China’s economy should grow 6%-6.5% next year, with a boost from “moderately loose” economic policy, a researcher at the state planner said yesterday, dismissing concerns there could be a sharp slowdown. But Du Feilun, director of the Institute of Economic Research at the National Development and Reform Commission (NDRC), said China won’t revert to its “old path” of resorting to massive stimulus. Du said that while there is “immense” short-term pressure facing China amid domestic challenges and the trade war with the United States, steady consumer price inflation provides headroom to tweak monetary policy.
“In the short term, there is not too much upward pressure on prices, thus it provides a good environment for economic operations and a good space for monetary policy adjustments,” he told a real estate forum in Beijing. China’s consumer price index (CPI) rose 2.2% in November from a year earlier, slowing from 2.5% in October. The government’s full-year target for consumer price inflation is 3%. “Policies will for sure be relatively accommodative. For example, China’s aggregate economic policy will be moderately loose next year to maintain steady growth,” said Du, who expects more measures to ramp up infrastructure investment, boost consumption and lower costs businesses face.
Du’s view that Beijing won’t follow an “old path” of massive stimulus was in line with central bank governor Yi Gang’s comments last week that China’s monetary conditions should be relatively loose but not too much that the yuan currency takes a hit. Reuters reported this week that government advisers had recommended to top leaders that China lower next year’s growth target to 6%-6.5% when they meet this week at the annual Central Economic Work Conference to map out the 2019 economic agenda. For this year, China aims for growth of around 6.5%, a target that policymakers have expressed confidence in achieving.
A speech by President Xi Jinping yesterday to mark 40 years of market liberalisation – although lacking new specific measures – confirmed that more detailed measures will be announced to help support the world’s second-largest economy, Du said. “Next year will still be tough,” the researcher said. “But we believe it could always be worse.”
Sources and photo-credits: Gulf Times, Reuters