GDP growth goal may be cut in 2016
Print Edition
CHINA may lower the target for economic growth next year to 6.5 percent from around 7 percent this year, economists said yesterday after the conclusion of the annual Central Economic Work Conference.
The government will use accommodative fiscal policies, including more tax cuts and increased infrastructure and social spending, as key tools to sustain the growth momentum, they said.
“The government has reiterated the importance of maintaining growth at a reasonable pace,” said Wang Tao, a China economist at UBS. “We think 2016 growth target will likely be set at or above 6.5 percent.”
The official target is set to be released in March.
Liu Ligang, chief economist for China at Australia & New Zealand Banking Group Co, said the government will lift the fiscal deficit ratio and keep a more flexible monetary policy next year.
“China will use market forces to establish a vibrant micro foundation for reforms,” Liu said. “The government will also use social security policy to guard against the adverse impact of the reforms on the social community.”
The annual work conference, a top-level meeting to set the tone for next year’s economic policies, decided China will “allow the market to play a bigger role” and “strengthen structural reforms.”
The leaders also pledged to promote economic growth by cutting business costs and reducing overcapacity in production in some industries.
China’s gross domestic product grew 6.9 percent from a year earlier in the third quarter — the slowest pace since the aftermath of the global financial crisis in 2009. The economic growth rate for the first three quarters stood at 6.9 percent.
“Fiscal expansion, especially investment in infrastructure, will likely remain the main lever for the government to ensure the growth rate is acceptable,” Wang said. “The monetary policy will remain prudent with a bias toward easing.”
China’s economic growth is set to slow to 6.8 percent next year with inflation at 1.7 percent, researchers at the central bank said in a report last week. The State Information Center, a government think tank, also said the growth may stay at or above 6.5 percent next year.
In September, the Asian Development Bank cut its 2016 China GDP growth forecast from 7 to 6.7 percent.
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