MNI POLICY: China Top Economic Forum Signals 6% Growth in 2020

By Archie Zhang

     BEIJING (MNI) - China's leadership emphasized stability and growth during a

key economic meeting this week, suggesting policymakers will seek to ensure

growth will be at least 6% in 2020, according to a report from China Finance

Forum 40, a think tank whose members include government officials. 

     Here are a few points from analysis presented by CF40 on the communique

released at the conclusion of the annual Central Economic Work Conference. 

     - The growth target is likely to be "defending 6%": With stability as the

leading keyword, followed by "reasonable growth in quantity and steady

improvement in quality," this likely gave a clear answer to the debate as to

whether 6% growth target would remain.

     - Monetary policy was changed to "appropriate in terms of flexibility" from

"appropriate between loose and tight," and the meeting pointedly called for

"increasing medium-to-long-term capital raising for manufacturing." The message

is for lower costs of financing and looser credit. The BOC is likely to continue

lowering MLF policy rate and provide cheap medium- and long-term loans. It also

tries to prevent "credit flooding" by emphasizing social financing must

correspond to growth. 

     - Preventing risks and deleveraging were deemphasized compared with last

year. Instead, the communique calls merely on stabilizing leveraging, a more

proactive stance.

     - "Limited room for expansionary fiscal policy" is indicated in that the

phrase of "cutting taxes and fees at a larger scale" was replaced with that

fiscal policy shall ensure "increased quality (of growth)." 

     - The issuance of local govt bonds next year may be limited given that

"greatly increase (the) issuance of special-purpose local govt bonds" was

omitted. Policies will likely boost credit support for infrastructure through

expanding financial balance sheet. 

     - Another noteworthy point is that the communique didn't mention "not using

property as a short-term economic stimulus," a phrase repeated earlier in a

mid-year meeting of the Politburo.

--MNI Beijing Bureau; +86 (10) 8532-5998; email: archie.zhang@marketnews.com

--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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