Advisers said to recommend cut in growth target for 2022 from this year’s 6% aim as headwinds grow
Advisers to China’s government will recommend authorities set a 2022 economic growth target below the one set for 2021, giving policymakers more room to push structural reforms amid growing challenges to the outlook.
Investors are closely watching for clues on next year’s policy and reform agenda as President Xi Jinping and other top leaders hold the annual Central Economic Work Conference due this month.
Three advisers told Reuters they have drafted recommendations for annual economic growth targets ranging from as low as 5% to 5.5%, down from the “above 6%” target set for 2021.
“Ideally, we should have growth of 5-5.5% or around 5.5% next year,” one of the advisers said.
“It’s necessary to maintain economic stability next year as we unveil a new leadership, and we need some counter-cyclical policies to cope with economic pressures.”
Another of the advisers, from a top government think tank, recommended a target of above 5%.
The advisers make policy proposals to the government but are not part of the final decision-making process. The advisers spoke on condition on anonymity.
Worsening realty sector
A Reuters poll in October showed economists see China’s growth slowing to 5.5% in 2022, but some analysts have since trimmed forecasts on risks such as a deteriorating real estate sector. The new Omicron virus variant is also seen adding risks.
Top leaders traditionally endorse a growth target, which is then publicly announced at the opening of the annual parliament meeting, usually held in March.
The world’s second-largest economy faces multiple headwinds heading into 2022, due to a property downturn and strict COVID-19 curbs that have impeded consumption.
The economy, which staged an impressive rebound from last year’s pandemic slump, has lost momentum in recent months as it grapples with slowing manufacturing, massive property market debt and new COVID-19 outbreaks.
“We expect the macroeconomic policy stance to ease in response to the downward pressure on growth,” Louis Kuijs at Oxford Economics said in a note.
“Policymakers remain keen to contain financial risks and leverage, and have become more tolerant to reduced growth. However, … Beijing still cares deeply about growth and wants to avoid a sharp slowdown.”
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