China’s Xi Jinping and other leaders to discuss GDP growth targets and stimulus measures | Real Time Headlines

Chinese President Xi Jinping and other top leaders are preparing for the annual Central Economic Work Conference, It is said The meeting is scheduled to take place this week as Beijing strives to boost economic growth.

While the official date for the two-day conclave has not yet been announced, Bloomberg reported The closed session will be held on December 11 and 12.

Goldman Sachs economists said that at the two meetings, top policymakers will review this year’s economic performance and policy implementation while setting priorities for next year.

Goldman Sachs said the central government will also discuss growth targets and budgets for 2025, in part to provide guidance for local governments in setting their own targets ahead of the annual parliamentary session early next year.

Although specific figures will not be released until March, Beijing’s GDP growth target next year is widely expected to remain at “around 5” – the same as this year – or even slightly lower.

Larry Hu, chief China economist at Macquarie, said, “If history is any guide, policymakers are likely to keep their 2025 growth target unchanged at around 5%, or lower it to 4.5-5%. %,” he said, adding that Chinese policymakers had never lowered the target by more than 0.5 percentage points in the past.

Lynn Song, chief economist at ING, said the Chinese government rarely fails to achieve its growth targets, with the only two exceptions in 1990 and 2022 when growth fell significantly below the target.

Chinese officials step up stimulus Announcements since late Septemberr, including multiple interest rate cuts, relaxation of home purchase rules, and liquidity support for the stock market.

Recent data suggests that existing stimulus measures have helped boost some aspects of the economy, but have not been enough to offset ongoing deflationary pressures.

Temperatures in the country are close to zero in November Consumer price inflation falls to five-month lowData on Monday showed wholesale price deflation deepening, with the producer price index falling for the 26th consecutive month.

Consumption continues to slow in the country Traced back to country’s real estate downturn and its close connection with local government finances.

Last month, China’s Finance Minister $1.4 trillion package announced Ease the local government debt crisis.

Morgan Stanley economists said in a report that given that local government financial instrument debt accounts for nearly half of China’s GDP, the authorities need to further expand the scale of the debt replacement plan.

Morgan Stanley said it expected Beijing’s fiscal deficit to widen by 1.4 percentage points, which would allow the central government to increase borrowing to support the economy.

Although the fiscal deficit widened to 3.8% in October 2023 with the issuance of special bonds, the authorities still Return to deficit target 3%.

Trump, who will take office in January 2025, said he will Add 10% tariff Unless Beijing does more to stop the trafficking of the highly addictive narcotic fentanyl. He also threatened to impose tariffs More than 60% of products are from China during his campaign trial.

Barclays economists said the latest tariff threat could be a “tactic to bring China to the negotiating table” and predicted the president-elect would end up imposing only an additional 30% tariffs. They added that this could still create a drag of up to 1 percentage point on China’s GDP.

“If Trump’s tariffs severely hit China’s exports, the policy bazooka may be coming,” Macquarie’s Hu said, adding that Beijing would have to stimulate domestic demand to meet its growth targets.

Hu added that exports and manufacturing could no longer power the economy’s 4% to 5% annual growth over the next decade, “they are too large to drive long-term growth” and that exports faced more trade risks and tensions.

Hu Jintao stressed that China needs to promote consumption as the main growth driver by solving the unemployment problem, increasing labor income and providing more services to low-income groups. “A reasonable goal is for household consumption to account for 50% of GDP,” Hu Jintao said.

Chinese government bonds have been rising on expectations of further interest rate cuts and weak economic fundamentals. 10-Year Treasury Bond Yield Recently fell below the psychological price level The 2% benchmark hit a multi-decade low.

The Chinese government has tried to stem the tide of bond gains amid pessimism about the economy and a lack of attractive investment options.

“The market is still pricing in some fiscal stimulus support early next year,” said Edmund Goh, investment director at abrdn. Although there are some encouraging signs of recovery in China’s real estate market, “we haven’t seen any improvement in domestic economic data over the past few months.” Improvement,” Wu added.

On the equity front, Barry Gill, head of investments at UBS Asset Management, said China remains his investment bank given its low valuation and the fact that it is “the most likely to surprise investors” on numerous fronts compared with other markets. “First choice”.

China’s benchmark CSI 300 index fell 0.5% on Monday after rising 1.3% on Friday to its highest level in two weeks, as some traders prepared for further stimulus measures at this week’s policy meeting.

“The market is likely to see a turnaround with more decisive stimulus measures over the next 12 to 18 months,” UBS Asset Management said in an email.

—CNBC’s Evelyn Cheng contributed to this report.