The economy slowed further in 2013. In January 2014 the official estimate of China’s GDP growth put the year on year growth figure for 2013 at 7.7%, the same as for 2012, which generated considerable optimism that China’s economy was stabilizing. In November 2013 the government announced planned reforms following the third plenum, a closed-door summit, which was aimed at rebalancing the economy. The government promised to encourage more private investment in the state sector, relax its one-child policy, and provide better protection for farmers’ land rights in what were described as the most sweeping reforms in two decades. The government also pledged a bigger role for a free market in the economy. The economy was affected by liquidity squeezes in 2013—the first in June, followed by recurrences in October and December. In the last case, China’s central bank took the unusual step of injecting fresh funds into the markets to help to allay concerns. Money rates fell during the last week of the month as liquidity conditions improved, but they remained at elevated levels. In January 2014 officials also revealed that local government debt had risen sharply. Local government debt in China remains lower than that of many advanced economies, including the United States, the United Kingdom, and Germany, but the speed at which it is rising has alarmed investors.
The economy is thought to have grown by 3% in 2013 compared to the previous year, the government said in November, up from 1.5% in 2012. In its medium-term forecast published in February 2014, the government predicted average growth of 4% during the four years 2014 to 2017. It also anticipated average inflation of 3.5%. Local consumption and tourist spending remained fairly resilient in 2013, with the value of retail sales, in nominal terms, increasing by 11.6% year on year in the first 11 months of the year. Unemployment remained low at 3.2% for the three-month period ending December 2013, while consumer prices increased by 4.3% in 2013. Hong Kong’s exports of merchandise grew by 3.6% over that year, reflecting sluggish conditions in major developed markets and across many Asian economies. In January 2014, Hong Kong chief executive Leung Chun-ying pledged to give assistance to poorer families and overcome the challenge of building more homes as he seeks to quell popular discontent over a record wealth gap. The government will spend about HK$3 billion (US$387 million) a year in subsidies to about 200,000 low-income working families.
On 20th November 2013 Macau’s legislative assembly approved the budget proposal for 2014, which provides for a 14% increase over the 2012/13 budget, to 153.6 billion patacas (1 pataca = US$0.125). The secretary for economy and finance, Francis Tam, said that the increase was justified by increased revenues from Macau’s special tax on gaming. Legislators have been unhappy for a long time with the opacity surrounding government expenditure, and Tam said that the government intends to introduce legislation in 2014 to make public sector expenditure more transparent and tightly controlled. The 2015 budget would include total costs for multiyear projects and clear information on the government’s investment plan, he said. The 2014 budget is set to deliver a surplus of 76 billion patacas. Much of this will come from an expected 115.5 billion patacas from Macau’s gaming tax, up 25% on the 2013 figure. Macau levies gaming tax on casino gross gaming revenue at 35%. Clothing exports and gaming are the two principal exports, along with gaming-related tourism. The gambling industry provides the government with sufficient revenues to provide all Macau citizens with 15 years of free education.