China to stick with ‘around 6.5%’ growth target

With the property market likely to remain under pressure and investment sluggish, many market watchers expect Beijing to cut its growth target for 2015 to around 7 percent., File pic shows: A worker rides past a poster showing Beijing's central business district outside a construction site in Beijing, December 29, 2014.- Reuters

BEIJING: China will keep its target for economic growth at “around 6.5%” in 2018, unchanged from last year, policy sources told Reuters, as it seeks to balance efforts to reduce debt risks while keeping the world’s second-largest economy stable.

The proposed target, to be unveiled at the annual parliament meeting in March, was endorsed by top leaders at the closed-door Central Economic Work Conference in Dec 18-20, according to four sources with knowledge of the meeting outcome.

Where Beijing’s policymakers set the speedometer on their closely-managed economy is always of crucial interest to global investors because of China’s role as an engine of growth for the world.

Past stimulus policies to stop growth flagging as the global economy passed through a sticky few years resulted in massive borrowing by state-run firms and local governments. Total debt in the second quarter of last year amounted to 255.9% of gross domestic product, according to Bank for International Settlements estimates.

And policymakers are on a mission to reduce the risk of any crisis erupting out of the mountain of debt as the country makes its gradual transition from a command to a market economy.

“The economic growth target will still be around 6.5% as they favour stability,” said one source who requested anonymity due to the sensitivity of the matter.

China’s State Council Information Office, the government’s public relations arm, had not yet responded to Reuters’ request for comment on the economic targets for this year.

There have been some doubts whether China would be putting a number on its target for 2018, as President Xi Jinping pledged in October to pursue “high quality growth”.

And while Chinese leaders remain committed to meeting a goal set by their predecessors of doubling GDP in the decade to 2020, to turn China into a “modestly prosperous” nation, a senior Communist Party official said in October that goal would not be set for the following decade.

Analysts expect final numbers will show the economy grew around 6.8% in 2017, beating the target thanks to strong global demand for Chinese exports, and just bettering the 26-year low of 6.7% posted in 2016. To hit the 2020 goal, the economy needs to expand at least 6.3% annually over the next three years, officials have said.

The government will maintain a 3% inflation target for 2018, the sources said, suggesting policymakers are not foreseeing any sharp price rises, as factories struggle to pass on higher costs to consumers. — Reuters

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