Economic course for 2020 to be mapped out at CEWC
December 10, 2019 Category China News Round-up, Weekly
A meeting of the Central Economic Work Conference this week will set the economic targets for 2020. Macro-economic policies in China are expected to strike a balance between growth stability and risk prevention next year, with the overall GDP growth during the period expected to be around 6%, economists said ahead of the start of the Conference. Unlike a decade ago, more efforts are certainly needed to sustain a growth rate of 6% and above, including an expansionary fiscal policy and a higher tolerance of debt growth as investment efficiency has weakened, said economists. Lu Ting, Chief Economist in China for Nomura Securities, said that the fiscal deficit ratio should be raised to 3% next year from the current 2.8%, while monetary policy will have even less room for further easing. More tax and fee reductions are likely next year, but they will be lower than the CNY2.3 trillion cuts in 2019, given the fiscal spending difficulties faced by some local governments. Uncertainties over the China-U.S. trade talks and external headwinds will push policymakers to focus more on maintaining stable growth, unlike the last two years when risk prevention was the priority, said Mao Zhenhua, President of the China Chengxin International Credit Rating Co.
Overall business activity in China expanded at the quickest pace in November since March 2018. The Caixin China Composite Purchasing Managers’ Index, which covers both manufacturing and services, jumped by 1.2 points to 53.2 in November, signaling a solid increase in business activity across China last month. “The upturn was driven by strong performance across both the manufacturing and service sectors,” according to a report by Caixin magazine and research firm Markit. The amount of new orders received from abroad, meanwhile, also continued to increase across China during November. China’s service sector expanded last month at the fastest pace since March. The Caixin China General Services Business Activity Index rose to a higher level than in each of the preceding seven months – 53.5 in November, up from 51.1 in October. The indicator for new export orders rose to a four-month high while overall new business also rebounded from the previous month. Services accounted for 59.7% of China’s GDP in 2018.
At a meeting of the Politburo of the Chinese Communist Party in Beijing it was announced that the authorities aim to win three critical battles in 2020: to ensure absolute poverty will be eradicated across the country, the target for pollution prevention and control will be met, and the systematic financial risks will be avoided. The country needs to boost high-quality development of agriculture, manufacturing and service industries, strengthen infrastructure construction and improve scientific and technological capabilities and innovation capacity, the statement said. The meeting underlined that despite the mounting risks and challenges from both home and abroad, China has maintained continuous and healthy socio-economic development.
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