MNI EXCLUSIVE: China May Set 2020 GDP Target At 6% Or Higher

     BEIJING (MNI) - China is likely to set its GDP growth target for 2020 at 6%

or higher unless the global economic outlook deteriorates further, people close

to policy-making circles told MNI, as the government seeks to meet objectives

under its strategic development plan.

     The central government will "fix economic growth at 6% for next year," said

one person close to policy makers who requested anonymity. "The target will be

close to the potential growth rate of the Chinese economy."

     Other advisors told MNI that China's potential economic growth rate remains

above 6%. China's GDP expanded by 6.2% in the first nine months of the year, and

growth at 6% would be the slowest since 1992.

     "The target for next year could be set from 6% to 6.5%. If there are strong

external risks, it may be adjusted to around 6%," according to Tang Duoduo,

Deputy Director of Macro-Economy Research at the Chinese Academy of Social

Sciences, a research institute overseen by the State Council.

     The target will be announced at the National People's Congress in March.

Next year is the last of the 13th Five-Year Plan that aims to double GDP from

2010, producing a "well-off society in an all-round way" in time for the 100th

anniversary of the founding of the Chinese Communist Party in 2021.

     "Only growth at 6% could reach that goal," said Wang Jun, Director of the

Department of Consulting Research in the China Center for International Economic

Exchange, a think tank overseen by the National Development and Reform

Committee, and a former director of the China Central Policy Research Office.

     --FISCAL POLICY

     The government could fix its target at the same level as this year's

6%-6.5%, although it could lower it below 6% if it becomes concerned that the

global economic environment has deteriorated, Wang said.

     The advisors told MNI that the government should apply a more expansionary

fiscal policy, boosting infrastructure investment in particular. China has

historically relied on the real estate sector to boost growth, but authorities

have shown no willingness to relax controls on the sector, for fear of feeding

speculation.

     "I am inclined to relax controls on infrastructure investment. They have

been tightened slightly too much in some places, and infrastructure investment

would produce an immediate effect," Tang said.

     Wang Jun agreed: "I think the government should speed up infrastructure

investment. If conditions worsen in the new year, the government should be

prepared to, and even determined to, raise its fiscal deficit above 3% of GDP.

     "There is not much room for monetary policy considering the asset price

situation and rising CPI," he said.

     The central government should also assume the debts of local governments,

which are struggling to pay, Wang said.

--MNI Beijing Bureau; +86 (10) 8532-5998; email: archie.zhang@marketnews.com

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

[TOPICS: M$A$$$,M$Q$$$,MT$$$$,MX$$$$,MGQ$$$]