China’s top economic policy makers will convene next week to plot how to secure growth of at least 8 percent in 2009, government officials said on Tuesday.
Beijing has dramatically relaxed its policy stance in recent weeks out of concern that the global financial crisis is badly damaging growth and job creation in the world’s fourth-largest economy, risking social instability.
The annual central economic work conference, which will take place from Monday until Wednesday, will discuss how to implement the recently adopted “expansive” fiscal policy and “moderately easy” monetary stance, one of the officials said.
“The meeting will focus on making arrangements to implement the revised policies and will set a goal of 8 per cent for 2009 economic growth,” he said. He declined to be named as he is not authorised to speak to the media.
Annual GDP growth slowed to 9.0 percent in the third quarter, from 10.1 percent in the second, and economists have pencilled in a much weaker rate for this quarter.
An 8 per cent growth rate is widely regarded as the minimum growth rate that China needs to absorb the millions of people entering the work force every year.
Multiplying protests by laid-off workers, and a spate of strikes by taxi drivers across China, have highlighted the strains that slowing growth are putting on the social fabric.
A pair of manufacturing surveys released on Monday showed output, employment and new orders slumped in November as business took fright at the prospect of a protracted global downturn and persistent financial uncertainty.
Ma Jiantang, the newly appointed chief commissioner for the National Bureau of Statistics, struck an optimistic note about the outlook for growth.
Writing in the China Information News, Ma said the array of forceful measures rolled out by the authorities would be effective in tapping China’s huge domestic consumption potential.
But the State Information Centre, a think-tank under the National Development and Reform Commission, the planning agency, said further steps were needed to counter a sharp slowdown.
In a research note published in the China Securities Journal, the centre recommended cutting taxes as well as increasing investments aimed at spurring domestic consumption.
“Our economy is at a historically significant juncture. In the short term, there is a risk of a fast decline in economic growth,” it said.
The think-tank said the central bank should slash interest rates and reserve requirements further so that banks have more money to lend out and so that borrowing costs for companies fall.
The central bank slashed borrowing costs by 1.08 percentage points last week, the deepest cut in 11 years, to complement a 4 trillion yuan ($586 billion) fiscal stimulus plan unveiled on November 9.
The central government will spend 30 percent of the huge sum itself between now and the end of 2010 and hopes to catalyse the rest from local authorities and state-owned banks and companies.
But consumers are wary of spending freely because they face heavy out-of-pocket expenses for health care and school fees. Few Chinese, moreover, can look forward to a good, secure pension.
The solution, the State Information Centre said, is for the government to invest more in housing, education and health care, and to further lower corporate and personal income taxes, so people have more disposable income.
The think-tank also recommended extra measures to slow a slide in export growth, such as increased export tax rebates for textile, high-tech and agricultural processing firms.
“The trends for our country’s exports remain grim,” it said.
Indeed, the State Information Centre said the overall outlook for 2009 was bleak despite recent monetary and fiscal easing.
“It is projected that in 2009 the unemployment rate will continue rising, and the employment situation will become more severe,” the report said.