China’s new leadership plans to de-emphasize government growth targets, which could mean Beijing will focus again on putting the economy on a more stable long-term footing.
The Chinese government “will no longer bring up the target of doubling GDP,” said Yang Weimin, a top economic adviser to President Xi Jinping, at a news conference Thursday. It was an apparent reference to a target to double the size of the economy by 2020.
“China’s economy has transitioned to a high-quality development stage, away from a high-speed growth stage,” said Mr. Yang, deputy director at the Office of the Central Leading Group on Financial and Economic Affairs.
The approach doesn’t necessarily mean China will abandon growth targets altogether, Chinese officials say. By de-emphasizing numeric goals, they said, the government will have more wiggle room in managing the economy.
“It’s not that we don’t want speed in growth, but that we must generate growth with quality, efficiency and dynamism,” Mr. Yang said.
The comments came after the conclusion of the Communist Party congress that granted Mr. Xi a level of authority unmatched in recent decades. Early in his first term, he appeared to embrace steps to steer China’s economy toward a path of slower but more sustainable growth. But in recent years, China’s leaders have returned to strategies fueled by debt and state investment to keep growth stable. Its target for this year is for growth of around 6.5%.
In a speech opening the congress last week, Mr. Xi didn’t explicitly mention numeric targets for China’s growth in coming years, though he repeatedly reiterated the goal of building a “moderately prosperous society” by 2020 and said China “must follow the requirements on building this society” set out by his predecessors. The goal of doubling GDP by 2020 was included in the work report of the party congress five years ago.
Asked about the 2020 goal, Mr. Yang said: “For 2020, there’s no change.” He indicated that new goals wouldn’t have such hard targets.
Mr. Xi’s exclusion of numeric growth targets in his speech led to speculation among economists and analysts that Beijing would tolerate lower growth in the coming years and carry out some much-needed overhauls, such as cutting the country’s ballooning debt levels.
In August, the International Monetary Fund urged China to focus less on growth targets. “Decisive policy action is thus needed to deflate the credit boom smoothly. A precondition is to de-emphasize high and hard GDP targets and the attendant excessive credit necessary to achieve these targets,” it said.
Efforts to stimulate the economy were stepped up ahead of the party congress. Analysts expect the conclusion of the meeting will allow China’s leaders to shift focus to economic restructuring, which could lead to lower growth goals.
“China’s economic growth could have another leg down to around 6% in the next year or two,” said Larry Hu, China economist at Macquarie Securities.
Source: Dow Jones