China lowers 2019 GDP growth target to 6-6.5 per cent range
- Gross domestic product growth target released on Tuesday morning in Premier Li Keqiang’s annual report to the National People’s Congress
- Target down from ‘about 6.5 per cent’ set for last year due to US-China trade war, an already high debt level and financing bottlenecks for private enterprises
Beijing has set a lower economic growth target for this year and will step up fiscal measures to stabilise growth, Premier Li Keqiang said in his government work report released on Tuesday.
The government set a growth target range of 6 to 6.5 per cent for this year, down from the target of “about 6.5 per cent” set for last year, after factoring in a variety of headwinds, including the trade war with the United States, an already high debt level and financing bottlenecks for private enterprises.
As it happened: China slashes taxes and defence budget growth
To achieve its aim of doubling the size of the economy in the decade from 2010 to 2020, China must post growth of 6.2 per cent this year, economists at Morgan Stanley estimated.
To achieve its growth target, the government would continue to pursue a “proactive” fiscal policy “with greater intensity and enhance its performance,” Li said, according to an official English-language copy of this speech.
Overall, government expenditure will rise to over 23 trillion yuan (US$3.4 billion), up 6.5 per cent from the previous year.
The government will continue its “prudent” monetary policy, easing or tightening “to the right degree,” Li said.
Increases in M2 money supply should be in line with nominal gross domestic product growth.
Li again denied that the People’s Bank of China, the country’s central bank, would engage in a massive stimulus campaign to boost growth.
“In implementation, we will ensure the value of aggregate monetary supply is well controlled and refrain from using a deluge of stimulus policies,” said Li.
Li also repeated the government’s often-used mantra that it would keep yuan exchange rate “relatively stable and at an adaptive and balanced level.”
Li said the government’s “employment-first” jobs policy was being elevated to a “macro policy” for the first time, making clear that maintaining strong employment growth was Beijing’s top priority.
“An employment-first policy will be pursued with full force. Employment is the cornerstone of well being, wellspring of wealth,” Li said, tying the labour market outlook directly to maintain a stable growth rate.
“Maintaining stable growth, first and foremost, is to ensure employment.”
The government set a goal of creating 11 million new urban jobs this year, compared to the actual 13.6 million created last year.
The target for the surveyed urban unemployment rate was set at “about 5.5 per cent,” compared to last year’s actual 5.1 per cent.
The government also aims to keep inflation under 3 per cent this year, the same cap it set for 2018.
The challenges China will face to maintain stable growth this year are “graver and more complicated” than in the past, Li said.
“We must be fully prepared for a tough struggle.”
Downward pressure in the economy is expected to test policymakers’ nerves in the first half of this year, when the impact of US tariffs will have their full effect on the national economy.
Given the impact the trade war has had on the economy, the Chinese leadership has tried to prioritise building a strong domestic buffer with the necessary monetary, fiscal and employment support.
Li admitted in his report that the “economic and trade frictions” with the United States had an adverse impact on the Chinese economy, though growth was nevertheless “generally stable” last year.
Li did not give details of the US trade dispute, saying only that the government had handled the dispute “appropriately.”
