China must prevent its economic growth from falling below 6.5 percent this year, leading economists said on March 2.
They were speaking ahead of the opening of the annual meetings of the country’s top legislature and political advisory body this week.
Jia Kang, a member of the Chinese People’s Political Consultative Conference National Committee, said the nation’s economy is likely to bottom out at about 6.5 percent this year before stabilizing.
This was a level that China must hold to and the economy could not afford growth to fall below 6.5 percent, said Jia, a former researcher at the Ministry of Finance.
China’s growth target and details of reform to shore up the economy will be watched closely as the annual meeting of the CPPCC National Committee opens on March 3.
The country’s top legislature, the National People’s Congress, will convene on March 5, as lawmakers gather in Beijing to elaborate on the Government Work Report and reform policies before giving their approval.
It is widely expected that the top leadership will place priority on stable growth with the emphasis on supply-side reform, aimed at trimming overcapacity and lifting tax burdens on companies.
According to observers, lawmakers and political advisers will likely endorse a growth target of 6.5 to 7 percent for this year and a more proactive fiscal policy with a higher deficit and more tax and fee cuts.
“China will have to raise its fiscal deficit above 3 percent of its GDP this year to ensure growth,” Jia said.
On March 2, Wang Guoqing, spokesman for the annual session of the CPPCC’s National Committee, ruled out a hard landing for the economy. “China is capable of maintaining medium to high growth, as the long-term economic fundamentals remain unchanged and there is ample room for the government to maneuver,” he said at a news conference in Beijing.
Chang Jian, chief China economist at Barclay’s Capital, agreed with Jia’s comment in a research note, saying that the top meetings would likely produce an upside surprise on China’s fiscal policy.
This would be moderately expansionary, with the general government deficit remaining at about 3.5 percent of GDP for this year and next, she said.
Chang added that China’s monetary policy would continue to be characterized as “prudent” but “moderately loose”, and further easing could be expected to support the housing market and private consumption.