MNI Policy: China Plans Spending Increase and Looser Credit

     BEIJING (MNI) - China increased its targeted spending, planned further

easing and tax cuts in 2019 as policymakers grapple with a host of economic woes

from slowing consumption and a backlash against its once-mighty exports. 

     Here are the quick takeaways:

--GDP growth is targeted 6.0%-6.5% versus 6.5% target in 2018, in line with

market expectations, which largely see it a difficult goal to achieve. 

     --China will pursue "prudent" monetary policy, with a keyword "neutral" in

the past official line deleted, suggesting a lean towards more loosening.

Monetary tools will be used flexibly to maintain a "reasonable abundant

liquidity". The central bank will also lower target required reserve ratios for

smaller banks. M2 and aggregate financing to the economy will "match the nominal

GDP growth." 

--Budget deficit will be 2.8% of GDP in 2019 vs 2.6% in 2018, with fiscal policy

to be "proactive, stronger and more effective." China will cut CNY2 trillion in

taxes and fees including lowering VATs. Local government bonds are set at CNY930

billion general bonds and CNY2.15 trillion special bonds. 

     --China will increase flexibility of yuan exchange rate. 

     --CPI is capped at 3.0%, unchanged from last year, which will be an easy

target considering the 2.1% actual in 2018.

     --China plans to create more than 11 million jobs to guarantee registered

unemployment rate under 4.5%. 

--MNI Beijing Bureau; tel: +86 (10) 8532-5998; email: flora.guo@marketnews.com

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

[TOPICS: M$A$$$,M$Q$$$,MI$$$$,MT$$$$,MBQ$$$,MGQ$$$]