By Luna Sun
President Xi Jinping reiterated the need for China to develop a 鈥渦nified national market鈥 at a high-profile economic meeting on Tuesday, a task which has taken on greater urgency as the country prioritises domestic demand amid a more uncertain external landscape.
Greater efforts are needed to address a variety of issues facing the world鈥檚 second-largest economy, the Central Financial and Economic Affairs Commission said in a readout from their sixth meeting, explicitly calling for a crackdown on the cutthroat competition between firms that has lowered prices, a phasing out of obsolete industrial capacity and an improvement to the business environment.
The commission 鈥 a body of the ruling Communist Party which supervises economic matters 鈥 also stressed the need to 鈥渂etter integrate domestic and foreign trade, facilitate the transition of export-oriented goods to the domestic market, and foster a group of high-performing firms engaged in both,鈥 according to the readout, cited by state news agency Xinhua.
Authorities will also continue targeted enforcement campaigns to standardise how regulations are implemented for businesses.
鈥淏uilding a unified national market is a requirement for high-quality development, and the country should strengthen coordination and cooperation to form a concerted effort,鈥 Xi was quoted as saying.
Four of the seven members of the party鈥檚 powerful Politburo Standing Committee 鈥 Xi, Premier Li Qiang, head of the party鈥檚 general office Cai Qi and Vice-Premier Ding Xuexiang 鈥 attended the meeting.
The commission is continuing to emphasise the importance of keeping the economy open, said Zhang Zhiwei, president and chief economist at Pinpoint Asset Management.
鈥淭he top priority seems to be preventing over-competition. As China鈥檚 economy faces deflation pressures and a weak labour market, the government aims to address these challenges from the supply side,鈥 Zhang said.
鈥淚 expect specific measures to be announced in the next few months.鈥
Chinese authorities released a blueprint for a unified national market 鈥 a less regionalised state of affairs for the exchange of goods and services 鈥 in April 2022, as part of an overall effort to boost economic activity within the country鈥檚 borders.
However, there are still many barriers to this goal. Cutthroat competition has driven down prices dramatically in many industries, and the consumer price index, a major gauge of inflation, has fallen for four straight months this year.
The meeting was held as concerns mount over China鈥檚 weak domestic demand and the country鈥檚 exporters come under pressure as external demand dips, driven by a number of trade barriers, most notably a prolonged stand-off with the United States over tariffs.
While Beijing has attempted to help these exporters sell their products domestically, it has been difficult to fully compensate for the shortfall.
The private sector has long complained about China鈥檚 fierce business environment, with the unpredictability of regulatory changes often mentioned in surveys of executive and investor sentiment. This has prompted the government to make structural reforms, such as a first-ever law on the protection of the private economy, passed earlier this year.
These efforts could be bearing fruit. Retail sales, a barometer for consumption, are showing an upward trend with a rise of 6.4 per cent in May after a 5.1 per cent increase in April, the quickest monthly growth rate reported since December 2023.
China鈥檚 export growth is also expected to improve in June after slowing the previous month, as a 90-day tariff truce agreed to on May 12 appears likely to boost orders, if only on a temporary basis.
According to customs data, in May exports went up by 4.8 per cent, year on year, to US$316.1 billion, according to customs data. While still a positive figure, this fell short of the metric recorded in April as well as market expectations.