amid Military Drills

It has been another tense week on the Korean peninsula as Pyongyang threatened to again test nuclear weapons while the U.S. and South Korean forces held joint military exercises in a show of force. VOA’s Brian Padden reports from the Kunsan Air Base in South Korea.
Video

Video Mama Sarah Obama Honored at UN Women’s Entrepreneurship Day

President Barack Obama's step-grandmother is in the United States to raise money to build a $12 million school and hospital center in Kogelo, Kenya, the birthplace of the president's father, Barack Obama, Sr. She was honored for her decades of work to aid poor Kenyans at a Women's Entrepreneurship Day at the United Nations.
Video

Video Ebola Economic Toll Stirs W. Africa Food Security Concerns

The World Bank said Wednesday that it expects the economic impact of the Ebola outbreak on the sub-Saharan economy to cost somewhere betweenf $3 billion to $4 billion - well below a previously-outlined worst-case scenario of $32 billion. Some economists, however, paint a gloomier picture - warning that the disruption to regional markets and trading is considerable. Henry Ridgwell reports from London.
Video

Video Chaos, Abuse Defy Solution in Libya

The political and security crisis in Libya is deepening, with competing governments and, according to Amnesty International, widespread human rights violations committed with impunity. VOA’s Al Pessin reports from London.
Video

Video US Hosts Record 866,000 Foreign Students

Close to 900,000 international students are studying at American universities and colleges, more than ever before. About half of them come from Asia, mostly China. The United States hosts more foreign students than any other country in the world, and its foreign student population is steadily growing. Zlatica Hoke reports.

All About America

AppleAndroid