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Economy

China seen targeting 'around 6%' growth in 2020

Government signals stimulus to shore up economy amid trade war

A container port in Shanghai: U.S. tariffs have slowed China's economic growth.   © Reuters

BEIJING -- China looks to set an economic growth target of "around 6%" for 2020, down from this year's goal of "6% to 6.5%," as the trade war with the U.S. continues to weigh on the country, Nikkei has learned.

The target for real gross domestic product growth is believed to have been approved at the Central Economic Work Conference that wrapped up Thursday. The figure will be announced in the government's work report at the National People's Congress session in March.

"The economy is showing signs of stability at this point, such as recovering sentiment in the manufacturing sector, so it was concluded that growth of 6% or so could also be expected in 2020," a source said. The purchasing managers' index ticked up last month for the first time in seven months.

Another insider said economists consider 6% growth to be "sufficient." After a recent revision of 2018 GDP based on economic census data, Beijing still could achieve its goal of doubling real GDP next year from 2010 levels even if China's growth dips a bit below 6%.

Growth for the quarter ended September fell to 6%, the lower end of the government's target range, owing partly to economic damage from U.S. tariffs. Structural factors are likely at play as well, amid the Chinese economy's rapid pivot to services from manufacturing.

The target downgrade, which follows one last year, shows that the trade war has dealt a heavier blow than expected. Officials reportedly considered cutting next year's target as low as "5.5% to 6%," but opted against it after improving indicators provided some grounds for optimism.

Beijing is intent on using aggressive fiscal policy and looser monetary policy to shore up the economy, a statement issued after the three-day conference indicates.

The document acknowledged "rising downward economic pressure" compared with last year, according to Xinhua, but still signaled a continued focus on growth. The government must keep economic operation in a reasonable range to be recognized by the people and stand the test of history, the statement said.

The section on monetary policy said it should be "flexible and appropriate," dropping language from last year that referred to "maintaining an appropriate balance between tightness and looseness." It urged banks to relieve the cash crunch faced by small businesses and to step up lending to the manufacturing sector for capital investments.

On fiscal policy, the statement called for spending on areas including telecommunications infrastructure, disaster preparedness and parking facilities.

Next year marks an important deadline for party and government pledges, including the current five-year plan and a promise to create a "moderately prosperous society" along with the GDP target. The statement emphasized addressing poverty and promoting employment, in an apparent nod to the frustrations of those harmed by the economic slowdown.

The document stressed the importance of stability to achieving the party's goals, suggesting that Beijing is likely to shelve structural reforms that could cause even temporary economic pain.

Unlike last year, no direct mention was made of trade negotiations with the U.S., even as the two countries work to wrap up a "phase one" partial agreement. But the statement did touch on issues of U.S. interest, saying that China will protect foreign investment, cut overall tariff levels and further open up markets.

Hinting at worry about a bubble in real estate, a highly influential sector of China's economy, the document called on local governments in particular to maintain stable housing and land prices.

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