China’s Xi Makes A Disappointing Economic Promise

November 18, 2015, 5:20 PM UTC
Key Speakers At The Final Day Of The APEC Summit
Xi Jinping, China's president, waves as he leaves the stage at the Asia-Pacific Economic Cooperation (APEC) CEO Summit in Manila, the Philippines, on Wednesday, Nov. 18, 2015. Xi acknowledged downside risks to growth while assuring fellow leaders that Asia's biggest economy is resilient and will remain on the path of reform. Photographer: SeongJoon Cho/Bloomberg via Getty Images
Photograph by SeongJoon Cho — Bloomberg via Getty Images

China President Xi Jinping’s assurances today of high GDP growth rates must have sent shudders down the backs of reformers.

The Chinese government, investors, and businesses know that China’s growth is not returning to the heady days of 2010, with its double-digit quarterly increases. In fact, here is wide acceptance even among the most forceful China bulls that those growth rates are no longer possible for the world’s No. 2 economy as it shifts from heavy industry to services. In the third quarter, year-over-year growth rose 6.8%, the slowest rate since 2009—and there is strong evidence that the real growth rate was even a couple percentage points below that.

Which is why when Xi said the country’s leaders would do everything for the economy to “preserve stability and accelerate its development,” the message was clear: for now, the government will defer to growth at the expense of liberalizing its economy.

Xi spoke at the Asia-Pacific Economic Cooperation summit in Manila. At the same summit this week, President Obama rallied behind American allies in South East Asia, providing $260 million in American aid for countries’ naval security to push back against China’s territorial claims in the South China Sea.

Xi’s message was part of a continuum of government messaging over the past month. In late October, the country’s Communist Party elite agreed on the next five-year plan at their so-called fifth plenum meeting. The communiqué released afterwards, which is expected to be approved in March, emphasizes doubling GDP and people’s income by 2020 from 2010 figures. That target would require 6.5% annual GDP growth—a rate observers including Julian Evans-Pritchard of Capital Economics said “confirms what we previously suspected – that policymakers will make their job more difficult by pledging to sustain rapid rates of growth.”

On Wednesday, Xi acknowledged that China “will work hard to shift our growth model from just expanding scale to improving its structure.”

But in the eyes of reformers, that must now appear as a secondary priority.

For more about China’s economy, see this recent Fortune video: