China's leaders gather to set economic targets for 2020; economists expect 'about 6%' growth target

Chinese officials face a tough combination of slowing growth and rising inflation. PHOTO: AFP

BEIJING (BLOOMBERG) - China's top leadership will set the target for economic growth at "about 6 per cent" for 2020 as they meet this week for their annual policy conclave, according to a survey of economists.

The central Economic Work Conference meeting began on Tuesday (Dec 10) and will wrap up on Thursday, according to people briefed on the plans, right as negotiators aim to finalise a phase-one trade deal with the US.

The closed-door gathering lays down priorities for economic policy for the coming year and sets targets for gross domestic product growth, the fiscal deficit and inflation. The details aren't released until legislative meetings in March.

Almost two-thirds of 18 economists surveyed by Bloomberg this week said the target for gross domestic product expansion will be formulated as "about 6 per cent", a form of words that gives policymakers flexibility to acknowledge the slowdown in the world's second-largest economy without abandoning a longstanding goal to double the size of output this decade.

The current goal for this year is 6 per cent to 6.5 per cent. Six of the respondents said a target of 5.5 per cent to 6 per cent would be set.

Chinese officials face a tough combination of slowing growth and rising inflation driven by soaring pork prices, and trade frictions with the US that could be about to worsen if US President Donald Trump goes ahead with a threatened tariff escalation on Dec 15.

Policymakers have sought to strike a balance between propping up the economy while avoiding an all-out stimulus binge that would worsen debt risks. The State Council's Information Office did not immediately respond to inquiries about the meeting.

State media typically issue a brief report on the outcome of the meeting after its conclusion.

Top leaders on Friday vowed to avoid systemic financial risks next year and warned that "challenges at home and abroad have risen significantly". The gathering of the 25-member Politburo, chaired by President Xi Jinping, pledged to keep growth in a "reasonable range" and called for turning external pressure into a driving force for deepening reforms and opening up.

China's economy grew 6 per cent in the third quarter, the slowest rate in decades. The nation's consumer inflation accelerated to a seven-year high in November while producer prices extended their run of declines. Exports unexpectedly declined in November amid still-weak global demand, though an uptick in imports may be further evidence of a stabilisation in the domestic economy.

A State Council economist said in a People's Daily article on Tuesday that it is not necessary to attach too much significance to the 6 per cent growth rate, but highlighted the importance of high-quality development.

"Six per cent is not a special watershed," said Dr Wang Yiming, a deputy director at the Development Research Centre of the State Council.

The surveyed economists also saw the government maintaining a cautious stance towards inflation and fiscal stimulus. A slim majority of 53 per cent said that the fiscal deficit target, which policymakers use to calibrate the level of support to the economy, would be set slightly higher, at 3 per cent of GDP compared with 2019's 2.8 per cent.

Dealing with inflation, the economists were split roughly evenly between those who expect a "ceiling" of between 3 per cent and 4 per cent for consumer-price gains to be set and those seeing no change at 3 per cent.

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