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November 29, 2017

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Call for moderate GDP growth target for 2018

A central bank advisor said yesterday that China should set a moderate economic growth target next year to give more room to structural reform.

China’s economy maintained steady growth and a positive outlook this year, with many bright spots emerging, including markedly improved corporate profits, said Bai Chongen, a Tsinghua University professor and member of the central bank monetary policy committee, at a forum.

While some advocate a higher GDP growth target for 2018, Bai said a slightly lower target is needed to curb inefficient investment and reduce the risk from growing debt.

“Personally I support a slightly lower, moderate growth target, so that we have more room to carry out structural reform,” he said during a panel discussion at the Caijing Annual Conference.

The government targeted GDP growth of around 6.5 percent for 2017. The 2018 growth target is set to be unveiled during the annual national legislative session in March next year.

“To achieve the official goal of doubling the GDP by 2020 from 2010, the country only needs an average growth rate of 6.3 percent in the coming three years,” Bai said.

He spoke of fast expansion in low-efficiency investment and increasing debt ratios at local government financing vehicles.

Pursuing a higher growth target could encourage upstream industries to continue expansion and lead to new excess capacity, Bai warned.

Meanwhile, consumption demand remains subdued, which calls for more measures to increase residents’ disposal income and stimulate spending, he said.

China’s economy expanded 6.8 percent year on year in the third quarter, down from 6.9 percent in the second quarter. Growth in the first three quarters reached 6.9 percent.

The government is trying to shift to sustainable economic growth driven more by technology and consumption and less by debt-fueled, low-end investment.


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