China lowers 2020 growth target to 6pc, cranks up state spending
CHINA switches gear to lower economic growth target to six per cent in 2020, down from this year's 6-6
CHINA switches gear to lower economic growth target to six per cent in 2020, down from this year's 6-6.5 per cent, relying on greater state infrastructure spending to prevent a more marked slowdown, policy sources said, reported Reuters.
Chinese heads of state are battling to support growth to limit job losses that could derail social stability, but are facing pressure to tackle debt risks.
The proposed target, to be unveiled at China's annual parliamentary session in early March 2020, was endorsed by top leaders at the annual closed-door Central Economic Work Conference this month, according to three sources with knowledge of the meeting's outcome.
Top leaders pledged to keep economic policies stable while making them more effective to achieve growth targets in 2020, state media said.
Next year will be crucial for the ruling Communist Party to fulfil its goal of doubling gross domestic product (GDP) and incomes in the decade to 2020.
The government aims to boost infrastructure investment by allowing local governments to issue more special bonds next year, but there is less room for tax cuts, the sources said.
The annual budget deficit could rise from this year's 2.8 per cent of GDP, but is likely to be kept within three per cent, they said.
Local governments could be allowed to issue special bonds worth CNY3 trillion (US$426.20 billion) in 2020 to fund infrastructure projects, including CNY1 trillion front-loaded to this year, they said.
'Fiscal policy will provide a key support for the economy,' said one source.
The central bank is likely to ease policy further to encourage lending and lower corporate funding costs, but it wants to avoid fanning property speculation and inflation expectations after consumer inflation hit a near eight-year high in November, the sources said.
A trade deal with the United States could ease pressure on Chinese exporters, but more policy steps are needed to underpin weak demand at home and abroad, policy insiders said.