BEIJING- China plans to set a lower economic growth target of around 6 percent in 2020 from this year’s 6-6.5 percent, relying on increased state infrastructure spending to ward off a sharper slowdown, policy sources said.
Chinese leaders are trying to support growth to limit job losses that could affect social stability, but are facing pressure to tackle debt risks caused by pump-priming policies.
The proposed target, to be unveiled at China’s annual parliamentary session in early March 2020, was endorsed by top leaders at the annual closed-door Central Economic Work Conference this month, according to three sources with knowledge of the meeting’s outcome.
“We aim to keep next year’s growth within a reasonable range, or around 6 percent,” said a source who requested anonymity.
Top leaders pledged to keep economic policies stable while making them more effective to achieve growth targets in 2020, state media said on Thursday.
Next year will be crucial for the ruling Communist Party to fulfill its goal of doubling gross domestic product (GDP) and incomes in the decade to 2020.
Economic growth of nearly 6 percent next year could be enough to meet that goal given the economy is expected to expand about 6.2 percent this year, policy insiders said.
Officials at the National Development and Reform Commission and the Ministry of Finance were not immediately available for comment on Saturday.
The government aims to boost infrastructure investment by allowing local governments to issue more special bonds next year, but there is less room for tax cuts, the sources said.
The annual budget deficit could rise from this year’s 2.8 percent of GDP, but is likely to be kept within 3 percent, they said.
Local governments could be allowed to issue special bonds worth some 3 trillion yuan ($426.20 billion) in 2020 to fund infrastructure projects, including 1 trillion yuan front-loaded to this year, they said.
“Fiscal policy will provide a key support for the economy,” said one source.
The central bank is likely to ease policy further to encourage lending and lower corporate funding costs, but it wants to avoid fanning property speculation and inflation expectations after consumer inflation hit a near eight-year high in November, the sources said.
Beijing has unveiled a raft of pro-growth measures this year, cutting taxes and fees and letting localities issue 2.15 trillion yuan in special bonds, alongside cuts in reserve requirements and lending rates to boost credit.
But top leaders have ruled out aggressive stimulus for fear of pushing up debt levels.