Forget the U.S. Federal Reserve’s Federal Open Market Committee.
The Chinese Communist Party’s October plenary meeting to decide the country’s next five-year plan was perhaps the most important meeting of policy makers in the world this year.
It decided the direction of Chinese economy, whose slow down this year has hit shares and commodities prices across the globe.
And much like a meeting of a central bank’s policy committee, analysts are scrutinizing the use of language in the communique released afterwards.
Analysts at Barclays, led by Victor Wang and Jian Chang, compared the usage of different words in the official statements after this year’s meeting compared to the previous five-year plan policy huddles.
The Communist Party shied away from setting hard targets on economic growth and instead used words focussed on people and quality of life.
Here’s what the analysts said (emphasis ours):
The new government appears to be placing less emphasis on the volume of economic growth (evidenced by the less frequent use of “investment” or “resources”); instead the focus appears to be primarily on the people (more frequent use of “people”, “population”, “medical”, “integration” and “inclusive development”). Furthermore, the current administration showed increased interest in: 1) new economy (“innovation” and “internet”); and 2) environmental protection.
Here’s the full analysis.
The Barclays analysts took this to mean that the focus for the next five years will be on China’s army of newly-eductated graduates, which could be the key to turning the country from its supply-led export economy to one powered by domestic demand and investment.
Here’s Barclays again:
Innovation was mentioned as a key theme. In the short term, we expect this to serve as a means to employ university graduates. As many as 25 million people need to look for jobs this year while only 12 million positions are available for them, according to the Ministry of Human Resources and Social Security. Among the 25 million job seekers, about 7.5 million are college graduates. In the long run, as we highlighted above, this could serve as means to upgrade the economy and increase aggregate supply.