Senior Chinese officials are debating an economic growth target for next year of around 5%, according to people familiar with the discussion, as Beijing shifts gears toward bolstering the recovery.
Some officials argue that setting a goal at a relatively high level would help local governments shift the focus of their work away from Covid controls to boosting the economy, the people said, asking not to be identified because the discussions are private. Other officials are concerned a target of around 5% could be too ambitious, they said.
Beijing is adopting a more pro-growth stance now after months of economic turmoil triggered by record Covid outbreaks and a property market crisis. The Communist Party’s Politburo, its top decision-making body, said in a statement on Wednesday it will seek a turnaround in the economy next year and significantly boost market confidence.
China’s CSI 300 Index erased an earlier loss to gain 0.3% after the news while a key gauge of Chinese shares listed in Hong Kong extended gains to 1.3%.
The gross domestic product target will likely be discussed at the Central Economic Work Conference, which usually takes place within a week of the Politburo’s December meeting. The GDP goal itself is only disclosed at the annual legislative meeting in March.
The National Development and Reform Commission, the country’s economic planning agency, didn’t immediately respond to a fax on Wednesday seeking more information.
China’s growth outlook for next year is highly uncertain, given a likely surge in coronavirus infections and further disruption expected to the economy as the government gradually dismantles its Covid Zero policy. Officials are expected to announce a further significant relaxation of rules as early as Wednesday, dialing back the need for testing and quarantines in government facilities.
On top of that, the global economy is at risk of falling into recession and a recovery in China’s property market is expected to be slow, weighing on the growth outlook.
A target of around 5% would be in line with the 4.9% median forecast for GDP growth for next year in Bloomberg’s survey of economists. However, some banks like Barclays Plc and Nomura Holdings Inc. are more bearish, expecting growth to come in at 4% or below given the heightened economic risks.
Government-linked economists have also differed in their views. Wang Yiming, who is an adviser to the People’s Bank of China, called on the government to set a growth target above 5% for next year to send a strong signal that supporting the economy is a priority.
Liu Yuanchun, president of the Shanghai University of Finance and Economics, favored a “more prudent” growth goal of 4.5% to 5% to preserve policy room for handling possible future global risks.
This year will be the first time Beijing misses its GDP target by a significant margin. The goal of around 5.5% has been gradually downplayed by officials during the year as Covid flareups and a property crisis battered consumer and business sentiment.
Economists surveyed by Bloomberg now estimate GDP growth will come in at just 3.2%, which would be the weakest pace since the 1970s barring the pandemic slump in 2020.
The Politburo signaled more stimulus could be on the cards next year, saying fiscal policy will be kept active with a focus on improving its efficiency, while monetary steps will be “targeted and forceful.” China will “push for overall improvement of the economy” by focusing on the quality of growth and keeping the pace of expansion reasonable, the official Xinhua news agency said in a readout of the meeting.