China’s Central Economic Meeting May Focus On Fiscal Stimulus, Soften On Growth Targets

China’s Central Economic Work Conference, currently taking place in Beijing to set the tone for the country’s economy next year, will probably focus on enhancing fiscal stimulus and soften emphasis on economic growth rate.

The Politburo meeting held last week, which provided some guidance to the conference, continued the theme of "seeking progress while maintaining stability". The meeting also used the term as an important principal for managing the world’s second largest economy for the first time.

The language could indicate the central government’s intentions to provide a more accommodating environment for reform and economic transition next year. It also shows that Beijing is likely to focus less on securing a particular growth rate, according to the chief economist at a research institute under Caixin Media, Zhong Zhengsheng.

The Central Economic Work Conference may also aim to continue pushing for the implementation of the five major tasks determined at last year’s meeting, including lowering overcapacity, reducing inventory, deleveraging, lowering costs, and improving weak areas of the economy.

China’s monetary policy may remain stable with a tightening bias next year, as the RMB is expected to depreciate further and global financial risks heighten.

Therefore, the country is likely to focus on fiscal stimulus, with a number of Chinese economists forecasting a 3.2% to 3.5% fiscal deficit for 2017.

China Expert network