BEIJING — China will continue to implement proactive fiscal policy and prudent monetary policy in 2015, while noting policy flexibility to sustain economic growth, according to a government work report available to media before the annual parliamentary session on March 5.
Regarding macro-economic policy, the government will “pay greater attention to anticipatory adjustments, fine-tuning, and targeted regulation,” read the report, to be given by Premier Li Keqiang at the opening of the annual session of the National People’s Congress.
Stressing the proactive fiscal policy will serve to “sustain the momentum of economic growth and increase economic returns,” the country will raise its budget deficit to 2.3 percent of its gross domestic product (GDP) for 2015, up from last year’s target of 2.1 percent.
Total government budget deficit is projected to be 1.62 trillion yuan ($263 billion), an increase of 270 billion yuan over last year, which consists of 1.12 trillion yuan of central government deficit and 500 billion yuan of deficit at local government levels.
China needs to find the right balance between managing debt and maintaining steady growth, and it should improve mechanisms for local governments to secure financing through bond issuance, according to the report.
The prudent monetary policy will be “balanced between policy tightening and loosening,” the report read.
The broad money supply, or M2, is forecast to grow by around 12 percent, lower than 13 percent of 2014, but it added the actual supply may be “slightly higher than this projection depending on the needs of economic development.”
The government will adopt a flexible approach in the use of monetary policy tools such as open market operations, interest rates, reserve requirement ratio, and re-lending, to maintain steady growth in credit supply and social financing, it said.