President Xi to become more focused on economic overhaul during his second term. (Photo : Getty Images)
Many analysts and observers posit that in order for China to continue growing in the years ahead, the country must make a massive overhaul to its economy.
This entails the limitation of political interference in banking and the financial system itself, and opening up the economy to market forces, according to a report by the New York Times.
Although many were optimistic in 2012 when President Xi took the reins of the Chinese Communist Party, with promises to crack down on corruption and red tape, much of the enthusiasm has not lasted.
Nearing the end of his five-year term, China has witnessed a significant slowdown in its economic growth while still dependent on large investments and government lending.
Experts expect President Xi to become more focused on an economic overhaul during his second term and he would need to address numerous issues.
Currency and real estate
When China opened up money flows, it led to many citizens and companies sending money out of the country, thus severely weakening the renminbi against the dollar. The government has since reimposed strict rules on money outflows.
In the area of Real Estate, experts are wary of a housing bubble that has been set off when China allowed banks to issue mortgages easily. In Beijing and Shanghai, for instance, has some of the world’s highest real estate prices in relation to local incomes, with many developers still in debt.
Financial markets and banking
Although China has opened up its bond market to foreign trade and connected its stock markets in Shanghai and Shenzhen to Hong Kong, genuine progress has been limited. After the 2015 stock market crash, the government has increasingly tightened its grip.
China has made significant moves to assist banks in combatting an increasing number of bad loans. Although there is not much progress, the government has exerted efforts to foster competition among banks that benefit depositors.
