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Communist Party redirects economic path of China

CCTV.com

07-01-2016 19:26 BJT

Full coverage: 95 years of glory

The Communist Party of China has been lauded for delivering economic growth in China for more than three decades, but this achievement did not come without a price. The road ahead for China's economy will be an uphill battle. The CPC knows where the problems are and have made plans to tackle them. 

China’s political leadership is giving the economy a facelift from the miracle of the past 30 years. The Communist Party of China now focuses on domestic demand, rather than export and investment. The party also switched tack on fighting corruption, which is seen by economists as a tax on the productive sector of the economy.

On foreign affairs, China has become more proactive. Analysts say that would pump up the patriotic sentiment at home, which may feed into the entrepreneurial scene in China, dubbed “Chinese Dream”, and reduce the outflow of wealth and talent.

This private sector growth is key to counter an economic slowdown.

The Communist Party of China will face higher pressure to sustain healthy growth, which matters to the party's power of governance.

This type of economic transformation is nothing new to the Chinese Communist leadership.

The Great Leap Forward more than 50 years ago tried to boost economic output without advanced industrial technology and a properly educated labor force. That led to an economic crisis, which prompted reforms for a coordinated growth model.

The cultural revolution in the 1960s took a toll on China’s economic growth and arrested China’s industrial and tech development.

After the upheavals, the communist party carried out bold reforms. Between 1978 and 2005, China scrapped most controls on prices, opened up to foreign investment, decentralised state control, relaunched the Shanghai Stock Exchange and accelerated China’s privatisation.

China joined WTO in 2001 and overtook Japan as Asia’s largest economy in 2015.

But analysts say some of the reforms stagnated between 2005 and 2013, and the development pivot was back on the state-sector.

The dilemma is this: Beijing is trying to push through economic reforms, but is not yet ready to lift strong controls over the markets.

Many economists believe the economic overhaul in the next five years will be gradual and complex, and the Communist Party of China will be mostly challenged on seeking a balance between growth and reforms.

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