China cautions against ‘compound errors’ from clashing policies

A mouthpiece for China’s ruling Communist Party has warned against conflicting economic measures, urging officials to better guide market expectations in a front-page commentary highlighting Beijing’s growing focus on policy coordination.

“The more policies there are, the greater the risk they will be working at odds,” the People’s Daily editorial said on Friday, pointing to China’s increasingly complex economic environment, “with more and more policy dilemmas emerging and greater demands on policy”.

It also cautioned against “compound errors” – where inconsistent policies cancel each other out – noting that such mistakes have previously “unsettled market expectations”. Describing the market economy as largely an “expectations economy”, the piece called for stronger policy narratives and prompt responses to market concerns.

The market has expressed concerns in recent years over different policies from various government departments, which have at times clouded business and investor expectations. Periods of regulatory tightening have sometimes been followed by easing or recalibration, making it difficult for market participants to gauge policy direction.

Friday’s commentary was the third in a series released this week, coming at the start of China’s 15th five-year planning period and published under the pen name “Zhong Caiping”. The pseudonym resembles one – “Zhong Caiwen” – that is widely believed to represent the Central Financial and Economic Affairs Commission, a key economic decision-making body headed by President Xi Jinping.

The previous two instalments, published since Wednesday, respectively warned against industrial “involution” – referring to cutthroat, low-quality competition – and highlighted China’s economic resilience.

South China Morning Post