Beijing
\nChina aims to expand its economy by around 6.5 per cent this year, the same as in 2017, while pressing ahead with its campaign to reduce risks in the financial system, Premier Li Keqiang said Monday.<\/p>\n
The goal was kept unchanged even though the economy grew 6.9 per cent last year and exceeded the government\u2019s target. Sources previously told Reuters that China will maintain its growth target at \u201caround 6.5 per cent\u201d.<\/p>\n
Economists had already expected the world\u2019s second-largest economy to lose some momentum this year as the government deepens its push to contain a build-up in corporate debt, while a war on pollution and a cooling property market weigh on manufacturers and real estate investment.<\/p>\n
In his annual work report, Li also said China has cut its budget deficit target for the first time since 2012, suggesting Beijing will be more watchful of fiscal spending while not tapping the brakes so hard that it precipitates a sharp slowdown.<\/p>\n
\u201cPolicy wise, the report definitely has a tightening bias\u201d said Betty Wang, senior China economist at ANZ in Hong Kong. \u201cIn line with expectations, the government is pushing through their reform agenda.\u201d<\/p>\n
But last week\u2019s escalation in trade tensions with the United States has jumped to the top of the list of uncertainties facing China this year.<\/p>\n
President Donald Trump said he would impose hefty tariffs on imported steel and aluminium to protect US producers, risking retaliation from major trade partners like China, Europe and Canada and sparking fears of a global trade war.<\/p>\n
Li said China opposes protectionism and supports the settlement of trade disputes through negotiation, but will \u201cresolutely safeguard\u201d its legitimate rights and interest.<\/p>\n
Yet, China will keep its currency, the yuan, basically stable, Li said in remarks to the opening of the annual meeting of parliament.<\/p>\n
He said a steady rise in import and export volumes can be expected this year, a view unchanged from a year ago. No export target was given for the third straight year.<\/p>\n
\u201cWe can expect continued recovery of the global economy, but there are also many factors that bring instability and uncertainty,\u201d he said.<\/p>\n
\u201cThe policy changes of the major economies and their spillover effects create uncertainty; protectionism is mounting, and geopolitical risks are on the ascent,\u201d Li said.<\/p>\n
China\u2019s economy and financial risks \u201care generally under control\u201d but more needs to be done to resolve issues such as local government debt, Li said. He also said China will improve supervision over shadow banking, internet finance and financial holding companies, and step up risk controls at financial institutions.<\/p>\n
Li said China has cut its budget deficit target to 2.6 per cent of gross domestic product (GDP) this year from 3 per cent in 2017. Most analysts had expected the target would be maintained or come in slightly lower.<\/p>\n
However, since the economy has been expanding at such a strong pace, analysts said the cut is more symbolic of Beijing\u2019s intention to further control debt growth.<\/p>\n
\u201cThe actual figure is even lower than we expected…a 2.6 percent deficit would be about 2.3 trillion yuan ($363.5 billion) in absolute terms, which equals to the 2016 level,\u201d said Wang.<\/p>\n
\u201cIt shows the government\u2019s determination to control leverage in the economy.\u201d<\/p>\n
Heavy government infrastructure spending was a major driver behind China\u2019s forecast-beating growth last year, but Beijing has been cracking down recently on some projects launched by local governments as it seeks to curb their spending and debt.<\/p>\n
Despite the lower deficit ratio, the absolute amount of the deficit is expected to remain unchanged at 2.38 trillion yuan ($376 billion), according to the finance ministry\u2019s annual budget report released on Monday.<\/p>\n
Li also reiterated that China will keep its prudent monetary policy neutral, neither too loose nor too tight, and will maintain reasonably steady liquidity, he said.<\/p>\n
While the central bank has been gingerly raising money market rates as part of its crackdown on riskier lending practices, it has also kept markets generally well supplied with funds whenever there are worries of a deeper cash squeeze, and bank lending hit a fresh record last year.<\/p>\n
Li also said he expects reasonable growth in broad M2 money supply and total social financing this year, without stating a target.<\/p>\n
The National Development and Reform Commission, the state planner, said in a separate report that outstanding total social financing (TSF) and M2 growth will grow at a similar pace this year as in 2017.<\/p>\n
TSF grew 12 per cent last year, in line with the target, but M2 growth slowed to 8.2 per cent, below the goal of around 12 per cent. ANZ had expected both targets to be set at 10 per cent or lower this year.<\/p>\n
\u201cIf I remember it right, it\u2019s the first time that they don\u2019t have a specific target in two decades. It shows authorities now prefer a tighter stance on monetary policy,\u201d Wang said.<\/p>\n
\u201cOverall policy wise both monetary and fiscal policy will be tighter than last year, because the government wants to control financial leverage and overall debt levels for the broader economy.\u201d<\/p>\n
China also set its consumer price index at \u201caround 3 per cent\u201d compared with 3 percent last year, as widely expected.<\/p>\n","protected":false},"excerpt":{"rendered":"
Beijing China aims to expand its economy by around 6.5 per cent this year, the same as in 2017, while pressing ahead with its campaign to reduce risks in the financial system, Premier Li Keqiang said Monday. The goal was kept unchanged even though the economy grew 6.9 per cent last year and exceeded the […]<\/p>\n","protected":false},"author":1,"featured_media":23920,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[87],"tags":[],"class_list":["post-23919","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-world"],"_links":{"self":[{"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/posts\/23919","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/comments?post=23919"}],"version-history":[{"count":1,"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/posts\/23919\/revisions"}],"predecessor-version":[{"id":23921,"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/posts\/23919\/revisions\/23921"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/media\/23920"}],"wp:attachment":[{"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/media?parent=23919"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/categories?post=23919"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/tags?post=23919"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}