China contemplates GDP growth target of around 5%

Some officials argue that setting a target at a relatively high level would help local governments shift the focus of their work away from COVID controls and toward boosting the economy, said the people, who asked not to be named because discussions they are private. Other officials worry that a target of around 5% is too ambitious.

Beijing is taking a more pro-growth stance after months of economic turmoil sparked by record COVID outbreaks and the housing market crisis, a worsening underscored on Wednesday by the worst monthly trade data in more than two years.

The Politburo of the Communist Party, its highest decision-making body, said in a statement on Wednesday that it will seek a turnaround in the economy next year and significantly boost market confidence. The comments came hours before the government announced a significant easing of COVID restrictions.

“Growth is now clearly more important for leaderssaid Zhang Zhiwei, president and chief economist at Pinpoint Asset Management. A growth target of around 5%”it would be a signal to send this message to the public and local officials“, said.

The gross domestic product target will likely be discussed at the Central Economic Work Conference, which usually takes place a week after the December Politburo meeting. The GDP target itself is only revealed at the annual legislative meeting in March.

The National Development and Reform Commission, the country’s economic planning agency, did not immediately respond to a fax requesting more information.

The Politburo signaled on Wednesday that there could be more stimulus next year, stating that fiscal policy will remain active with a focus on improving its efficiency, while monetary measures will be “selective and forceful.

China “will boost the general improvement of the economythe official Xinhua News Agency said in a reading of the meeting.

Larry Hu, head of China economics at Macquarie Group Ltd., said the message from the Politburo meeting was “very clear: ‘COVID zero’ is behind us, and growth will be the top priority for next year.” The signs suggest that policy makers want next year’s growth rate to return to its potential above 5%, he said.

Growth prospects for the coming year remain highly uncertain, given the likely rise in coronavirus infections and expected further disruptions to the economy. The world economy is also at risk of slipping into recession, and a recovery in the Chinese property market remains elusive.

A target of around 5% would be in line with the median forecast of 4.9% GDP growth for next year according to a Bloomberg survey of economists. However, some banks such as Barclays Plc and Nomura Holdings Inc. are more bearish, forecasting growth of 4% or less.