China to set lower GDP growth tar­get

Business Daily (Kenya) - - MONEY & MARKETS GLOBAL -

China plans to set a lower eco­nomic growth tar­get of 6-6.5 per­cent in 2019 com­pared with last year’s tar­get of “around” 6.5 per­cent, pol­icy sources told Reuters, as Bei­jing gears up to cope with higher U. tar­iffs and weak­en­ing do­mes­tic de­mand.

The pro­posed tar­get, to be un­veiled at the an­nual par­lia­men­tary ses­sion in March, was en­dorsed by top lead­ers at the an­nual closed-door Cen­tral Eco­nomic Work Con­fer­ence in mid-de­cem­ber, ac­cord­ing to four sources with knowl­edge of the meet­ing’s out­come.

Data later this month is ex­pected to show the Chi­nese econ­omy grew around 6.6 per­cent in 2018 - the weak­est since 1990. An­a­lysts are fore­cast­ing a fur­ther loss of mo­men­tum this year be­fore pol­icy sup­port steps be­gin to kick in. “It’s very dif­fi­cult for growth to ex­ceed 6.5 per­cent (this year), and there could be trou­ble if growth dips be­low 6 per­cent,” said one source who re­quested anonymity due to the sen­si­tiv­ity of the mat­ter.

As the world’s sec­ond-largest econ­omy loses steam, China’s top lead­ers are closely watch­ing em­ploy­ment lev­els as fac­to­ries could be forced to shed work­ers amid a trade war with the United States, de­spite a more re­silient ser­vices sec­tor, pol­icy in­sid­ers said.

Growth of about 6.2 per­cent is needed in the next two years to meet the rul­ing Com­mu­nist Party’s long­stand­ing goal of dou­bling gross do­mes­tic prod­uct and in­comes in the decade to 2020, and to turn China into a “modestly pros­per­ous” na­tion.

“Con­sid­er­ing em­ploy­ment, in­come and sta­bil­ity, we need growth of at least six per­cent this year,” said one of the sources.

Adopt­ing a range as a tar­get would give pol­i­cy­mak­ers room to ma­noeu­vre amid un­cer­tain­ties caused by a tit-for­tat tar­iff war with the United States, as the two sides strive for a pos­si­ble deal to set­tle their dif­fer­ences be­fore March. The gov­ern­ment plans to main­tain a three per­cent con­sumer in­fla­tion tar­get for 2019 de­spite a re­cent soft­en­ing in price rises.

AFP

A worker check­ing steel pipes at a fac­tory in China.

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