Chinese President Xi Jinping

China set the tone for economic growth in 2019 by carrying out counter-cyclical adjustments and deepening reforms, with a prudent monetary policy and proactive fiscal policy, according to the three-day Central Economic Work Conference (CEWC) concluded on Friday.

Chinese leaders charted the course for the economy in 2019, a key year for the country to achieve its goal of building a moderately prosperous society in all respects by 2020, according to the Xinhua News Agency.

Xi Jinping, general secretary of the Communist Party of China (CPC) Central Committee, Chinese president, and chairman of the Central Military Commission, reviewed the country’s economic work in 2018 in a speech at the conference, Xinhua said.

Xi also analyzed the current economic situation and arranged the economic work in 2019, Xinhua reported.

The country has effectively coped with profound changes in the external environment this year, risen to challenges with solid work, accomplished the goals of macro-regulation relatively well and delivered a good start in the three tough battles against major risks, poverty and pollution, according to a statement issued after the meeting, according to Xinhua.

Faced with the reality of intensifying economic slowdown, which has been weighing on exports, consumption and investment, top policymakers have agreed on boosting demand by unveiling more favourable policies such as tax or fee cuts, Tian Yun, director of the China Society of Macroeconomics Research Center, told the Global Times on Friday.

Earlier on Friday, the People’s Bank of China – the country’s central bank – denied online rumors that the CEWC decided against tax cuts and fee reductions, citing the financial stability and development committee under the State Council.

“Considered the latest cut in tax contributions, income tax threshold would be further raised, which will enable tax exemption to middle-class family earning less than 200,000 yuan ($29,000) per year, and that is significant reduction,” Tian said.

China’s economy grew 6.5 percent in the third quarter of 2018 year-on-year, which was the weakest year-on-year quarterly growth in wake of the global financial crisis, according to data unveiled by the National Bureau of Statistics (NBS) in October.

China had a rough year in 2018 as NBS data showed that the industrial output growth has been slowing down to below 7 percent since May amid escalated trade war between China and US. The total retail sales growth has also been losing double-digit momentum since the beginning of this year.

Stability a key

The conference held in Beijing also signaled the need for more aggressive and proactive fiscal policy and prudent monetary policy, stressing larger tax and fee cuts.

It also said that a prudent monetary policy should be neither too tight nor too loose so as to keep liquidity reasonable and abundant. The transmission mechanism of monetary policy should be improved so as to raise the ratio of direct financing and tackle the issue of high financing costs for micro and small-sized enterprises as well as private firms.

The top priority for next year’s economic work is ensuring stability, including stabilizing employment, finance, foreign trade, foreign investment, investment, and expectations, which is also in line with the economic work symposium held by the Central Committee of the Communist Party of China in July, Liu Xuezhi, a senior macroeconomics expert at Bank of Communications, told the Global Times on Friday.

“In terms of policies, increasing proportion of direct finance also requires that capital market and bond market should play more active roles in supporting the real economy,” he said.

Instead of using land-backed fiscal policy to tackle cash flow issue, local governments should also shift their focus toward bond market, for example, to allow more companies, individuals, foreign financial institutions into the domestic bond market, Tian added.

Target to achieve

Experts also consider the prevention of systematic risks a key task for 2019, including hedging impact of trade war by expanding domestic consumption and diversifying trading channels.

Major tasks including further developing high-quality manufacturing, boosting the development of the domestic market, accelerating economic and institutional reforms and pushing forward all rounds of opening-up are highlighted in the statement after the CEWC.

“It has further strengthened the overall confidence to pursue quality economic growth in 2019, in spite of rising external pressure,” Dong Dengxin, director of the Finance and Securities Institute at Wuhan University of Science and Technology, told the Global Times.

China has set its GDP growth target at around 6.5 percent for 2018, unchanged from the previous year.

“As long as it maintains the growth rate above 6 percent, the country will not see systematic risks,” Tian said, noting that long-term tasks such as deepening reforms need more efforts.

China will also implement the consensus reached with the US in a recent meeting in Argentina and carry forward trade talks in 2019, the CEWC statement said.

(In Association with Global Times)