MNI POLICY: China Shuns GDP Target, Raises Deficit to 3.6%

--China's Annual CPI Seen At 3.5%; Monetary Policy To Be More Flexible

--China Aims To Create 9 Million New Jobs

     BEIJING (MNI) - China refrained from its usual practice of setting a formal

growth target this year, citing the "great uncertainties" caused by the Covid-19

pandemic on the global economy, according to the annual report to the National

People's Congress presented by Premier Li Keqiang on Friday.

     The government stressed that growth is still necessary to support its goals

including ensuring employment and eradicating poverty, Premier Li said.

     The fiscal deficit will rise to more than 3.6% this year, Li's report read,

as China will keep fiscal policies "even more proactive and effective,"

increasing the deficit by CNY1 trillion yuan from last year and selling CNY1

trillion in special treasury bonds, the report noted. The target was set at 2.8%

last year.

     --FLEXIBLE MONETARY POLICY

     China will continue with its stable monetary policy, although it will be

"more flexible and appropriate," Li said in the report. Money supply M2 and

aggregate financing will grow significantly faster than last year, and open

market operations, cutting interest rate and reserve ratios, refinancing and

rediscounting were all among the options that could be used to ensure liquidity

and guide loan rates lower, Li's report read. 

     The yuan will be kept stable at an appropriate level while the size of the

forex reserve will also be reasonable and appropriate, the report added. 

     Inflation is expected to be around 3.5%, and the overall pressure is large,

Li said.

     --JOBS GROWTH

     China aims to create more than 9 million jobs while keeping surveyed urban

unemployment rate at 6% and urban registered jobless rate at 5.5%, Li's report

read. The pressure of ensuring employment has clearly risen, it noted. 

     The additional CNY2 trillion from the deficit expansion and special

treasury bonds will be given to local authorities in safeguarding employment,

people's basic livelihoods, businesses, tax and fee reductions, rent and

interest rate cuts along with expanding consumption and investment, the report

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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