Economic stability will be the top priority of China's policymakers next year, as they are expected to roll out supportive measures ahead of schedule to shore up growth against strong headwinds and will likely set 5 percent as the bottom line for GDP growth for 2022, experts said on Sunday.
Policymakers will intensify fiscal spending to boost domestic demand and increase infrastructure investment and are likely to fine-tune regulatory measures in the energy sector to stabilize production and growth, they said.
China's top leadership acknowledged that the country is facing threefold pressure from contraction of demand, supply shocks and weaker expectations, and it pledged to safeguard economic stability amid rising domestic and external challenges at the tone-setting annual Central Economic Work Conference, which concluded on Friday.
Top policymakers at the meeting decided that supportive policies should be implemented ahead of schedule, and all regions and departments should actively roll out policies conducive to economic stability, according to a statement released after the meeting.
Experts said that the emphasis on economic stability signals that China will pursue a more pro-growth policy to avoid deep economic slowdown, as the world's second-largest economy is likely to face strong downward pressure in the first half of next year before rebounding in the second half.
Most economists agreed that setting a reasonable growth target for next year is important for the government to better anchor the weakened market expectations. Policy support needs to be further intensified, because the Chinese economy may continue to be threatened by weaker growth of consumption and investment, disruptions of the supply chain, resurgence of the COVID-19 pandemic and the negative spillover effect of developed economies exiting their ultra-loose policies, they said.
Zhang Lianqi, a member of the Standing Committee of the 13th National Committee of the Chinese People's Political Consultative Conference, China's top political advisory body, said China may set next year's GDP growth target at around 5.5 percent year-on-year, with 5 percent growth expected to be the bottom line.
"Stability will be the top focus of economic policies in 2022," Zhang said.
The key economic meeting also stressed the importance of strengthening policy coordination, sticking with a systemic approach and improving policy effectiveness, which were seen as signs that policymakers will work to avoid any negative effect of its regulatory policies that could weigh on economic growth, experts said.
Han Wenxiu, a senior official with the Central Committee for Financial and Economic Affairs, said on Saturday that the government should be cautious about unveiling policies that could trigger economic contraction. The government should also avoid launching policies that are reasonable separately but could have negative effects as a whole, he added.
Wu Chaoming, chief economist at Chasing Securities, said that the country is expected to fine-tune regulations in areas such as the property market and capital expansion in certain sectors to foster well-regulated and healthy development, instead of launching stern regulatory moves that could trigger contractions of economic activities.
It is necessary to prevent industrial regulations from diluting macro policy support and aggravating economic downside risks, Wu said.
Looking forward, a more proactive fiscal policy can be expected as the government will launch additional tax and fee cuts to alleviate financial burdens on smaller enterprises and ensure stable employment. Public spending and the issuance of local government bonds will also be accelerated to boost infrastructure investment, said Wen Bin, chief researcher at China Minsheng Bank.
China's monetary policy will maintain a flexible stance to ensure ample liquidity, and additional reduction of banks' reserve requirement ratio and interest rate cuts remain viable options of the Chinese central bank if the economy further decelerates in the first half of next year, Wen said.
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China's top leaders have mapped out priorities for next year's economic work as the annual Central Economic Work Conference concluded in Beijing Friday, highlighting efforts to maintain stability while pursuing progress.
In a speech at the conference, 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 2021, analyzed the current economic situation and arranged next year's economic work.
Li Keqiang, Li Zhanshu, Wang Yang, Wang Huning, Zhao Leji and Han Zheng, who are members of the Standing Committee of the Political Bureau of the CPC Central Committee, attended the three-day conference.
Steady progress
Economic work next year should prioritize stability while pursuing progress, according to the meeting.
Actions should be taken to safeguard macroeconomic stability, keep major economic indicators within an appropriate range and maintain social stability to prepare for the Party's 20th National Congress, the meeting said.
The year 2021 has been a milestone for both the Party and the nation, according to the meeting, which noted that China has maintained a leading position in the world in economic development and epidemic control, with progress made in scientific strength, industrial chain resilience, reform and opening-up, people's livelihood and ecological civilization.
However, it cautioned that China's economic development is facing pressure from demand contraction, supply shocks and weakening expectations, and the external environment is becoming increasingly complicated, grim and uncertain.
"We must face the difficulties squarely while staying confident," said a statement released after the meeting, citing China's strong economic resilience and unchanged fundamentals underpinning long-term growth.
The meeting called for remaining committed to China's own cause, consolidating the economic foundations, enhancing the abilities of scientific and technological innovation and adhering to multilateralism.
It also urged making proactive efforts to align with the high-standard international economic and trade rules, deepening reform via high-level opening-up, and boosting high-quality development.
The meeting stressed the necessity to adhere to the centralized, unified leadership of the CPC Central Committee, promote high-quality development and pursue progress while ensuring stability.
It highlighted the timing, extent and efficiency of policy adjustments and reform to ensure their steady advancement, as well as coordination and systems thinking.
The 2022 policy toolbox
China will continue implementing proactive fiscal policies and prudent monetary policies for steady economic progress next year, according to the meeting.
It pledged to implement new tax and fee cut policies, strengthen support for small and medium-sized enterprises, individually-run businesses, manufacturing and risk-defusing, and take a moderately proactive approach in advancing infrastructure investment.
Prudent monetary policies should be flexible and appropriate, and liquidity should be maintained at a reasonable and ample level, the meeting said.
It underlined efforts to guide financial institutions to ramp up support for the real economy, especially for small and micro enterprises, technological innovation and green development.
In 2022, China will wield its microeconomic policies to stimulate the vitality of market entities, deepen the supply-side structural reform with a focus on smoothing the circulation of the national economy, and firmly advance the implementation of policies related to science and technology, said the meeting.
Next year's economic priorities also include vitalizing development through policies of reform and opening-up, promoting more balanced and coordinated regional development, and ensuring that its social policies well safeguard people's well-being.
Efforts will be made to boost the employment of young people, including college graduates, and optimize flexible employment and social security policies.
In the first 10 months of 2021, China created 11.33 million new jobs in its urban areas, achieving its whole-year target in advance, official data showed.
Reiterating the principle that "housing is for living in, not for speculation," the meeting said China will support the property market to better cater to the reasonable demand of home buyers and adopt city-specific policies to boost the virtuous cycle and healthy development of the sector.
The country will also expand high-quality and institutional opening-up, grant foreign-funded enterprises national treatment, attract more investment from multinational companies, and facilitate the early implementation of major foreign-invested projects.
