BEIJING: China’s top leadership will meet today for an annual gathering to map out economic and reform plans for the following year, and some influential advisers to the government are recommending it cuts its 2015 growth target to 7 percent.
China looks set to miss its growth target this year for the first time since 1999, and full-year growth is likely to be the weakest in 24 years.
The government last cut its annual growth target in 2012, to 7.5 percent from 8 percent that it had kept for eight years.
Sources said government-run think-tanks, which are influential in the decision-making process but do not wield power themselves, are planning to recommend Beijing reduce its official GDP growth target in 2015 to 7 percent, down from 7.5 percent this year. “President Xi (Jinping) has already hinted at the growth target when he said growth of 7 percent is the highest in the world,” said a senior economist at the Chinese Academy of Social Sciences (CASS), who declined to be identified.
“I think it should be 7 percent if there are no more surprises. But it cannot be lower than 7 percent, otherwise there could be employment problems and debt default problems.”
China’s reform-minded leaders have shown greater tolerance for slower growth, but they will have to tread carefully to avoid a sharper slowdown that could fuel job losses and debt default risks, analysts say.
The annual Central Economic Work Conference, which state radio said meets from today, may reiterate a prudent monetary policy, but the sources believe the underlying tone could be accommodative to ward off a sharp growth slowdown.
Economists expect policymakers to embark on their biggest easing campaign since the global financial crisis, forecasting a combination of more rate cuts and reductions in bank reserve requirements to encourage lending despite mounting bad loans.
After months of saying major stimulus wasn’t needed, the central bank surprised markets on November 21 by cutting interest rates for the first time in more than two years to shore up growth and lift some of the pressure off debt-laden companies.
Reuters
