China
2022.12.12 22:46 GMT+8

Graphics: what can be expected from China's economic work conference?

Updated 2022.12.13 18:30 GMT+8
CGTN

The upcoming China's annual Central Economic Work Conference (CEWC), closely watched by investors, may focus on discussions to push for an overall improvement of the economy and strongly boost market confidence next year, as a key meeting hinted.

The Political Bureau of the Communist Party of China (CPC) Central Committee, the top decision-making body of the CPC, held a meeting last Tuesday to analyze economic work in 2023, and the economic priorities are expected to flesh out at the CEWC in mid-December.

Chinese policy makers may signal more supportive macroeconomic policies, underpin consumption and investment, and further optimize COVID-19 control measures, according to the meeting of the Political Bureau of CPC Central Committee.

The closed-door CEWC will discuss the growth target, according to Lu Ting, chief China economist of Nomura.

“In our view, both 'around 5.5 percent' and 'around 5.0 percent' are likely, though personally I believe 'around 5.0 percent' is more reasonable," said Lu.

China's GDP in the first three quarters of this year reached 87 trillion yuan, up by 3.0 percent year on year at constant price, or 0.5 percentage points higher than that in the first half year, according to the National Bureau of Statistics.

The International Monetary Fund has cut its estimate for China's economic growth to 3.2 percent this year and 4.4 percent in 2023, while Standard and Poor's (S&P) has raised its forecast for China's growth this year to 3.3 percent and projected 4.8 percent growth for 2023.

Further expand domestic demand

“Further efforts will be made to expand domestic demand and give full play to the fundamental role of consumption and the key role of investment,” the meeting of the Political Bureau of CPC Central Committee said.

China's retail sales fell by 0.5 percent in October from a year ago, the first decline since May when Shanghai was severely affected by the COVID-19. In the first ten months, retail sales rose 0.6 percent year on year, down 0.1 percentage point from the first nine months.

Further attract foreign investment

"Work will be done to boost opening up at a higher level and to further attract and make good use of foreign investment," the meeting also said.

Foreign direct investment (FDI) into the Chinese mainland in the first ten months of this year rose 17.4 percent year on year to $168.3 billion, slowing from a year-on-year increase of 18.9 percent recorded in the first nine months, according to the Ministry of Commerce (MOFCOM).

More supportive macroeconomic policies

"Proactive fiscal policy and prudent monetary policy will continue to be implemented," the meeting added.

Wang Tao, chief China economist at UBS Investment Bank, expected a slightly higher headline fiscal deficit at around 3 percent of GDP and a small increase of new quota of special local government bonds to 3.7-3.8 trillion yuan in 2023.

"We see robust albeit slightly slower credit growth in 2023, additional reserve requirement ratio cuts, more use of other liquidity facilities such re-lending and PSL – no policy rate cut, but a small cut to the loan prime rate of 5-10 basis points," said Wang.

Easing COVID restrictions

"Efforts are also required to better coordinate COVID-19 prevention and control with economic and social development, and development with security," the meeting noted. After the meeting, the State Council released its 10-point measures to further ease COVID curbs.

No negative nucleic acid test results or health codes will be checked for accessing public venues and for cross-regional travel. Asymptomatic patients and mild COVID-19 patients are allowed to quarantine at home. High-risk areas may now be classified based on a single floor or a single household.

The 10-point measures "are much welcome" for the economy, Lu said.

Chinese stocks have rallied in the past weeks, pushing the Hang Seng China Enterprises Index up over 30 percent from a low at the end of October.

Copyright © 

RELATED STORIES