MNI POLICY: China Says Growth Goals Need More Flexibility

     BEIJING (MNI) - China made its economic goals more flexible to account for

growing uncertainties affecting the economy, an official involved in drafting

the government report told reporters on Tuesday. 

     Here are the main points from a press conference by Huang Shouhong, the

director of the State Council's policy research office, commenting on Premier Li

Keqiang's work paper:

     --On the growth target lowered to 6.0%-6.5% from last year's 6.5%, Huang

said the situation is more complicated this year with greater headwinds, so

lowering the target fits the reality. The economy will likely be volatility, so

the goals must be more flexible. The target China has set fits potential and can

ensure employment. Huang added that China does not have a low for growth, as

long as it ensures the goals of jobs, incomes and the environment. 

     --Addressing the recent stock market boom, the spokesman said some of

China's policies will certainly impact the stock market. What financial

institutions need to do is ensure the credit released goes to the intended

sectors -- small-to-medium enterprise. China isn't pursuing a policy of

"flooding" the system with stimulus. 

     --China's debt level isn't high, is lower than that of the EU and emerging

markets, therefore additional fiscal stimulus would not be a problem. The

objectives China is pursuing -- innovation, improving standard of living and

industrial upgrading -- need investment. Local governments also need debt to

finance their development. What the government has done is control risks. 

     --Huang said China hasn't changed its monetary policy bias, despite the

removal of "neutral" form statements. Experts use various expressions, including

"can be tight or loose," but the underlying tone hasn't changed, he said. 

     --On the yuan, Huang said the currency's flexibility is steadily

increasing. China won't use cheap yuan to stimulate the economy, he added,

noting China will further market-based currency reform and the yuan can be kept

basically stable. The underlying tone hasn't changed despite short-term

fluctuations, he added.

     --China isn't avoiding criticism by abandoning the Made in China 2025

development plan despite it not being mentioned in the report. The work report

has limited space to accommodate all policies, Huang said. 

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

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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