BEIJING (Reuters) – Chinese government advisers say they are going to recommend modest economic growth targets for next 12 months starting from 4.5% to five.5% to an annual policymakers’ meeting, marking a pickup from this 12 months’s growth but still hobbled by COVID-19 and other challenges.
China’s leadership can also be expected to prioritise stimulus over reform on the closed-door Central Economic Work Conference in December, which is able to chart the policy course for the world’s second-largest economy, including economic targets, people involved in the federal government’s policy discussions said.
The gathering will aim to jump-start growth that has been depressed by strict COVID 19-related curbs – and their disruption to produce chains and folks’s every day lives – in addition to by a slumping property market and slowing global growth.
China’s economy grew just 3% in the primary three quarters of this 12 months, well below the “around 5.5%” full-year goal set by the federal government finally 12 months’s December work conference and the primary shortfall since 2015, when China was hammered by a stock market crash and capital flight.
“We usually are not optimistic concerning the economic situation. Downward pressures are still there whilst we make some policy adjustments on COVID and the property sector,” said one among the federal government advisers, who all spoke on condition of anonymity since the deliberations are private.
“Fiscal policy shall be proactive next 12 months as we want to issue more debt to fund infrastructure projects. Monetary policy has room to ease given inflation stays moderate.”
The federal government’s recent easing of COVID curbs and stepped-up financial support for the property sector have boosted market sentiment regarding the economy, but it would take time for the results to filter through to growth rates, policy sources and analysts said.
4 government advisers told Reuters they’d drafted recommendations for next 12 months’s annual economic growth targets, starting from 4.5% to five.5%.
“We should always set a growth goal around 5% for next 12 months,” one among the advisers said.
Top leaders are expected to endorse a goal on the December meeting, although it would not be announced publicly until China’s annual parliament meeting, often held in March.
A Reuters poll in October showed that economists expect China’s economy to grow 3.2% in 2022 but some have since trimmed their forecasts. The poll also showed that China’s growth could pick as much as 5.0% in 2023.
President Xi Jinping laid out a long-term vision of “Chinese-style modernisation” at a twice-per-decade conference of the ruling Communist Party last month, with a goal of doubling China’s economy by 2035 that will require annual growth of 4.7%, in accordance with government economists.
To fulfil Xi’s ambition of turning China into a fantastic global power by the center of the century, the country could have to avoid the “middle income trap” where economies can get stuck with low productivity and a mediocre spot in the worldwide value chain.
China’s economic slowdown and its ageing population have led many analysts to reconsider when China will surpass the US because the world’s largest economy – or if it ever will.
Chinese leaders, under pressure from the mounting economic costs of their strict COVID containment policy, announced a handful of easing measures, including shortening quarantines by two days and ending penalties for airlines that carry a lot of COVID-positive passengers.
But a full reopening is unlikely before the annual convening of China’s parliament in March, the advisers said.
“We want to follow a step-by-step approach. We fear social instability if we abruptly remove all control measures,” one among them said.
China faces a very pressing need to extend vaccine coverage amongst its elderly population before it may well ease restrictions.
“If China were to desert zero-COVID now, that will warrant a lower not higher GDP forecast for next 12 months,” Capital Economics wrote in a note.
Within the troubled property sector as well, while the market reacted favourably to a rescue package on Sunday to spice up liquidity for cash-strapped developers, including loan repayment extensions, analysts worry that weakening demand will make for a slow and bumpy recovery.
(Reporting by Kevin Yao; Editing by Edmund Klamann)
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