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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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Free AccessMNI US OPEN - PBOC Makes First Major Policy Tweak Since 2011
MNI BRIEF: China Passenger Car Sales Up In November Y/Y
MNI INTERVIEW: China Confident Of Near-Term Growth: Advisor
China is confident its economy can maintain a potential growth rate of around 6% in the next five years, and will need growth to average over 4% annually for 15 years to double its GDP and become a moderately developed country, former Vice Finance Minister Zhu Guangyao told MNI.
The moderately-developed status targeted in Beijing's 2035 vision set at a politburo meeting last year means China is aiming at doubling its GDP per capita from the current USD10,000, taking it to levels similar to those of Slovakia or Greece which are about USD20,000, Zhu said.
"This requires an average annual growth of 4.37% in the next 15 years," said Zhu, adding that China's determination to pursue high-quality development with lower carbon emissions makes the target more challenging.
The government will need to target growth a little over 4.37% for the next five years if it is to achieve that level, Zhu said, noting that China grew close to its potential in the fourth quarter at 6.5%. China is not currently setting firm growth targets, but still signals its aspirations as policy directions, he noted.
POSSIBLE USD RALLY
For 2021, China will maintain an expansionary fiscal policy targeting higher-quality growth, together with the People's Bank of China's prudent monetary policy, said Zhu, who served as vice finance minister from 2010 to 2018 and remains a senior government advisor.
"I believe the scale of overall fiscal expansion will not be greatly reduced," said Zhu, urging more policy coordination with other major economies via the G20 economic forum as the new U.S. government expands its fiscal stimulus.
In 2020, China budgeted for a fiscal deficit of over 3.6% of GDP in response to the Covid-19 pandemic. MNI previously reported that the government will likely cut the budget deficit-to-GDP ratio to 3%.
Chinese authorities should also closely monitor international financial markets and be prepared for a possible rally by the U.S. dollar, Zhu said.
The U.S. dollar may strengthen in the near term, he added, and dollar index could rebound from a low at 90.
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.