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More pro-growth policy likely for economy in 2024

By OUYANG SHIJIA | | Updated: 2023-12-16 01:18
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A view of Beijing's CBD area. [Photo/VCG]

China is set to take a more pro-growth stance next year by implementing more aggressive fiscal policies and optimized property measures should economic recovery face headwinds, experts said on Friday.

Despite facing pressures and challenges from real estate sector woes and faltering external demand, they said China has sufficient policy tools and space to tackle issues, as policymakers are expected to make more concerted efforts to stimulate the world's second-largest economy.

Their comments came as the National Bureau of Statistics said on Friday that China's industrial output expanded at the fastest pace since February, though growth in retail sales missed expectations.

The NBS said China's value-added industrial output grew 6.6 percent year-on-year in November after a 4.6 percent rise in October. Retail sales grew 10.1 percent year-on-year in November following a 7.6 percent growth in October.

In the January-November period, growth in fixed-asset investment came in at 2.9 percent compared with a year earlier, the same performance as the January-October period.

Liu Aihua, a spokeswoman for the NBS, said continued improvement in some key economic indicators, including industrial production and consumption, points to signs of a rebound and suggests the country is set to meet its major economic goals for this year.

"Despite facing challenges from a complicated and grim external environment, lack of effective demand, overcapacity in some industries, weak expectations and other risks, the favorable conditions for China's economic development outweigh the headwinds," Liu said at a Friday news conference in Beijing.

She said China has a huge domestic market, a complete industrial system, advanced technologies, abundant human resources as well as plenty of policy space, and the country's ongoing efforts to promote industrial upgrading and deepen reforms and opening-up also help support its future development.

The Asian Development Bank has recently raised its 2023 annual GDP growth forecast for China to 5.2 percent, from 4.9 percent in September, above the country's preset annual GDP growth target of around 5 percent.

Weak demand for exports and the real estate crisis continued to weigh on growth, the ADB said in a report on Wednesday.

To offset softer external demand and a prolonged property downturn, policy support is expected to continue, it added.

Citing the latest economic data, Zhou Maohua, a researcher at China Everbright Bank, said the recovery in consumption is slower than supply, and private investment continues to drag down the economy, pointing to the lack of effective demand.

The NBS said property investment fell 9.4 percent in the first 11 months compared with a year earlier, while in the first 10 months, it declined by 9.3 percent.

Citing the recently concluded tone-setting Central Economic Work Conference, Zhou said, "China will likely adopt a more expansionary fiscal policy next year to boost the economy amid lackluster demand, a property downturn and a cloudy global outlook, including lifting its 2024 budget deficit and further tax and fee reductions."

Zheng Houcheng, chief macroeconomist at Yingda Securities Co Ltd, estimates that the budgeted fiscal deficit rate next year may exceed the "red line" of 3 percent.

Considering that China's consumer prices may remain at low levels in the first half of next year, Zheng said he expects to see interest rate cuts and a reduction in the reserve requirement ratio as early as the first quarter.

Given China's anticipated implementation of a proactive fiscal policy and a prudent monetary policy — as well as further moves to optimize property measures — Luo Zhiheng, chief economist at Yuekai Securities, said China's economy will likely expand by 5 percent next year, mainly driven by the growth in services, high-end manufacturing and infrastructure investment.

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