As China’s leaders prepare to reveal the country’s economic plan for 2018, sources familiar with the discussions have told the Wall Street Journal that Beijing is struggling to cut debt while maintaining economic growth. According to these sources, the blueprint to be unveiled on Wednesday will ditch talk of bringing down debt in favor of the more modest goal of controlling the rise in borrowing.
Beijing has reined in borrowing between banks in an effort to crack down on debt, but overall borrowing has continued to rise faster than growth. The softening of the goal, agreed earlier in December by the Communist Party’s top leaders, is an official acknowledgment of how hard it is for Beijing to reduce the economy’s reliance on debt-driven growth.
“Let’s face it,” said an official involved in policy discussions. “It”s not realistic to reduce leverage when the whole economy relies on banks for financing.”