China plans to set a lower economic growth target of 6 percent to 6.5 percent in 2019 compared with last year’s target of “around” 6.5 percent, policy sources told Reuters, as Beijing gears up to cope with higher U.S. tariffs and weakening domestic demand.
The proposed target, to be unveiled at the annual parliamentary session in March, was endorsed by top leaders at the annual closed-door Central Economic Work Conference in mid-December, according to four sources with knowledge of the meeting’s outcome.
Data later this month is expected to show the Chinese economy grew around 6.6 percent in 2018 — the weakest since 1990. Analysts are forecasting a further loss of momentum this year before policy support steps begin to kick in.
“It’s very difficult for growth to exceed 6.5 percent (this year), and there could be trouble if growth dips below 6 percent,” said one source who requested anonymity due to the sensitivity of the matter.
As the world’s second-largest economy loses steam, China’s top leaders are closely watching employment levels as factories could be forced to shed workers amid a trade war with the United States, despite a more resilient services sector, policy insiders said.
Growth of about 6.2 percent is needed in the next two years to meet the ruling Communist Party’s longstanding goal of doubling gross domestic product and incomes in the decade to 2020, and to turn China into a “modestly prosperous” nation.
“Considering employment, income and stability, we need growth of at least 6 percent this year,” said one of the sources.
Adopting a range as a target would give policymakers room to maneuver amid uncertainties caused by a tit-for-tat tariff war with the United States, as the two sides strive for a possible deal to settle their differences before March.
The government plans to maintain a 3 percent consumer inflation target for 2019 despite a recent softening in price rises, leaving some space for the government to stimulate weaker consumption.
Data this week showed China’s consumer inflation eased to 1.9 percent in December from 2.2 percent in November, below the government’s full-year target.
The State Council Information Office did not immediately respond to a Reuters request for comment.