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China to focus on economic ‘contingency plans’ to battle growing pressures in 2020

South China Morning Post

發布於 2019年12月12日16:12 • Frank Tang frank.tang@scmp.com
  • Central Economic Work Conference, attended by President Xi Jinping, took place under close scrutiny due to the US trade war and the slowing domestic economy
  • Economic targets for 2020, including gross domestic product (GDP) growth and inflation, will only be revealed at the ‘two sessions’ meeting in March
President Xi Jinping as well as Premier Li Keqiang and Vice-Premier Liu He attended the Central Economic Work Conference in Beijing this week. Photo: CCTV
President Xi Jinping as well as Premier Li Keqiang and Vice-Premier Liu He attended the Central Economic Work Conference in Beijing this week. Photo: CCTV

China's top policymakers have increased their focus on maintaining economic stability next year, calling for "contingency plans" to offset growing global risks, according to the results of a top economic planning meeting that concluded on Thursday in Beijing.

It is the first time since 2013 that the planners have explicitly cited the need to ensure stability in their goals for the coming year, in parallel with other goals including promoting reform, structural adjustment, improving people's living standards and risk prevention, although the broad sense of stability has often been cited by Communist Party leaders in the last several years.

The greater sense of urgency comes as the country is facing a series of major economic challenges. The 18-month trade war with the United States continues, and could escalate further if new US tariffs scheduled to be implemented on Sunday are not delayed.

Domestic growth is also expected to slow further in the fourth quarter and into next year from the 6 per cent growth posted in the third quarter of 2019, which was the lowest in nearly three decades.

Sources of global turbulence and risk have increased noticeably. We must make contingency plansOfficial statement

"We are at a critical period in transforming our method of development, optimising the structure of the economy and changing the drivers of growth. Structural, institutional and cyclical problems have woven together and exerted greater pressures on the economy," the official Xinhua News Agency reported, citing a statement following the conclusion of the three-day Central Economic Work Conference,which was attended by President Xi Jinping.

"Sources of global turbulence and risk have increased noticeably. We must make contingency plans."

The annual meeting is closely watched as it sets the tone for the size and nature of economic stimulus to achieve targets for growth, inflation, government investment and structural reform for the coming year.

The conference attracted special attention this year because of fear that the national economy could slow sharply in 2020 in the absence of sufficient government support, triggering a market debate on whether Beijing should increase stimulus to defend a 6 per cent growth rate.

The general consensus among economists was that the conference would set a growth goal of "around 6 per cent" for 2020, down from the 6 to 6.5 per cent growth target range for this year.

In addition, analysts expect the central government budget deficit to rise to about 3 per cent of gross domestic product, up from 2.6 per cent this year, while Beijing is also set to authorise local governments to issue an additional 3 trillion yuan (US$426 billion) in special purpose bonds to fund infrastructure projects.

Thursday's statement did not reveal the specific economic targets for 2020, which will only be officially disclosed in Premier Li Keqiang's government work report in March at the "two sessions" meetings of the National People's Congress and Chinese People's Political Consultative Conference.

The statement, though, did make it clear the government would continue to fine-tune its existing "proactive" fiscal policy and "prudent" monetary policy to support growth.

"(We) must make the proactive fiscal policy more efficient and pay more attention to structural adjustment," the statement said.

"The prudent monetary policy must be flexible and appropriate to ensure reasonably ample liquidity, maintain money, credit and aggregate financing growth in line with economic growth, and lower funding costs."

The prudent monetary policy must be flexible and appropriate to ensure reasonably ample liquidity, maintain money, credit and aggregate financing growth in line with economic growth, and lower funding costsOfficial statement

Employment, a key element of social stability, was already high on the 2019 government agenda and was again a focus of the conference goals for next year, along with the need to ensure that citizens in financial difficulty due to the slowing economy and higher inflation were taken care of.

"We must stabilise the overall level of employment, improve its structure and lift the quality of jobs. (We) must pay attention to key groups and ensure there are no families in which all the members are unemployed," the conference statement said.

"(We) must play the government's proper role in guaranteeing a basic standard of living for people in financial difficulty at this important time."

Copyright (c) 2019. South China Morning Post Publishers Ltd. All rights reserved.

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