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--Central Economic Work Conference May Endorse Boosting Imports, Opening Up
Finance
--Officials to Support Policies Ending Trade War With The U.S.
--Meeting Likely To Approve Fiscal, Monetary Stimulus
     BEIJING (MNI) - China's leadership is likely to use a crucial meeting next
week to endorse proposals to defuse the trade dispute with the U.S., including
moves to boost imports, open up financial services, enhance intellectual
property protection and improve coordination on global trade rules, MNI
understands from speaking to officials and government advisors.
     While the measures, which have been under discussion for some time, will
not receive final approval at the Central Economic Work Conference and key
details will likely remain ambiguous, officials hope confirmation that they are
on the way to being enacted will help ensure that a 90-day truce reached at a
G20 dinner between Xi and U.S. President Donald Trump leads to a more permanent
ceasefire - something that would be key to stabilizing growth in 2019 -- sources
told MNI.
     "The leadership will introduce some important bargaining chips into the
discussion, including expanding imports, opening up the financial industry,
intellectual property protection and coordination on global trade rules," said a
source close to the government. External trade woes have been recognized as a
factor that disrupts China's stable development, sources said.
     The CEWC, which will set the tone for next year's economic policies and
will be chaired by President Xi Jinping, will also point towards further
targeted monetary easing and a moderate increase in fiscal stimulus, including
further tax cuts, which might take the national budget deficit to 3% of GDP from
this year's 2.6%, they said.
     The key annual policy meeting, the date of which is not made public, has
drawn particular attention this year as growth prospects have been clouded by
increasing uncertainties both within and outside the country.
     --EMPHASIZE STABILITY
     The world's second-largest economy will emphasize stability as the top
priority, a high-ranking source told MNI. This will hark back to the principle
of "six stabilities" -- stabilising employment, finance, foreign trade, foreign
investment, investment and expectations -- proposed by the Politburo in July.
     Sources who spoke to MNI agreed that while policymakers will not pursue a
large-scale stimulus, they will be compelled to further downplay a campaign that
had sought to reduce excessive leverage in the economy.
     "The focus on stability implies a huge stimulus isn't in store, but
monetary policies will further tilt towards easing, and financial regulations
won't be as strict," a source close to the central bank told MNI.
     Policies permitting a targeted expansion of lending should help China's
struggling private sector, sources said.
     --DANGERS
     While the economy may face headwinds in the first half, it should stabilize
from the middle of next year as looser monetary and fiscal policies take
effects, another source said.
     "GDP growth at about 6.5% is in line with our potential as both consumption
and investment, particularly in the private and manufacturing sectors, will
rise, and the property market should be stable as volume and land supply will
both increase next year," the source said,
     Significant concerns for the officials and advisors with whom MNI spoke
were the need to maintain employment levels and the danger that high levels of
debt at state-owned enterprises and local government could muffle the effect of
the stimulus.
     "Even big listed companies are laying off workers, and small businesses,
which supply the majority of the employment, are faced with a much more
difficult operating environment, one policy advisor told MNI.
     State-owned companies and local governments might also take advantage of
easier monetary conditions to roll over maturing debt, mopping up additional
credit and impeding the transmission of stimulus to the broader economy. A wave
of 10-year debt created during the borrowing binge at the time of the financial
crisis is due to mature in 2019, the advisor said.
--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com
--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com
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