China plans to tweak economic policies for more stability in 2020
Leaders met behind closed doors to create policy steps to ward off a sharper slowdown after a near 30-year low of 6% growth in the third quarter
Beijing — 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 country’s economy has cooled amid a trade war with the US.
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’s second-largest economy.
“To achieve the expected target for 2020, we should prioritise 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 will maintain its proactive fiscal policy and prudent monetary policy, 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 will 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, it 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 Shengrong 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 fulfil its long-standing goal of doubling GDP 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 about 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 will 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.
The agency said that China will also stabilise and expand the use of foreign capital and keep foreign trade growth steady.