Off The Wire
China to keep policies steady in 2020 as economic growth slows
BEIJING (Reuters) - China will keep economic policies stable while making them more effective in 2020 to help achieve its annual growth target, the Xinhua news agency said after a meeting of top officials as the economy has cooled amid a trade war with the United States.
The annual Central Economic Work Conference, a closed-door gathering of top leaders and policymakers, is being watched by investors for any fresh policy steps to ward off a sharper slowdown in the world second-largest economy.
“In order to achieve the expected target for next year, we should prioritize stability. Macro policies will be stable, micro policies will be flexible, underpinned by social policies,” Xinhua reported on Thursday, after the meeting.
China’s economic growth cooled to a near 30-year low of 6% in the third quarter and could slip further in the fourth quarter, although for the full year it remains on track to meet the government’s target of 6%-6.5%.
“We should improve macro policies to make them more forward-looking, targeted and effective,” it said, outlining broad plans but offering few details.
China would maintain its proactive fiscal policy and prudent monetary policy, making economic adjustments more forward-looking, targeted and effective, Xinhua said.
Top leaders committed to increasing the quality and effectiveness of fiscal policy while monetary policy would be flexible and appropriate, it added.
China’s economy faces increased downward pressure as the global economy slows and the government should be prepared for greater global risks, but China would keep its economic growth within a reasonable range in 2020, Xinhua said.
The government should “scientifically and steadily grasp” its counter-cyclical policy adjustments, while paying more attention to reforms to support businesses, Xinhua said.
“Apart from implementing the existing policies, some major counter cyclical adjustment policies, such as in manufacturing industry and infrastructure investment, will be further strengthened,” said Zhang Yi, economist at Zhong Hai Sheng Rong Capital Management.
The government has launched a raft of measures, including reductions in reserve requirements for banks, tax cuts and more infrastructure spending, but steps have yet to halt the economic slowdown.
Next year will be crucial for the ruling Communist Party to fulfill its longstanding goal of doubling gross domestic product and incomes in the decade to 2020, and to turning China into a “modestly prosperous” nation.
Top leaders are likely to set economic targets for 2020 at the meeting, but such targets are not expected to be announced until the annual parliament meeting in March.
The government has been urged to lower its economic growth target to around 6% for 2020.
The room for aggressive policy action is limited by worries over debt and financial risks, and diverging price trends have made policymakers’ choices more challenging.
China’s consumer inflation jumped to a near eight-year high in November as pork prices doubled, but producer prices remained in deflation for a fifth straight month.
Xinhua said China would deepen financial supply-side reform and increase medium to long-term financing for manufacturers, and ensure money supply, credit and social financing growth is in line with economic growth.
China would stabilize and expand the use of foreign capital and keep foreign trade growth steady, the agency said.
Additional reporting by China Monitoring Desk and Stella Qiu; Editing by Toby Chopra and Edmund blair